Baranduda and Wodonga VIC

Due diligence

The property for Wodonga comprises of Childcare facility need completion to set on side of area approximately 3400m2. The planning permit allows 125 childcare places. There are 12 conditions associated with the planning permit the more majority which are standard.

The school cross has been relocated to facilitate rear access and egress from the side. On the day of the inspection, the valuer stated the construction of the property was very well progressed and was beyond knock up stage.

Wodonga property currently have all services including electricity, gas water drainage sewerage and telephone connected to the property.

Similarly, Baranduda also has all services all connected. In addition, Baranduda is 7km south east from Wodonga town centre and the as has fully constructed road services donna constructed and number under construction at the time of the inspection. currently has planning permit issue by Wodonga city council which allows uses development of childcare facilities.

Project Risk Location

The subject property in Wodonga is located with the north east reginal Victorian town ship it’s located approximately 250km north east of the Melbourne CBD and the subject property is situated within an established section. Within established section of Wodonga where surrounding development comprising a rage of residential properties with number village facility. Wodonga primary school and Mitchell secondary college are located at the rear of the property. This are all considered advantage of use the property as childcare facility. Wodonga has permanent population approximately 92000 people as of June 2017 which is expected to grow continuously in the future. Public transport in the area is limited, given its regional location however Wodonga is service via train from Melbourne and local bus services do exist. There is a main frontage on the road that is located on, which can be easily access to the property, there is a quite a bit of competition of childcare facilities within Wodonga with number of new facilities having recently being in Albury and Wodonga region.

Baranduda though, it has a total population within the established township of Baranduda of roughly 2300 people. 7.4 per cent of that population is aged between the ages of 0 to 4 where the national average for age groups between the age of 0 to 4 is 6.3 percent, so as you can see Baranduda has higher. On the day of inspection construction of the childcare facility was well progressed and at locked up stage. The subject property is located within northeast and regional Victoria approximately 250km from the CBD. The subject property is also situated from the developing suburb Baranduda approximately 70km south east of Wodonga.

The number of the school are situated around the township and it’s considered a positive attribute of the site. It’s also a corner location which is also considered to be positive attribute as it allows frontage exposure and ease access to the property.

Risk control

The sponsor is a permanent resident of Australia and his primary place of residence being Victoria his family has been in business of running childcare facilities from numerous years and he has multiple investment properties which provides stable stream of income. As we can see from the asset and liabilities provided by the borrower which certain been certified by an accountant. With mortal investment properties, borrower has strong rent income in place, the borrower is deemed to be asset rich with little by way of mortgages over these properties. All that can be shown here, and there is no bad credit history on the borrower.

Risk Analysis

Regarding on the gearing risk, this is a construction loan where the total amount is 40.48 of the LVR which is very safe. An initial drawdown on 1.5 million will be provided and it’s based on the asset value of the subject property looking at the leverage of 28.85% the remaining total loan amount we provided upon construction drawdown across supported by appropriate quality survey reports. The total leverage is very low, and we saw we do it very safe as it provides sample buffer in the case of default. The exit risk provided by the BOE is to sale the security property or for the loan facility to be refinanced by an independent financer

Coming into this, as a lender, we will be positioning our self as a first mortgage and looking at the builders they are qualified for this project as evidenced by the QHS Report provided.

So, consolidating all this information we can see the risk table provided where the sponsor risk is low as well as the gearing risk and ranking risk providing average of 1.4 with a heavy emphasis on the gearing and sponsor.