Investment Property
Overseas
Stirling Mortimer and EquityBridge Capital have launched the Development Finance Fund S.A. No1 Limited which will close to subscription on Monday 5th July 2010. The €150m fund is a highly collateralised asset-backed income product that will offer investors returns of 4.8% above LIBOR in years 1, 2 and 3 and 5.8% above LIBOR in years 4 and 5. The Fund will maintain a loan to value (“LTV”) ratio of less than 60% and will also benefit from a 25% upside equity participation in the profits of the developments (after a predetermined benchmark developer return).
The returns for the Fund will be realised through the provision of construction finance for the development of two of South Africa’s most prestigious golf resort developments - Lagoon Bay Lifestyle Estate and Waterkloof Hill Estate. The Fund has the ability to provide the developers with financing at very competitive rates in comparison to the lending rates available locally in South Africa and will receive first charge collateral security over the developments.
Lagoon Bay and Waterkloof will provide prestigious residential properties, leisure facilities, five star hotel complexes and Retief Goosen signature international championship golf courses. Both resorts are capitalising on the changing nature and increased demand for golf estate living in South Africa and have already seen strong demand from local investors.
UK
Given the current economic climate, developers and land owners are facing acute cash flow shortfalls resulting from the lack of banks providing development finance and mortgage lending. Stirling Mortimer by virtue of its buying power is being offered land opportunities heavily discounted to the current RICS red book valuation. All the land benefits from at least outline planning and this will enable quicker re-sales as opposed to trying to gain an approval over time. In some cases the seller is requesting the option to re-purchase the land from the Fund at the full asking price at a fixed future date.
The aim is to buy low and then re-sell at nearer the market value either immediately or in the medium term. Development is essential to meet not only the Government target of three million new homes by 2020 but also the general consumer demand. The land will be owned from outset with no borrowing requirement and the Fund will not look to develop the sites itself merely profit from the cash flow pressures being experienced in the building/development sector.
Following the huge success of the Stirling Mortimer No 8 UK Land Fund the No 9 UK Land Fund II is available for investment until 30th July 2010.
