Sydney Eastern Suburbs Development - Progress Diary

Discussion in 'Development' started by Mel Morgan, 14th May, 2019.

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  1. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    This one is a JV effort with @Shahin_Afarin, its been a while in the making, but now that construction is progressing well, thought it would be a good time to share :)

    What is it?

    This is an approx 390sqm warehouse site that was purchased off-market thanks to one of Shahin's contacts.

    We spent a long time negotiating the terms to ensure that it was subject to DA approval as we didn't want the risk of waiting for DA. Its a challenging/contentious site as it was in a narrow street, built completely to boundary and a conversion from industrial to residential.

    We also had challenges around some metals contamination in the soil requiring numerous reports and consultants around remediation. We also had a challenging tenant on a fixed lease whom we had to wait to vacate first.

    The Development


    The approval is for 4 attached strata titled terrace-style townhouses. We had the benefit of utilising the existing footprint but this also presented a logistical challenge as we were building on essentially 100% of the site. We've had all sorts of 'fun' like facing the council's Traffic Committee to get approvals.

    Each dwelling will be 3 bedrooms, study, 2.5 bathrooms, garage, 3 balconies and courtyard.

    The Numbers

    Purchase price: $4,250,000
    Stamp duty, legals: $255,000
    CC & s73: $40,000
    Other consultants: $50,000
    S94 and LSL: $47,000
    Holding costs/interest (approx): $250,000
    Other costs/contingency: $100,000
    Construction: $2,000,000

    Total: approx $7,000,000

    Estimated value on completion: $8,800,000

    The Strategy

    The JV was conceived in 2017 when we realised we could combine funds/experience/skills and work on a larger project at a higher margin. In this case its very much a 50/50 JV and has worked fantastically to date (if I can say so from my POV).

    We put the properties on the market off-the-plan in early 2018 (when we could see weakness in the Sydney market) and that has assisting in selling 2 out of the 4 off the plan and hedging some of our risk.

    I'll let Shahin tell some more of the story, and also watch this space as are planning an event coming up!

    020.JPG 005.JPG 3-4441 Short Street Waverly S13627 living-0228.jpg
    External - small.jpg
     
    Last edited: 14th May, 2019
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  2. Cheern

    Cheern Member

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    Thanks for sharing Mel. Great to see you making progress on this. Might pop over one day to have a look. :)
     
  3. ZOMG

    ZOMG Well-Known Member

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    This is great, look forward to hearing how the development goes. A newbie question- total cost is $7m, so splitting 50/50 means $3.5m cost to each JV partner. Where does the bank come into this, assuming you're not outlaying $3.5m in your own cash? i.e. how much cash assets would you need to start and complete?
     
  4. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    We went 50/50 into the funds required after financing, from memory the bank financed 70% of the purchase and a bit more of the construction. Only about $2.5m was contributed as equity in total.
    @Shahin_Afarin can shed more light.

    We are also going to do hold an info session on this project as a case study and more around development/financing etc - will post the link shortly :)
     
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  5. Omnimaqq23

    Omnimaqq23 Member

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    Would love to attend the info session / case study for this!
     
  6. Huy Le

    Huy Le New Member

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    hi Mel, could you please advise as to when the info session will be held? Love to attend.
    much appreciated
     
  7. Archaon

    Archaon Well-Known Member

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    also interested in info session
     
  8. Morgs

    Morgs Well-Known Member Business Member

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  9. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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  10. Omnimaqq23

    Omnimaqq23 Member

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    Looks like an awesome final product @Mel Morgan. How do the numbers stack up now that it's finished?
     
  11. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    The expenses are actually very close to feasibility with the end result currently on target - hopefully will even surpass slightly! Hard to find a project thats been totally on budget!
     
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