Development & Investment Lending Proposal

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1SSUD71-126 Property Finance and Investment AssignmentAssignment 1: Development & Investment Lending ProposalThe due date: 4.00pm on Monday 25 October 2021.Word limit: around 3,000 words including referencesReference style: APR reference styleThe important thing is to solve the problem and support your findings with case study or otherevidence. Please ensure that your assignment is fully referenced and submitted the reportand excel file on iLearn. All assignments will be reviewed for originality and the results madeavailable to students. Late lodgement of assessment work may attract penalties.Question: PD Company proposes development of a retail shopping centre of 2,800sqmlocated at the corner of Cotlew and Wardoo Streets, Ashmore on the Gold Coast. The retailarea of the completed project will be 1,400sqm and comprise 7 tenancies. The proposeddevelopment of this brownfield site is based on a strategy informed by extensive markettesting indicating a need for a fast-food, a drive-through liquor outlet and a convenience storein this precinct. The project details are as follows:• Development approval: approx. 6 months. Cost approximately $280,000• Estimated construction cost $3,240,000• Consultants $300,000• Land cost $1,800,000• Infrastructure charges $250,000• Contingency $200,000.If you require further information, please make your own assumptions and include these ina supporting Appendix to the advice/report.PD Company has $1,240,000 to invest in this project and wishes to:1. Raise a construction loan to meet the building of the centre, and2. Raise an investment loan for a period of 10 years on completion.The company holds an expression of interest from KFC, McDonald’s, Nando’s and the BoostJuice company. A lease agreement has been entered into with the Ashmore Tavern to leasethe drive-through liquor facility and discussions are underway with IGA for a smallsupermarket store or a convenience shop. The fast-food outlets are viewed as anchor tenantsand traffic builders for other retailers on the site. A preliminary financial forecast indicatesthat net rents after outgoings but before management costs will be in the order of $600,000per annual from year 3.PD has asked you for advice about what it needs to do to prepare a loan application for theproject. In particular, you should advise on the matters that PD will need to undertake in orderto meet typical bank lending criteria for construction and investment finance?2Late submissions – the following adjustments will be made to the maximum marks available:• Up to 1 day late = minus 10% (maximum 90%)• Up to 2 days late = minus 20% (maximum 80%)• Up to 3 days late = minus 30% (maximum 70%)• Up to 4 -5 days late = minus 50% (maximum 50%)• After 5 days then no marks will be awarded
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