Investment Updates: March 2025

The borrower continues to work towards the refinance of the facility.

The project is now entering its final stages, with key works progressing towards completion. The concrete driveway is being finalised, while inground electrical works and fire services are nearing completion. Plumbing and electrical fit-off are well advanced, alongside the implementation of mechanical services. Finishing touches are in progress, including painting, glazing, and the fit-out of internal walls. Practical completion is expected to be achieved next month.

Tatura:
– Initial settlements have been delayed and are now expected to commence in mid-late April 2025 following the issuance of the Statement of Compliance (SOC).
– The borrower has reported 50 presales out of 60 remaining lots across Stages 1 and 2.

Morwell:
– Bulk earthworks for Stages 1, 2, and 3 are ongoing.
– 58 presales have been achieved across Stages 1-3 of the project.
– The Australian Government’s Housing Support Program has allocated $35.8 million to five projects aimed at fast-tracking housing in regional and metropolitan growth areas in Victoria. Funding is expected to have a direct benefit on the Morwell development.

The facility has now expired and ARK has reserved its right to put the borrower into default, whilst a new 12-month facility is arranged.

In December 2024, the Victorian Planning Authority (VPA) confirmed that the Ballarat North PSP will focus exclusively on the Core Area of the precinct, excluding the Expanded Area where the property is located.

A draft valuation report has been prepared, and discussions are ongoing between the borrower, development manager, and valuer to ensure that the latest VPA updates are accurately reflected in the final report. ARK will assess whether any adjustments to the facility are required once the report is finalised.

The borrower plans to hold the two remaining security properties as a land bank while due diligence on the Oakbank PSP continues. ARK intends to refinance the existing facility into a new 12-month facility in June 2026.

The borrower intends to strategically hold the property in the short to medium term whilst continuing to monitor the market. The planning overlay remains supportive of a major mixed use development on the site.

The facility reached financial close this month to fund the acquisition of ‘The Buckingham’ property and refinance the Sellicks Beach construction facility into a residual stock facility following project completion.

To date, 3 out of the 8 residual lots from Sellicks Beach have settled.

The sales campaign is progressing well with multiple groups active in the data room. Savills is engaging with potential buyers, including under-bidders and past interested parties, while also targeting local, offshore, and intermediary buyers. A new EDM has been sent out since the campaign first went live to maximise exposure and highlight key property features. The priority is to position serious buyers for strong, unconditional offers.

A 3-month extension to the facility has been finalised to provide additional time for the completion of remaining works and practical completion is currently expected in May-25.

Civil works are steadily progressing this quarter, following delays from inclement weather and council in in the previous year.

Stage 4 has achieved practical completion however council delays have pushed settlements into April 2025.

Bulk earthworks for Stages 5 to 7 are underway and are expected to conclude by the end of 2025. Civil works for Stages 5 and 6 are scheduled to commence concurrently in April 2025, with Stage 7 following a month later, and all stages expected to be completed by the end of the year.

The terms for the construction facility have been agreed with the borrower and the refinance is on track to be completed on or before the maturity date.

The majority of the sold lots within Stage 1 have now settled. ARK is currently negotiating with the borrower to refinance the remaining lots into a residual stock facility, which is anticipated to be finalised by the end of next month, aligning with the facility’s expiry date.

Road and drainage works have continued in Stage 2 whilst the sewer reticulation works are close to completion.

The property has been inspected following Cyclone Alfred, with no damage reported.

The borrower has successfully completed plan sealing, allowing for title issuance, which is expected in early April. Settlements will be called 14 days after title registration.

The borrower conducted a six-week EOI campaign with Savills, receiving offers ranging from $20 million to $28 million with varying structures.

To support the borrower in fully considering these offers (all of which exceed the valuation), ARK has provided a 4-month facility extension until 31 July 2025.

Following the recent inclement weather, including the impact of Cyclone Alfred, an inspection was conducted confirming no damage to the property. The draft civil works contract has been agreed and construction costs have been confirmed. It is expected that the civil contractor will mobilise on site in April.

The borrower submitted the planning application for the proposed 213-lot subdivision in early January and is still awaiting preliminary council feedback.

Precast panel walls have been installed for 15 warehouses out of 24, roof sheeting is complete for 11 warehouses and warehouse slabs are now poured.

The warehouses are being marketed by two sales agents, with a recent spike in interest expected to translate into additional sales.

The borrower has successfully achieved development approval for the Salisbury Plain property and will now commence discussions with civil contractors in preparation for the tender process to finalise the contract price.

Demolition of the site has been successfully completed. A remediation contract has been executed, with works now underway and expected to be finalised in May 2025.

Initial remediation costs remain in line with expectations and further clarity on the required level of remediation is anticipated by mid-late April 2025, midway through the forecasted 8-week timeframe.

The borrower continues to make progress with an amendment to the Local Structure Plan, with the Stage 1 subdivision application now submitted, keeping the project on track to achieve approvals by Q2 2025.

An inspection was conducted post-Cyclone Alfred which confirmed that the property sustained no damage. The borrower is continuing discussions with major banks to secure a refinance, which is expected to accelerate as the facility term approaches its end.

The civil contractor mobilised on site during the month although later than originally anticipated. Following several productive meetings with council and the relevant authorities, feedback was received which necessitated changes to documentation and ultimately delayed the contractor’s ability to mobilise on site. With the civil contractor now established on-site, work can progress without delay.

The facility reached financial close this month, and civil works have already commenced on-site. An inspection was conducted following Cyclone Alfred where no structural damage to the property was identified. Operational works have now resumed following the inclement weather.