Ten fortunate professional investors participated in the new Gieldan deal
Gieldan has just announced completion of its most recent deal, a luxury waterside apartment development. The deal raised $44.25m to finance an apartment development in Cronulla, a Sydney suburb.
The structure of the deal provides comfort to investors with presales covering a significant 75% of the debt commitment. Recent directives from APRA and changes in banks’ lending policies means that, whilst presales have gone well, they are not quite sufficient to unlock bank funding. Banks are now typically seeking pre-sales coverage of 100%.
Generally speaking, selling off the plan isn't as lucrative for developers, making private debt arrangements more attractive. Holding out for 100% pre-sales coverage makes bank finance much less appealing to developers, who can otherwise get the development started earlier.
Neil Sutton, Gieldan managing director commented, “these apartments are priced between $3m to $5m, and as you can imagine, more difficult for purchasers to commit to buy without first being able to see and touch the finished product”.
This deal is a sweet spot for us, providing finance to the developers at lower presale rates than the banks, while offering a very attractive 11% fixed quarterly coupon for investors. An undrawn commitment fee is also paid to investors while funds are progressively drawn for the build.
It is estimated that investors will be repaid in 70 weeks, delivering a projected internal rate of return of 12.6%.
The completed apartment building has an estimated asset value of $80m, with a loan to valuation ratio of 55%. The luxury waterside side apartments all have a west facing aspect next to the marina on Gunnamatta Bay. Most are three bedroom apartments with the penthouse and sub-penthouses having their own outdoor swimming pools.
Minimum subscription per deal is $1m.
To learn more about Gieldan, please click here.
If you are interested in future Gieldan opportunities, please call Neil Sutton on 02 9697 8776.
Gieldan Capital arranges high yield debt solutions for corporate borrowers, providing private debt investment opportunities to institutional funds and professional investors and is an affiliated business of FIIG Securities and MH Carnegie.
Neil Sutton is an accomplished investment executive with substantial experience in structuring primary investments across both private equity and debt. He heads Gieldan Capital, a joint venture established in 2014 between FIIG Securities and MH Carnegie.
Prior to Gieldan, Neil was at Gresham Private Equity, HBOS and Arthur Andersen, providing hands-on experience as an investment manager, corporate financier, and investor. Neil is a qualified Chartered Accountant (ICAEW) and holds a First Class honours degree in Economics and Accounting from the University of Bristol, England.
Jay Mertens is a qualified chartered accountant who joined Gieldan Capital in April 2016. He is responsible for deal origination, structuring and execution of new debt transactions.
Prior to Gieldan, Jay was at Commonwealth Bank of Australia and Qantas, as their corporate banking director and business analyst respectively. Jay’s breadth of experience across many sectors allows him to critically analyse new transactions and understand the inherent risks in any opportunity. Jay commenced his career in professional services, and holds a Bachelor of Business degree.