Developer Fortis has secured three lending facilities totalling $142 million for three of its projects in Sydney since February amid conservative lending conditions. 

The Pallas Group developer said the facilities supported a completed building valued at $42 million and two construction projects with a combined end value of $242 million. 

“Although the commercial real estate finance market is more demanding at the moment, these recent facilities from ANZ, St. George and Macquarie Bank demonstrate that the major banks are still looking to lend and to take a commercial approach, displaying a strong preference for premium assets and experienced borrowers,” Fortis Director Charles Mellick said.  

The first facility is a term debt facility of $25 million from Macquarie Bank, supporting the completed retail and commercial building at 2 Guilfoyle Avenue, Double Bay. It was last valued at $42 million.  

The second facility was a $52.4 million construction loan from St. George for the completion of the premium retail and residential project MONA in Darling Point.  

The development has a total projected value of circa $103 million on completion, with construction expected to be completed in late-2024. 

The third facility was a $64.3 million construction loan from ANZ for the completion of the $139 million residential project Piper in Point Piper opposite Cranbrook School.  

“Macquarie Bank saw significant value in the strength of the lease covenants in this building and were able to lend at an Interest Rate Cover that reflected this,” Mellick said.  

“Although we were still required to make a substantial equity injection, we appreciated the commercial attitude taken by the bank.  

“These construction loans represented conservative loan to value ratios of about 50%, whereas the major banks would probably have loaned about 60-65% of end net value in early 2022. Accordingly, each project is more equity intensive than it would have been in that environment. On the other hand, in earlier times the major banks would have required that the net value of off-the-plan sales represented 80-100% of the construction loan limits, so in this respect they will show commercial flexibility for the right project if the developer has a strong track record.”