About Zank
ZANK&CO is an Australian-based fund company that focuses on fixed-income fund products. It currently has several real estate mortgage debt funds and hotel funds. Zank & Co has provided investors with predictable and stable returns by investing in first and second mortgages within Australia. At present, ZANK&CO’s main investment areas are concentrated in Sydney, Melbourne and Queensland.
This is an example of ZANK&CO residential & commercial lending process, a client who wants to buy a property in Bangor, Sydney through a loan.
Firstly, the broker provides a loan summary regarding the loan.
Then, due diligence will be discussed regarding the risks of the underlying asset and location selection.
Lastly, Zank&CO’s consideration of risk controls to mitigate any potential issues will be discussed, focusing on the background investigation of developers and their proposed exit strategies.
- A brief introduction to loan application
The underlying asset type of this loan is vacant land in the Bangor area of Sydney. The loan will hold the first mortgage on the underlying asset with a loan-to-value ratio of 65.73% of the purchase value of the underlying asset, backed by an independent valuation.
Funds from the loan will be used to settle the securitized assets. The proposed plan for the underlying asset is to use the property for the construction of townhouses for future development.
- Due Diligence – Risk consideration of underlying assets
Bangor is a suburb in New South Wales governed by the Sutherland Shire Council. It currently has 5,620 residents, and the median home price is $1,147,823, while the median unit price is $839,700. Over the past three years, house prices in the Bangor region have risen by an average of 12.32, while unit prices have surged by 13.30 per cent.
The underlying asset is in close proximity to a number of schools, such as Aquinas Catholic College, Holy Family Primary School, Inaburra School, etc., making it a more family-centric area with more career professionals, currently 91.3% of the local housing for self-owned housing.
- Risk Control
To monitor risk, in addition to controlling leverage, we also examine the background of borrowers and their proposed exit strategies in the event of a default.
Firstly, we’ll focus on key management. The borrower is an experienced real estate broker who also works in property management. He owns his own real estate company and brings together several serious shareholders to buy the assets of the table together for development. Although this is the first development project he has managed, he has extensive experience in the real estate industry. Furthermore, the borrower owns multiple investment properties and functioning companies, so ZANK&CO, as the borrower, does not see any serviceability issues with this loan.
Secondly, consider an exit strategy, refinancing the sale of the property or loan financing. We believe this is an appropriate exit strategy due to the low LVR.
- Risk Analysis
Since the sponsor is an Australian citizen who owns multiple properties in Australia, his own risk is low. The serviceability risk is also classified as low risk due to the fact that there are no problems with his personal business and the local income he derives from it.
Meanwhile, leverage is below our maximum LVR (70%) and our risk rating on the property is healthy at 2.3. After passing a series of strict audits, ZANK&CO released the loan.
