Banks Back Fortis Pipeline

Sydney-based developer Fortis has secured bank funding to the tune of $142 million for three of its projects.

Fortis director Charles Mellick said the bank funding was a vote of confidence for the $42-million completed 2 Guilfoyle Avenue and two projects under construction. 

“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,” Mellick said. 

“Macquarie Bank saw significant value in the strength of the lease covenants in 2 Guilfoyle Avenue and were able to lend at an Interest Rate Cover that reflected this. 

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

The mixed-use commercial building has long-term tenancies with Baker Bleu and TDM Growth Partners. 

St George provided a $52.4-million construction loan for the completion of the retail and residential project, MONA at Darling Point. Mellick said eight of the 24 apartments had been pre-sold, including the penthouse, which sold for $13.75 million.

Completion of MONA was slated for late 2024, while construction on Piper at Point Piper was also due for completion at that time.

Fortis secured an ANZ construction loan of $64.3 million for the Luigi Roselli-designed apartment project. Mellick said six of the 14 luxury apartments had been pre-sold and the loan was about 55 per cent covered. 

▲ A render of MONA at Darling Point.

“These construction loans represented conservative loan to value ratios of about 50 per cent, whereas the major banks would probably have loaned about 60-65% of end net value in early 2022,” he said. 

“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 per cent 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.”