Hi all,
Haven't been around for a while, and have found all the changes!
Sim tells me this is where I should ask a question on mezzanine finance. And before anyone asks: no, I have not done a HK course.
I got into a JV part financing a development in Brisbane. It is going well, and the returns are good. As a result, and being contacted by one of the guys in the JV, I have been approached to be part of another JV providing mezzanine finance (2nd mortgage).
I know the risks, they come with the high returns. What I would like to do is find someone who has experience in mezzanine finance and off whom I can bounce some detailed questions and get some feedback.
For example, is it correct that some of the following requirements can reduce the risk:
a) permit in place (not just pending), good location and correct market
b) 100% presales consummated (not just dummy presales)
c) first mortgagee committed
d) assessment and reports from independent lawyers, QS, accountant and valuers
e) top quality builder
f) developer and builder to have multiple times asset covering of the value of the mezzanine loan
g) tri-party agreement to stop first mortgagee having a fire sale
What else should I be doing my due diligence on? Any other advice/opinion/idea/suggestion/recommendation?
Thanks for any help!
Cheers
Apprentice Millionaire
Haven't been around for a while, and have found all the changes!
Sim tells me this is where I should ask a question on mezzanine finance. And before anyone asks: no, I have not done a HK course.
I got into a JV part financing a development in Brisbane. It is going well, and the returns are good. As a result, and being contacted by one of the guys in the JV, I have been approached to be part of another JV providing mezzanine finance (2nd mortgage).
I know the risks, they come with the high returns. What I would like to do is find someone who has experience in mezzanine finance and off whom I can bounce some detailed questions and get some feedback.
For example, is it correct that some of the following requirements can reduce the risk:
a) permit in place (not just pending), good location and correct market
b) 100% presales consummated (not just dummy presales)
c) first mortgagee committed
d) assessment and reports from independent lawyers, QS, accountant and valuers
e) top quality builder
f) developer and builder to have multiple times asset covering of the value of the mezzanine loan
g) tri-party agreement to stop first mortgagee having a fire sale
What else should I be doing my due diligence on? Any other advice/opinion/idea/suggestion/recommendation?
Thanks for any help!
Cheers
Apprentice Millionaire