The purpose of the capital raising undertaken through this Campaign is to secure $2,100,000 from Investors to provide loan funds to enable the acquisition of property in the Badgerys Creek area. The Badgerys Creek area has been determined as the area for the 2nd airport in Sydney. This area will be developed both from a commercial and residential area.
In conjunction with monies raised via a property campaign on the DomaCom platform for the equity component of $2.4 million to acquire a property within the South West corridor of Western Sydney (Badgerys Creek). This land is currently zoned rural.
If the capital raising for the Loan Sub-Fund is unsuccessful, or not all of the investors with an Active Bid accept the offer under this SPDS, or the borrower no longer needs the loan, the Loan Sub-Fund will not be created, and an Investor’s Quarantined Funds will be released after expenses (if applicable) are deducted. An investment in this Loan Sub-Fund will not provide exposure to any other investment in the DomaCom Fund or any of its other sub-funds.
Key Information for Landbanking Investment
|Minimum Investment amount||$100,000|
|Maximum amount to be raised||$2,100,000|
|Investment term||1 year from commencement of the loan|
|Target return to investors||9.56% p.a. fixed for the term of the loan. This is the net return that investors will receive after fees|
|Income distributions||Monthly in arrears|
|Underlying loan details|
|Underlying loan amount||$2,100,000|
|Underlying loan interest rate||10% p.a. Fixed for the term of the loan, interest only loan. This represents the interest rate that the Borrower will pay and this will be paid from the rental income proceeds and cash reserves derived from the Property Sub-Fund.|
|Underlying loan security||A first registered mortgage over the property 9 Emmetts Farm Road, Rossmore NSW 2557 (located in South West growth corridor of Sydney).|
|Loan to Value Ratio (LVR)||The maximum LVR allowed is 60%. The loan as a percentage of the interest bearing liabilities to the total asset at acquisition will be 52%.|
|Interest Cover Ratio (ICR)||This ratio measures the serviceability of the loan. The DomaCom Fund has a minimum requirement of 1 times cover, which indicates that the property must be positively geared. This interest servicing costs will be raised as part of the capital raising costs for the Property sub-fund. The interest costs cannot be capitalised. The ICR ratio is 1.5 times.|
Maturity of the Loan
At the end of the 1-year term the Underlying Loan terminates, the Loan Sub-Fund is wound up and the capital proceeds are returned to the investors. It is anticipated that the loan will be replaced by other equity participants in the property sub-fund who will replace the loan with additional capital.
If you would like to invest in the Landbanking Badgerys Creek loan, you can join this crowdfunding campaign by completing the application and lodging your investment funds through this General Advice page. Please ensure that you first read the DomaCom Fund’s Product Disclosure Statement (PDS). For a copy of the current PDS, please click here or call your financial adviser.
When you have lodged your bid and the campaign is filled, you will also receive a Supplementary Product Disclosure Statement (SPDS) outlining the specific offer to invest in the Landbanking Badgerys Creek Loan which will contain all the information required for you to make a decision. You are not bound to proceed with your bid amount for this Landbanking Badgerys Creek Loan crowdfunding campaign until you accept the offer contained in the SPDS (which will include the specific details of the property).
If you are new to DomaCom, click on the Apply button to begin your application. If you are an existing DomaCom Fund investor, you can log in to access your account and all the other public crowdfunding campaigns by clicking the Investor Login button
Refer to the section 7 of the PDS titled Risks of investing in the DomaCom Fund and the sub section 10.3 of the PDS Risks of Investing in a Loan Sub-Fund.
• Loan Sub-Fund not established – If there is insufficient Investor interest in the Loan Investment, or if the Borrower is not successful in purchasing the Security Property the Loan Sub-Fund will not be created.
• No guarantee of returns – Returns are not guaranteed and Investors may lose money some or all of their income return and capital.
• Liquidity risk – An Investor cannot withdraw from the Loan Sub-Fund until the Loan Sub-Fund is wound up. DomaCom does intend to offer a facility through which Investors can seek to sell their Units to another party, however there is no guarantee of this.
• Damage or loss to Security Property – There are a range of events that can damage the Security Property including acts of God (fire, flood, earth quake and other natural disasters) through to accidents, negligence, and failures of maintenance. The Borrower’s insurance may not cover or may not fully cover such losses which can impact its ability to repay the Underlying Loan.
• Underlying Loan Servicing Risk – There may be insufficient income generated from the Security Property to meet the borrowing costs. The costs associated with Security Property may exceed its income. The Borrower will seek to ensure that there is sufficient income to meet expenses. Interest servicing costs have been raised as part of the capital raise.
• Asset Risk – While there is a buffer and property markets would need to fall significantly investors should be aware of that there is a risk of loss of capital if property markets were to experience a significant down turn.
• Interest Rate risk – The interest rate has been set at 10% p.a. and is fixed for a period of 1 years. During this time there is a risk that interest rates could rise, resulting in investors receiving a lower return on their investment than an alternative lending product.
• Non-recourse lending – Investors should be aware that the Underlying Loan is secured with a first ranking registered mortgage over the Security Property that is held by the Borrower. In addition, the Underlying Loan is secured through a general security agreement against all the assets of the Borrower specific to the Property Sub-Fund. If the Borrower defaults, there will be recourse to all the assets of the Borrower (limited to the assets of the Property Sub-Fund that holds the Secured Property) however, there will be no recourse to any other assets of the DomaCom Fund, nor any recourse to the assets of the Trustee, the Manager, or the Custodian.
• Economic risk – There is a risk that the general economic conditions in Australia may change in relation to interest rates, employment rate and economic growth that could in turn have an impact on the property market and specifically the value of the Security Property and the Borrower’s ability to repay the Underlying Loan.
• Timing risk – There is a risk that the Loan Sub-Fund may not proceed if the proceeds in relation to the Property Sub-Fund are not raised for the equity component. If this situation the Loan Sub-Fund would not proceed, and the capital raised would be returned back to the investors.
• Security Property Sale risk – There is a risk that if the Security Property was needed to be sold at the conclusion of the term of the Loan Sub-Fund. This may cause delays in the repayment of capital to the Loan Sub-Fund beyond the Loan Sub-Fund’s 1-year term.
All costs in relation to establishing the Underlying Loan will be paid by the property sub-fund. No transactional and operational costs will be borne by Investors of the Loan Sub-Fund. Costs in relation to the Valuation fees, building inspections and legal conveyancing costs will be met by the property sub-fund.
The estimated total ongoing operating costs for the Loan Sub-Fund represent the management fee of 0.44% p.a. This fee will be met from the repayment of borrowing costs by the Borrower from the property sub-fund.