Archives September 2018

Melbourne University starts moving on Royal Women’s Hospital site

The former Royal Women’s Hospital in Carlton. Photo: Melanie Faith DoveAfter letting it sit idle for six years, one of the city’s biggest landowners, Melbourne University, has moved to rezone and redevelop the former Royal Women’s Hospital site.

The Carlton-based university has initiated the first stage of a planning scheme change via the City of Melbourne for half a city block bordered by Swanston, Grattan and Cardigan streets to build an “innovation hub” called the Carlton Connect Initiative.

“The university is proposing … to build a sustainability and innovation hub, which will include a mix of research, development and education facilities in addition to community, commercial, residential and retail spaces and student housing,” planning documents say.

The planning amendment, if approved by the new government after this month’s state election, will reclassify the site to “capital city zone”, allowing unlimited height and liberal development constraints similar to Melbourne’s CBD.

The three existing buildings on the site rise up to 47 metres but “as a result of the amendment, the building height of the new development will range from 25 metres to 59 metres”, planning documents state.

Melbourne University has nearly completed refurbishing the A.J. Cunningham Wing of the former hospital on Swanston Street for teaching and research before it ultimately demolishes or adds to it with another structure.

Project director Charlie Day said the size of the development meant completion was likely to be a “decade-long process”.

It would “bring together academia, industry and government research labs”, he said.

Under the Carlton Connect plans, the most prominent building – the 13-storey, brown, brick-and-glass 3AW Community Wing that made up the core of the former women’s hospital – will be refurbished, making up the second stage of a five-stage project.

A third stage will see student housing developed on the north-east portion of the site, while a fourth will see another large building constructed on the corner of Grattan and Cardigan streets. The final stage will demolish the A.J. Cunningham Wing.

The Women’s Hospital moved off the site into a new $250 million building in Flemington Road constructed by Baulderstone in June 2008, which has the capacity for more than 7000 births a year.

The university said Carlton Connect’s research activities will focus on energy, food security, water, cities, climate change, and building more resilient communities through innovation.

Planning amendments can take up to six months to get ministerial approval once public submissions close. Time frames “vary widely”, a council spokeswoman said.

This story Administrator ready to work first appeared on Nanjing Night Net.

Box Hill car park site fetches $8m-plus

A local developer has paid Box Hill Institute just over $8 million for a car park near the suburb’s busy commercial sector.

The 2430-square-metre site, which has two street frontages at  7 Poplar Street and 5-9 Wellington Road, is near the intersection of  Elgar and Whitehorse roads.

Savills agent Nick Peden, who ran the expressions of interest campaign, said the result represented a land value of $3296 a square metre.

“It was a fair bit beyond their expectations of around $7 million,” Mr Peden said.

The campaign attracted 120 inquiries and 15 inspections – from offshore and local developers – before the shortlist was whittled down to four, he said.

The developer, also local to Box Hill, is planning a multi-storey residential development, he said.

“There are a lot of projects coming on and about to start in Box Hill,” he said.

The Budget car-hire yard at 997-1003 Whitehorse Road, a 1241-square-metre site, recently fetched more than $6 million, selling before auction. That site is expected to become a mixed-use project.

About 14 kilometres east of the CBD, Box Hill is identified as one of Melbourne’s busiest redevelopment zones.

A slew of apartment projects are under construction or in planning, along with the dominating new 19-level Australian Tax Office site, which Grocon is building.

Website, Urban Melbourne, which tracks the progress of new buildings in the city, estimates there are at least 12 multi-storey developments under way in Box Hill. Sovereign Square, a 33-storey residential tower on Station Street is the largest.

This story Administrator ready to work first appeared on Nanjing Night Net.

Brady Group push to develop 80-level Queen Street tower

One of the Melbourne’s more enduring family-owned development companies has lodged plans for a soaring 80-level city skyscraper, adding to the long list of 43 proposals to be considered by whatever party forms government after this month’s election.

Local developer Brady Group, which has been building units in the city for more than 25 years, is banking on continued heat in the apartment market, submitting a proposal for a thin 220-metre tower on a relatively small 1290-square-metre site at 280 Queen Street.

The three-storey rendered brick office building on the site partially leased to Kliger Partners Lawyers will be demolished to make way for a $150 million tower with a blue curtain wall finish and 589 apartments.

The majority of dwellings – 287 – will have two bedrooms, with 242 one bedders and 36 three bedroom apartments. The tower will also have 14 penthouses on its top levels.

The property was purchased by Chinese national Xuebin Wu for $23.9 million last year.

Mr Wu holds a third portion of the holding company which lodged the plans for the site, suggesting an initial joint capital venture with, or buyout, by Brady.

A Brady Group spokesman said Mr Wu was no longer involved in the project. “It will be a Brady Group development,” he said. “Work will start in about 12 months.”

The site formerly had a permit for a 57-level commercial building with ground floor retail that was issued in 2013.

This story Administrator ready to work first appeared on Nanjing Night Net.

DIY super funds paying over the odds in interest

Big difference: It’s fair bet a lack of competition in the market for limited recourse mortgages is also a factor in the higher interest rates.Trustees of DIY super funds borrowing to invest in residential property through their funds are charged 0.7 percentage points extra in interest, on average, than for ordinary mortgages.

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That is for variable interest rate mortgages. The gap is the same, or a little higher, on one, three , and five-year fixed interest rate mortgages. Researcher Canstar estimates on a $300,000 variable interest rate mortgage an extra $54000 in interest would be paid by trustees to the lender over 25 years.

A mortgage for borrowing through a self managed super fund has to be a special type of mortgage called “limited recourse” where, if the borrower defaults, lenders have recourse only to the property.

With ordinary mortgages the lender has recourse to virtually all of the borrowers’ assets. That means there is less security for the lender with a limited recourse mortgage and one of the reasons lenders put forward to justify the higher interest rates they charge.

The Australian Prudential Regulation Authority, which regulates the lenders, requires them to put aside more capital for limited recourse mortgages than with ordinary mortgages, says Philip La Greca, head of technical services at AMP’s SMSF administration services.

That is money that cannot be used to invest for higher investment returns or lend elsewhere and is a further reason lenders put forward as justification for higher interest rates on limited recourse mortgages.

Doubtless, these are factors behind the higher interest rates, but they are unlikely to account for all of the gap which, at 0.7 percentage points, is a big difference. It is fair bet a lack of competition in the market for limited recourse mortgages is also a factor in the higher interest rates.

It is the big lenders, mainly the banks and AMP, who offer limited recourse mortgages with the second-tier players absent from the market. Lenders of limited recourse mortgages will often try to have the members of a fund sign personal guarantees.

A guarantee gives lenders recourse to the personal assets of members if the lender has to sell the property and the sale proceeds do not cover the mortgage.

Naturally, lenders want to have as much security for their loans as possible. The “sell” on the personal guarantee to trustees is that more can be borrowed.

Usually, the maximum loan-to-valuation ratio (LVR) on a limited recourse mortgage, without the guarantee, is somewhere between 60 and 70 per cent. With a personal guarantee, the maximum LVR is can be as high as 80 per cent.

No wonder borrowers opt for the personal guarantee. But the guarantee gives the lender almost as much security as with a standard mortgage.

Not only is the average interest on limited recourse mortgages higher, but the range in interest rates is greater than for ordinary mortgages.

Canstar data shows that while the gap between the lowest and highest interest rates on ordinary mortgages is 1.2 percentage points, the gap is 1.84 percentage points on limited recourse mortgages.

The extent of the range in interest rates between the highest and lowest among limited recourse mortgages makes it even more important to shop around.


This story Administrator ready to work first appeared on Nanjing Night Net.

Seven looks to US exploration program as control of Nexus swings

Seven Group Holdings chief executive Don Voelte says he has “no idea” whether control of Nexus Energy will end up with his company or if it will be placed in liquidation.

Seven paid $180 million for Nexus, which has triggered legal action and an investigation by the Australian Securities and Investment Commission.

“We have no idea whether we will end up with it or not,” Mr Voelte said on Tuesday, pointing out that Nexus is not only heavily in debt but has onerous capital spending commitments.

A disgruntled group of Nexus shareholders argues that if the company is liquidated the value of its assets would see some value flow to them.

With control of Nexus yet to be clarified, Mr Voelte pointed to the exploration success of a separate group investment in US acreage where there is the potential for a significant number of production wells.

Seven is working with Apache in the Canyon Wash acreage in Texas, which is being worked by Apache. Here, initial drilling results have signalled the property may be able to host as many as 400 production wells, Mr Voelte said, with bidding under way for other prospects as well.

“We thought Nexus was a good opportunity, albeit difficult. The biggest issue with Nexus is not only the debt that it had – it was a lot of debt – but the amount of capital needed to attain the value of its properties.

“That is caught up now with ASIC and in court, and we will see what happens and whether we end up with it or not.”

With the status of the Nexus buy stalled, Seven Group has bought into an exploration prospect in Texas, where horizontal drilling is under way into limestone shale.

“We’ve now drilled the first half a dozen wells and they’re coming in all winners,” Mr Voelte said. “Apache has not said anything publicly, but … they think this property can hold up to 400 locations for 400 wells.”

Mr Volte said bids for additional properties were also under way.

ASIC has delayed a decision whether to grant a waiver to allow for the transfer of shares in Nexus to Seven Group as it continues to consider the disputed issue of valuation for Nexus.

The delay in the ruling by ASIC may increase the likelihood that Seven Group will have to again extend the funding lifeline it has provided to Nexus as the troubled $180 million takeover proposal edges toward a resolution.

The $165 million funding facility, which was extended last month, lapses on Friday. A group of disgruntled Nexus shareholders claims funds would be left over if the company’s assets were liquidated.

Their concerns have not been reduced by the October 31 release of a further independent expert’s report that found that the takeover by Seven Group was the best solution for Nexus and did not unfairly prejudice shareholders.

This story Administrator ready to work first appeared on Nanjing Night Net.