Stage 2 Capital Raise
An absolute beachfront, 73 unit luxury residential development on the 'best street' in the booming Sunshine Coast with $32.5m in pre-sales and structured to quarantine your capital and 40% fixed returns against a 30% drop in property prices
Hotspotcentral is offering you the opportunity to participate in a preferred equity capital raising to fund the building approvals and other related costs in stage 2 of a 73 luxury beachfront apartment development in Buddina on the Sunshine Coast. Notably, 30 pre-sales have already been achieved since launch mid-COVID with only another 13 sales (approx.) required to cover all the 1st mortgage debt plus investor capital and returns. The rapid number of sales during the covid pandemic- at prices above the valuers pre-covid estimate - should give investors an additional level of comfort that this second stage will be as successful as stage 1 where investors returns of 30% have been achieved.
- $50,000 - min investment
- 24 months - expected project term
- 40% - fixed dividend paid against profits
- Investor Type - retail, wholesale and SMSF
- Fees - $0
- Security type - Preference units in the project unit Trust giving you first right to the profit paid as a 40% fixed dividend
- Target Raising - $1.1m
- Status - open
- Note - more than 50% of the pre-sales required to cover mortgage debt and investors returns have already been achieved with, notably, $7.5m in sales achieved in one week during with a total of $32.5m pre-sales achieved during COVID and at 7% (average) above Valuers pre-COVID price estimates.
The information below is a summary of the broader information contained in the information memorandum.
Investors are offered a dividend from profits of up to 40% (depending on when they invest) which is paid net of all fees and taxes, and (importantly) paid in priority over the developer's profit share.
Stage 1 Investors earned 30% - in stage 1 of the project, a full development approval was obtained for 73 luxury units fronting the beach on the best street in the booming Sunshine Coast (as voted by all the leading Sunshine Coast estate agents). Investors in the 1st stage capital raise have earned a 30% fixed dividend with over 90% choosing to reinvest in this second stage for an additional 40% fixed dividend.
Retail investors allowed - under ASIC class order 02/0273, a limited number of retail investors and unlimited wholesale and sophisticated investors may invest subject to availability and maximum funds to be raised.
Project already successful - the Developer has achieved significant sales during the COVID19 pandemic with almost $30m obtained since the pandemic started. $7.5m in sales were achieved in ONE WEEK during July 2020. Additionally, actual sales prices achieved have exceeded the valuers pre-COVID estimate by 7% on average. Before COVID19 arrived, the valuer estimated 2-3 sales per MONTH could be achieved. In fact, 2-3 per WEEK have been achieved during COVID19 with some 5 sales in one week in July 2020.
Significant site equity uplift already achieved backing capital and returns - it is estimated the current site value is about $22m-$24m with the new DA and high level of pre-sales already achieved. This means there is approximately $8m in equity in the site (difference between settlement price and valuation). Investors have automatic first right to this equity should the site be sold prior to construction. Another risk mitigation consideration.
Quarantine your capital and returns
The project shows an exceptional profit margin estimate of $25-$30m. Investor capital and returns are already backed by significant actual sales, an independent valuation and a quantity surveyors report.
Notably, all investor funds and returns are "quarantined" in the profit pool - or paid first - due to the structure of this investment. Investors are allocated preference units in the project unit trust. Preference units are given automatic first priority over any profit distributions and rank ahead of the Developers returns.
Why's this important? AThe estimated profit margin can support price drops of up to 30% (costs as budgeted) before affecting your capital and returns. Given the project has already achieved sale prices that have exceeded the Valuers Pre-COVID price list, significant prices drops are unlikely to happen but this creates a powerful risk mitigation measure nevertheless.
50%+ Pre-sold Plus Quarantine Your Capital + Returns
Apart from the exceptional location and target end-buyers less impacted by economic shocks, more than 50% of pre-sales required to cover mortgage debt and investors returns have been achieved during COVID-19 and investors get their entire returns paid out before the developer sees any return.
FIXED DIVIDEND OFFERED
FIXED RETURNS UP TO 40% DEPENDING ON DATE OF INVESTMENT & PAID NET OF TAXES & FEES AND SUBJECT TO RISKS AND PROJECT PERFORMANCE AS DETAILED IN THE INFORMATION MEMORANDUM.
EQUITY IN SITE Approx.
INVESTOR CAPITAL AND RETURNS QUARANTINED WITH APPROX $8m IN SITE EQUITY AND FURTHER SUPPORTED WITH SIGNIFICANT PRE-SALES ACHIEVED SO FAR.
PROJECTED PROFIT MARGIN
WITH PROFESSIONAL REPORTS CONFIRMING: THE PROFIT MARGIN IS ESTIMATED TO BE 35%. PROJECTS WITH A LOT OF 'FAT' CAN SUSTAIN GREATER COST INCREASES AND PRICE DROPS. 2 FUNDING OFFERS ON THE TABLE FOR SITE SETTLEMENT AND CONSTRUCTION.
IF PRICES DROPPED BY 30%, INVESTORS WOULD HAVE FIRST RIGHT TO THE $4m PROFIT LEFT OVER. ACTUAL PRICES ACHIEVED BY JUNE 2020 HAVE EXCEEDED VALUERS ESTIMATE BY 7% ON AVERAGE SO THIS SCENARIO IS HIGHLY UNLIKELY REGARDLESS OF THE GENERAL MARKET CONDITIONS.
set amongst single detached houses within walking distance to key amenities including major shopping centre and schools
Comprising of 7 amalgamated detached homes, the project site is located on the absolute beachfront in Buddina on the Sunshine Coast. The site location has the remarkable benefit of being zoned 'medium density' in contrast to all the low-density zoned properties surrounding the project. This means the views will never be built out by other apartment projects and residents will enjoy uninterrupted 360° hinterland and ocean views.
The site is situated on an elevated position on a street recently voted the best street on the entire Sunshine Coast.
It all adds up: Booming Sunshine Coast region with huge infrastructure investment, beachfront position, uninterrupted 360° views, close to everything, on the best street in the entire Sunshine Coast. Plus - $22m in pre-sales during the pandemic prove significant market acceptance.
"I regard the Sunshine Coast as the strongest market in Queensland at the moment and indeed one of the strongest in Australia. the Sunshine Coast has diversified and strengthened and is now, I think, the nation’s most compelling growth story. It has a $17.7 billion economy, making it one of the largest regional economies in Australia, and on infrastructure it’s outspending several of the nation’s capital cities.
The top end of the market in particular has been boosted, thanks in part of the influx of well-paid medical specialists working in the new medical precinct, based around the $2 billion university hospital.
Terry Ryder | Hotspotting
Read full article here
KEY PROJECT SUCCESS FACTOR
Current buyers are owner-occupiers comprising of meeical professionals, interstate buyers, cashed up retirees and downsizers that appear relatively immune to economic impacts and have established secure savings and are mostly not reliant on the banks or on an income.
$30m+ of pre-sales have already been achieved during COVID-19 with only another 13 sales required to cover the investors returns and capital.
RETURNS TIED TO APPROX.
BASED ON PROVISIONAL VALUATION FOR BANK FUNDING, APPROX. 35 SALES WOULD COVER BANK DEBT AND YOUR CAPITAL PLUS RETURNS. SALES DURING COVID MARCH TO JULY TOTAL $3Om.
VOTED BEST STREET ON SUNSHINE COAST
PROJECT LOCATED ON THE 'BEST STREET' IN THE BOOMING SUNSHINE COAST AS VOTED BY 15 LEADING ESTATE AGENTS.
SHOPPING & SCHOOLS
RESIDENTS WILL HAVE A SHORT WALK TO THE 160+ SPECIALTY STORE KAWANA SHOPPING CENTRE AFTER A DAY ON THE BEACH. KIDS WALK TO SCHOOL AND THE BEACHFRONT RSL IS AROUND THE CORNER. MAGIC.
UNINTERRUPTED 360° VIEWS
THE APARTMENTS PROJECT IS UNIQUELY LOCATED AMONGST DETACHED HOUSES WITH MEDIUM DENSITY ZONING RESTRICTED TO THIS SITE ALONE. THIS MEANS VIEWS WILL NEVER BE BUILT OUT. A STRONG DRAWCARD FOR BUYERS.
Meet the Developer, Rob Scott and Hotspotcentral's head of research, Michael Fuller. Discover why sales are so strong in this project today and why your investment and returns are assured at this stage of the project (obviously subject to the risks).
Rob Scott (Developer) and Michael Fuller (Research, Hotspotcentral) discuss the project performance in the June 2020 Investor Update. Topics covered include how the key investment risks have been mitigated and what makes this such a successful project.
View the project sales video. Take a look inside the apartments with near to real life artist illustrations.
MASSIVE HEALTH PRECINCT NEARBY
The health and wellbeing industry is the Sunshine Coast’s largest employer. Around 2,000 healthcare related businesses employ more than 24,990 people (AEC Group 2018), providing the foundation for a dynamic and fast-growing sector.
Strong population growth will drive demand for health and wellbeing services, with an additional 198,000 new residents expected by 2041, in addition to a regional service catchment predicted to grow to 2.4 million people.
- New $5 billion Sunshine Coast Health Precinct
- New $1.8 billion Sunshine Coast University Hospital
- New $150 million Sunshine Coast University Private Hospital
- New $60.8 million Sunshine Coast Health Institute Rapidly
- growing and ageing population
AIRPORT EXPANSION COMPLETES IN 2020
Work on the Sunshine Coast's new $347 million international airport will conclude in 2020 allowing more direct international flights. Currently there are only seasonal flights to New Zealand. The project will enable direct flights to more destinations across Australia, Asia and the Western Pacific, enhancing national and global connections. It will generate jobs and economic growth, boost tourism, help export businesses and secure air access to the Sunshine Coast for generations to come.
"A world class tourism destination and a highly desirable place to live like the Sunshine Coast needs a world class airport",
Federal Infrastructure and Transport Minister Darren Chester said.
REASONS TO INVEST
- Absolute beachfront position
- 360° uninterrupted views of hinterland and ocean
- Zoned to never be built out
- Walk to all main amenities including Kawana shopping centre
- Surrounded by low density homes
- $30m+ sales during COVID
REASONS TO INVEST
- Investor capital and returns of $3.8m paid first out of $25m+ profits
- Prices achieved mid COVID beat Valuers pre-COVID price estimates by 7% on average
- End buyers fairly immune to economic impacts of COVID (sales prove this)
- Retail investors accepted
- Experienced fund manager
- Offer made under special ASIC Class Order 02/0273 to include retail investors
The Beach Houses are approximately 320m2 with direct beach access
TESTIMONIALS & RESULTS
With a history of delivering above-market returns, here's what some of our investors have said about us over the years. Some of these investors invested in stage 1 of this project and others have invested repeatedly across numerous projects.
Dr Kim Ngo
It has been enormously refreshing to find Michael and Hotspotcentral. Michael is very approachable, answers any questions promptly and clearly is an expert in his field, treating his clients with respect and as individuals always delivers timely updates that shows actual progress on the development...once you see your money back with the expected returns you know this is the real deal. It's a no-brainer - I have no hesitation recommending Hotspotcentral to others - only wished I had found you earlier!
KIM RECEIVED A 30% RETURN ON HER CAPITAL INVESTED IN 12 MONTHS
Banker, SMSF Investor
"A developer's 57% return on my cash without all the work. Everything ran smoothly." Hotspotcentral has been fantastic, the project has run smoothly and the finished product looks great. I knew Michael had some... of the best people on his team. Discount achieved in 11 months was $90,500...rents achieved 10% higher than original agent appraisal. Annualised cash returns 57% on money invested. Property cash flow positive. So in short really happy with the return – as this is a developer's return without all the work....
TRACY HAS SINCE INVESTED IN 2 PROJECTS WITH ANNUALISED RETURN ACHIEVED OF 57%
Michael’s passion, inspiration and enthusiasm to help others succeed is infectious and I find him to be an extremely trusted adviser in this field.
I have always been passionate about residential property and would regularly purchase Property Investment Magazines to keep up on the latest information where I discovered Michael's Boomscore location data (previously Boomtown) and I would test the results against different towns that I was familiar with in Queensland and New South Wales.
I followed 2 projects of Michael’s prior to being in a position to undertake my first experience as an Armchair Developer. During this time I had many communications with Michael. He was always and still is very patient and generous with his time which reflects Michael’s high ethical standards and I observed that Michael is very particular with the Developers that he partners with.
JULIE INVESTED IN 2 PROJECTS WITH ANNUALISED RETURN ACHIEVED OF 49.19% AND 30%
Juerg & Nicola Nydegger
"I wanted to make sure that we would not be losing any money."
I had had a previous experience buying a property through another company which had not been a great success, so I wanted to make sure that we would not be losing any money.
We like the fact that Michael has a specialised company but is still small enough that he is happy to have a chat and explain anything that we are not certain of.
JUERG & NICOLA HAVE SINCE INVESTED IN 4 PROJECTS MOST RECENTLY EARNING ANOTHER 30% FIXED DIVIDEND IN 13 MONTHS.
Jonathan & Brianna Mansfield
These have been the best investments I’ve made with continued growth even during the housing market downturn. I have seen my initial investment grow 30% over the previous 12 months with the opportunity to make an additional 30%. I will continue to follow Michael and appreciate his honest direct approach to seeking out and bringing to market the best investment opportunities.’
THE MANSFIELDS HAVE INVESTED IN 2 SMALL DEVELOPMENT PROJECTS BOTH DELIVERING RESULTS AS PROMISED (PIC TAKEN IN DISNEYLAND WITH SOME OF THE INVESTMENT PROCEEDS)
The results exceeded expectations and I'm very, very happy with the outcome! Not just financially, but the quality and detailed communications about the offer, the structure, the process, the progress reporting, and the project wrap-up including payout. All contributed to my comfort throughout the build, and all from my own armchair!"I achieved a 42% return on my $100,000 over 19 months. Have told my friends and family and will definitely invest with Hotspotcentral again."
JOHN HAS SINCE INVESTED IN 3 PROJECTS MOST RECENTLY EARNING A FIXED RETURN OF 30% (12 MONTHS) AND 42% (19 MONTHS)
FREQUENTLY ASKED QUESTIONS
Everyone including SMSF funds, wholesale investors and up to 20 retail investors.
The risks are relative depending on you unique circumstances and objectives. The specific risks of this offer are outlined in our Part 2 Information Memorandum. The general risks of investing in property developments are contained in the Part 1 Information Memorandum issued by Investire who operate the ASIC Class Order 02/0273 which regulated this offer.
As with all investments there are no guarantee as every investment carries a certain level of risk, however, there are structures in place to mitigate the risks. I addition, this is a maturing project with actual sales volumes and prices achieved indicating a high level of market acceptance supporting valuations and the project feasibility.
Yes, you can invest using your SMSF, a Trust, personal cash, mortgage offset cash. Any funds you wish to get an above market return on.
The situation may arise where you need your funds back earlier than expected. We do ask that you are prepared to commit the funds for a minimum of 24 month. There is no secondary market like the stock exchange where you can sell your unit in the project trust.
Zero. You get your returns net of fees and taxes.
Hotspotcentral has been sourcing projects for over ten years. Our Developer-partners are independent of Hotspotcentral and have a minimum track record and level of experience before their projects are considered. Hotspotcentral's DNA lies in property market research and was the first company in Australia to build a location research platform that algorithmically ranks 15,000 suburbs based on how they compare against 8 property market supply and demand indicators.
Cheaper 1st mortgage 'bank debt' will form the senior debt in this project. However, there is always a gap in funding as banks typically supply less than the developer requires to complete construction.
The banks typically lend a percentage of total development costs (TDC). Let's say it's only 60% of the TDC. The developer needs to get the balance of 40% from somewhere. This could be sourced from a mix of his own funds and a variety of other sources but he may still be short. So in order for the project to proceed, the developer needs to find more funding. The total funds raised from equity investors in this project amounts to around only 3% of the total project turnover.
Bank debt is cheaper but it might not make up the sole source of project funding.
The source of funding is usually either DEBT or EQUITY.
If the developer were to pay you an equivalent of 20% per annum like some providers out there are doing, you need to ask yourself, what is the SOURCE of those monthly distributions and can the project AFFORD to pay them if there is no revenue from the sales of completed properties at the time of making those monthly payments?
The answer is simple. We've seen competitors offering "20% pa paid monthly". What investors do not realise is that these monthly returns are paid to early investors from your capital. The developer might raise $5m but use 20% of that to pay the monthly 'returns'. These are not returns but repayments that could ultimately reduce the investors capital if the project runs out of funding sources.
What happens if the project is delayed? Where does the developers get more money to keep paying the investors their monthly 'returns'? Raise more capital? The project profits could quickly get eroded.
Good questions to ask are: "Are any of the monthly payments made from capital sourced from new investors? Is it possible that I could lose some of my capital when the project is completed."
We provide regular updates throughout the project. These include images, audio, video and are delivered on a timely basis. In fact, most of our clients tell us how much they love this part of the process (see a sample of our client testimonials).
Your money is deposited into the Trust account of the fund manager who operate this offer under ASIC Class Order 02/0273 and provided to the developer once the specific milestones are met. The developer then deploys the capital in accordance with this offer Information Memorandum.
No. Our Fund manager has special permission to issue this offer under an ASIC Class Order allowing for both retail and wholesale investors.
REQUEST INFORMATION MEMORANDUM
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