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The Beginning of Excel Development Group: A $200 million Portfolio

When one of Reg Rowe’s property business partners died in 2007, the BRW Rich Lister, who founded Super Cheap Auto, set about looking for a steady hand to run his multimillion-dollar real estate empire.

His accountant – Grant Thornton’s Mark O’Hare – knew just the person. He had another client, Peter Sherrie, who was heading up Stockland’s Queensland apartment business at the time, and he asked him if he would like to take charge of a wealthy, but very private local businessman’s property concerns.

Mr Sherrie was interested and after getting the nod from Mr Rowe, Mr O’Hare sent a text message through with Mr Rowe’s details. It was the beginning of the Excel Development Group, which now has a portfolio of more than $200 million across commercial, residential and, more famously, retail, which includes 33 large-format stores up and down the east coast, majority leased to Super Cheap.

“I said to Reg ‘I don’t just want to work for you, I want to come into the business’,” Mr Sherrie said. “I had been wanting to do some development for myself and this was an opportunity to have some skin in the game.”

FINANCIAL CRISIS HIT

Reg RoweReg Rowe.Photo: Glenn Hunt.

Mr Rowe accepted but right as the financial crisis hit. Values were plummeting. Feasibility studies were being binned.

“The biggest thing that impacts property is jobs,” Mr Sherrie said. “But when the financial crisis hit, the mines kept going and so we had a very good run up in central Queensland.”

Excel set up residential and commercial property developments from Emerald to Biloela and into Gladstone. It even joined the rush in speculatively building a commercial office tower – 51 Alfred Street in Fortitude Valley, Brisbane – with the expectation of more demand from white-collar, resource-related workers. Even Mr Rowe, who despises his estimated $871 million wealth being recorded in BRW, agreed to a rare photo shoot in front of the building’s construction.

But then commodity prices started to dive and vacancy rates shot through the roof. The building at 51 Alfred has only been saved by a focused leasing campaign and the emergence of a technology sector – although there is still some untouched space on offer.

“Yes we have been battered by the recent downturn in resources,” Mr Sherrie admitted. “The resources sector had controlled a lot of white-collar employment but now that has gone, too.”

GROWTH AREAS

As a former national president of the UDIA and a leader at Stockland, Lend Lease and Peter Kurts Properties, Mr Sherrie’s experience helped him pinpoint growth areas and new, quality developments. In a joint venture with private group RGD, Excel developed and kept ownership of Youi Insurance’s headquarters at Kawana Waters on the Sunshine Coast. The 7000-square-metre property known as The Edge is an award-winning building.

Furthermore, Excel has developed dozens of new apartments on the Sunshine Coast including Broadwater at Kawana Waters, which has sold out, and Saltwater also at Kawana, which is more than 80 per cent sold.

The company is also now about to roll out more than $70 million in apartments in Brisbane and Mr Sherrie is not concerned about oversupply.

“We have a very strong apartment market, driven by investors. We are yet to see any crazy price growth in the end price of an apartment.”

Last month, the company also bought Abacus Property Group’s Aspley Village Shopping Centre in Brisbane for $32.25 million. That will be a value-add play for Excel, which will test the company’s retail skills. But there are plenty of those.

“Reg has been very helpful on a lot of things, especially in retail. He understands how consumers walk into a shop and how they spend their money. He has also been invaluable in negotiating leases.”

Source: Business Review Weekly

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Finance

Investors Lead Home Loan Rush

Home Loan

Property investor lending in January has risen by 10.5 per cent, lifting the overall value of home loans to $28.7 billion in the month—an increase of 43 per cent on 2020.

The surge in the latest Australian Bureau of Statistics figures occurred across all states and territories, with the exception of the Northern Territory, to be 44.3 per cent higher year on year, the largest annual growth on record since 2003.

Owner-occupier lending for homes rose 10.9 per cent in January, 52.3 per cent higher than in January 2020, with first home buyers increasing by 9.6 per cent to be at the highest level since May 2009, mirroring the similar uptake following the global financial crisis and the introduction of the first home-owner grant.

Investor lending for housing lifted by 9.4 per cent, capping a 22.7 per cent rise across the last twelve months and revealing a renewed appetite in new loan applications.

The lift marks the the largest rise in new loan commitments for investor housing since September 2016.

The number of first home buyer loan commitments for investment purposes accounted for 4.4 per cent of all first home buyer commitments.

The HomeBuilder program, which offers grants of $25,000 to help construct or renovate a property, is also contributing to an increasingly febrile market.

 Home Loan

▲ The value of loans for alterations and additions in the three month to January 2021 is 40.8 per cent higher than the same time the previous year.

“Since the HomeBuilder grant was introduced in June 2020, there have been record rises in the value of construction loan commitments,” ABS head of finance Katherine Keenan said.

“Loan applications made late in 2020—prior to the reduction of the HomeBuilder grant on 1 January 2021—contributed to the strong rise in January’s construction loan commitments of 15.7 per cent.”

The value of new loan commitments to owner occupiers rose 10.9 per cent, the largest monthly increase since August 2020.

Owner-occupier first home buyer loan commitments accounted for 36.5 per cent of all owner occupier commitments.

Despite 6.5 million Victorians being put through two lockdowns in the lead up to January, the value of new loan commitments to investors also rose 12.9 per cent in the state across the month.

ANZ economist Adelaide Timbrell said Victoria has continued to play catch-up after its lockdown, with its total new lending moving from 15.2 per cent year on year in December to 29.7 per cent year on year in January.

“Government support is adding to the momentum of housing lending, with stamp duty concessions in Victoria, the first home owner deposit scheme and other first home owner concessions all reducing the initial cost of home purchases.

“Low rates—including an outlook of continued low borrowing costs—are fuelling the housing market more than other parts of the economy,” Timbrell said.

Loans to owner-occupiers for the construction of a new dwelling in the three months to January 2021 compared to the same time last year has tripled in Western Australia, up 221.7 per cent and more than doubled in Queensland to 164.9 per cent.

The Northern Territory recorded a 160.3 per cent boost while Tasmania and Victoria also recorded spikes of around 100 per cent.

HIA economist Angela Lillicrap said investors were now returning but remained more active in the market for established dwellings.

“The value of lending to investors increased by 17.6 per cent in the three months to January 2021 from the previous quarter.

“Low interest rates, rising house prices, higher savings and a demographic shift in demand towards detached housing and regional areas should ensure ongoing demand,” Lillicrap said.

National house prices grew slightly by 0.9 per cent in January to surpassed pre-Covid levels by 1 per cent, and be 0.7 per cent higher than the previous September 2017 peak.

 

Article Source: theurbandeveloper.com

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Finance

2020 saw 6,777 interest rate cuts across Australia’s home loan institutions

From 1 January to 31 December there were 6,777 cuts to home loans, with an average cut of -0.30%, according to Canstar’s database.

It recorded:

  • 880 cuts to variable rates for owner occupiers, with an average cut of -0.21%
  • 2,455 cuts to fixed rates for owner occupiers, with an average cut of -0.33%
  • 764 cuts to variable rates for investors, with an average cut of -0.21%
  • 2,678 cuts to fixed rates for investors, with an average cut of -0.32%

Over the same period there were 535 home loan rate increases, with an average increase of 0.20%.

On 1st January 2020 the average variable rate for owner occupiers paying principal and interest was 3.73% (80% LVR). Today that rate is 3.32% The lowest variable rate was 2.69% and it is now 1.99% (80% LVR) or 1.77% (60% LVR).

On the 1st January 2020 the average 3-year fixed rate for owner occupiers paying principal and interest was 3.15%. Today the average 3-year fixed rate is 2.30%. The lowest 3-year fixed rate was 2.69% and it is now 1.89%.

Australia's home loan institutions

Savings interest rates

From 1 January to 31 December Canstar recorded:

  • 529 cuts to savings, with an average cut of -0.18%
  • 262 cuts to regular savings accounts, with an average cut of -0.19%
  • 267 cuts to bonus savings accounts, with an average cut of -0.17%

On 1st January 2020 the average regular savings account rate was 1.12%. Today that rate is 0.43%. The maximum rate was 2.65% and it is now 1.75% (available for 4-months).

On 1st January 2020 the average bonus savings account rate was 1.47%, now just 0.75%. The maximum rate was 2.25% and it is now 1.35%.

 

Article Source: www.urban.com.au

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Finance

Home-buyer confidence at an all-time high

Home-buyers

More than two-thirds of respondents in a recent survey believe that the conditions are right to purchase a home – a level of confidence not seen since the onset of the pandemic.

Finder’s latest consumer sentiment survey, which involved a nationally representative sample of more than 20,300 respondents, found that 67% of Australians feel that now is a suitable time get on the property ladder, up from 42% last April.

This marked the first time that home-buying optimism has reached this level since the financial comparison site started tracking the metric in May 2019.

Confidence was highest in Adelaide, where 77% of those polled thought now is the right time to buy a home. This was followed by Melbourne’s 70%, Brisbane’s 69%, Perth’s 67%, and Sydney’s 59%. Numbers were not available for Canberra, Darwin, and Hobart.

Those expecting house prices in their areas to “significantly increase” also hit an all-time high of 19%, climbing from just 5% in September last year.

Meanwhile, respondents who anticipate property values to “somewhat increase” rose to 44% from a low of 18% back in April.

Graham Cooke, insights manager at Finder, said that the recent spike home-buyer optimism was a good indication of economic recovery.

“This rebound in buyer confidence is indicative of increased economic activity over the past few months, along with an optimistic outlook for 2021,” he said. “Not only did the Australian government do a better job than most at restricting the spread of COVID-19, but federal and state economic support measures helped prop up the property market.”

Cooke said that property prices in every capital city, expect for Melbourne, have reached a higher level compared to the same time last year, adding that he expected “this trajectory to continue,” especially with 86% of economists in a separate Finders survey predicting a full recovery of national house values this year.

However, Cooke advised prospective buyers to carefully consider the pros and cons “before taking the plunge in the current market.”

“Low interest rates and government assistance packages like the First Home Loan Deposit Scheme put buyers in a strong position. The potential removal of stamp duty in NSW will be another boon for buyers and may spread to other states,” he said. “If you’re thinking about dipping your toe in the market this year, make sure you have a strong credit history, and shop around before signing up for a home loan.”

 

Article Source: www.brokernews.com.au

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