In 2006 the Hunter Region of NSW was identified as a future growth corridor.  The region was and still is benefiting from tourism, mining, aged care, defence and government infrastructure projects.
 
As such in 2007 we partnered with Chris Chapman of Pacific Lifestyle Developments, a Newcastle based developer with over 30 years experience. The goal was to work with Pacific Lifestyle Developments to capitalise the regions long term growth prospects.
 
The JV’s first project was a serviced apartment and residential apartment development in the Honeysuckle Precinct of Lee Wharf. More specifically the development included 81 serviced and non-serviced apartments, 995sqm of retail accommodation and a 98 basement car spaces.  The basement ground parking had been constructed by the previous vendor.

The Constellation Hotel Group, a short-term stay residential management business, was appointed to operate the serviced apartments. The Management Agreement maintains that the Constellation Hotel Group provide a lease over 70 serviced apartments for 5 years with a rental guarantee at a yield of approximately 6% per annum, indexed annually.

The project fundamentals were as follows;
 
1.  Newcastle was suffering from a shortfall in short term accommodation.

2.  The site was DA approved and hence the statutory risks were mitigated;

3. The basement had already been constructed by the previous vendor, and hence the construction costs and timeframe were shortened significantly;

4. The Developer secured the Constellation Group to lease 70 apartments at a 6% yield, meaning any unsold units would yield a strong income.
 
Construction was completed in March 2009.   The Project has achieved  pre-sales of 40%  to date with the balance to be sold post completion. The yield from the hotel operator, the quality of the apartments and the strength and resistance of the Hunter economy  has continued to attract investors and owner occupiers to the project. The Project continues to benefit from this demand.

Investors in the Lee Wharf Project Investment are expected to achieve the expected return of 22% p.a. and be repaid by December 2009.