Parent and potential SDA investor
Since reviewing the investor brief and engaging in discussion with a number of lenders, it seems the lenders have less confidence now than before. As a parent and family, we are willing to invest on our child’s long term future with an SDA property but the lenders feel there is a lack of commitment to funding long term. Now I have looked further into this, I can understand their concern.
My assumption that after the 5 year term has passed for fixed pricing, their would be some CPI based increase to the SDA price schedule. But this is not clear in any documentation that I am yet to find in order to establish some confidence with our lenders. The type of property we will develop is of robust category and we also have issues with property valuations as the additional cost of building a robust category development is not really reflected in the value of the final product as it is valued as a conventional residential property because of the SDA pricing uncertainty and the fact that a decrease in SDA pricing could lead to disposal of a dwelling as a “normal” building, again resulting in a loss of the investment to build as “robust”.
We need certainty in SDA pricing after the 5 year fixed term.
Thank you, Garry.