The Internal Credit Team recommends adoption of an indicative Market Value range of $5.7M – $6.5M, central point $6.1M, on an as-leased basis under the executed Letter of Intent to the proposed arm's-length tenant, subject to satisfaction of conditions precedent.
This range supports the $140,000 bridge facility on a loan-to-value basis of approximately 2.3% — well within prudent lender tolerances. A formal Certified Practising Valuer instruction is required prior to any lender reliance, with recommended scope as set out in Section VII. The Team notes the asset class is specialised: indicative debt capacity under a tier-1 lender base posture (70% LVR, 1.50× ICR, 6.50% interest-only) is calculated at $4.27M (LVR-binding), with absolute ICR ceiling at $4.68M.
Three-storey Class 6 building on 335.1 m² combined site (Lots 8 & 9, DP 12036) at the Rockdale Town Centre node — approximately 100–170 m from Rockdale Station (T4 East Hills). 758 m² GBA / 586.5 m² NLA. Sixteen enclosed working rooms with en-suite shower/spa facilities; office; VIP suite; introduction lounge; bar/lounge area. Comprehensively upgraded 2018–2020 under DA-2018/7 + CC-2018/198; Occupation Certificate issued 17 December 2020.
Foundational use right anchored in NSW Land & Environment Court Order 30 April 1997 (Appeal 10088/1997) — 27-year established use; runs with the land; not subject to lapse. Zoning E1 Local Centre under Bayside LEP 2021, 34 m height limit, no mandated FSR maximum (Rockdale Town Centre node). Sits within the Rockdale TOD precinct under Housing SEPP 2021 Chapter 5 (effective 1 July 2024) — base FSR 2.5:1 with 30% bonus for ≥10% affordable housing. Material reconvertibility optionality to Class 5 medical use.
Subject to executed Letter of Intent (12 May 2026) from Nikolay Antonov ATF Energia Discretionary Trust: nine-year triple-net (3+3+3), $430k transition Year 1, $480k + CPI Year 2 onward, $215k security (BG + cash deposit hybrid) plus Personal Guarantee. Existing related-party Seven Skies tenancy to be surrendered concurrent with Antonov commencement. Conditions Precedent presently in cure: AFSS rectification ordered (~$14.3k), replacement specialist insurance binding this week, Fire Engineering Report recovery in train.
Cap rate adoption is anchored to recent industry research on the specialised hospitality asset class. Isolated-private market average sits near 7.5% net, with the band spanning 6.5%–8.0%. Adopted cap rate reflects single-asset specialised positioning with arm's-length covenant strength and reconvertibility premium balancing single-tenant exposure.
| Scenario | Cap Rate | Indicated Value | $/sqm GBA | $/sqm NLA | $/Working Room |
|---|---|---|---|---|---|
| Aggressive | 7.00% | $6,514,000 | $8,594 | $11,108 | $407,125 |
| Upper | 7.25% | $6,290,000 | $8,298 | $10,725 | $393,125 |
| Adopted · Base | 7.50% | $6,080,000 | $8,021 | $10,367 | $380,000 |
| Lower | 7.75% | $5,884,000 | $7,762 | $10,032 | $367,750 |
| Conservative | 8.00% | $5,700,000 | $7,520 | $9,719 | $356,250 |
Income Capitalisation indicated range: $5.7M – $6.5M; central $6.1M.
Two primary income-based approaches converge tightly at $6.08M central. The Cost Approach sits below as the sanity floor. HBU optionality (Class 5 medical conversion / TOD redevelopment) supports the upper end of the range as an additive premium, not standalone Market Value.
| Approach | Weight | Lower | Central | Upper | Cross-check |
|---|---|---|---|---|---|
| Income Capitalisation | 55% | $5.70M | $6.08M | $6.51M | NOI $456k ÷ 7.5% · primary |
| Direct Sales Comparison | 25% | $5.70M | $6.08M | $6.50M | 16 rooms × $380k = $6.08M exactly |
| Cost · DRC | 5% | $3.70M | $4.10M | $4.60M | sanity floor only |
| HBU Optionality Premium | 15% | +$0.30M | +$0.50M | +$0.80M | additive · Class 5 / TOD |
| Weighted Reconciliation | 100% | $5.32M | $6.05M | $6.78M | rounds to $6.1M central |
Per-room cross-check: 16 working rooms × $380,000 adopted central = $6,080,000 — matches Income Capitalisation exactly. Sydney metro medical building-rate band ($10,000–$13,000/sqm GBA) applied to subject 758 m² as if Class 5 conversion: $7.58M – $9.85M unadjusted; less ~30% use-class adjustment → $5.3M – $6.9M on current Class 6 basis. This cross-checks the Income Cap base.
Indicative debt capacity is constrained by the lower of two binding metrics — Loan-to-Value Ratio cap and Interest Coverage Ratio cap. The Team notes the ICR ceiling at indicative 6.50% interest-only is $4.68M regardless of asset value, calculated as NOI $456,000 ÷ (1.50 × 6.50%). LVR is binding across all realistic lender postures.
| Lender Posture | LVR | ICR | Rate | LVR Cap | ICR Cap | Binding |
|---|---|---|---|---|---|---|
| Tier-1 conservative | 60% | 1.50× | 6.50% | $3.66M | $4.68M | $3.66M (LVR) |
| Tier-1 base · recommended | 70% | 1.50× | 6.50% | $4.27M | $4.68M | $4.27M (LVR) |
| Tier-1 aggressive (w/ PG + BG) | 75% | 1.25× | 6.50% | $4.58M | $5.61M | $4.58M (LVR) |
| Tier-2 / specialised | 65% | 1.30× | 8.50% | $3.97M | $4.13M | $3.97M (LVR) |
Risk-adjusted indicative Market Value (probability-weighted): ~$6.8M (upside-tilted). The central $6.1M is the appropriate planning anchor for current-state Market Value; significant em