The MFS Property Enhancement Contracts Trust has completed its first investments, guaranteeing more than $10 million in presales at two separate apartment developments in New South Wales.
The MFS PECS Trust provides credit support for investors and developers who are unable to meet the requirements of banks and other lenders and progress their projects in the face of a difficult market for achieving presale or prelease requirements.
Sagacious Advisory, MFS’s structured finance advisory subsidiary, is responsible for origination, structuring and obtaining approvals for PECS exposures.
“PECS has now established itself as a valuable tool for securing the necessary financial backing to get a property developer’s, or investor’s, project off the ground by reducing the credit exposure for banks,” Sagacious Advisory director Kyle Richardson said.
“Following the completion of these two contracts in June, we are moving quickly to complete a number of other contracts, ranging in size from $3 million to $20 million, mainly in the NSW and Queensland property markets,” he added.
Richardson said PECS was the first vehicle of its kind and had been developed using Sagacious Advisory’s extensive knowledge of the current requirements of the development funding industry.
“While the majority of our transactions to date have been focussed on underwriting presales, PECS is suitable for all forms of real estate credit enhancement,” he concluded.
By Nelson Yap
