It’s not often nowadays you see a 10 per cent coupon on a fixed interest offering, but the well-established Steller Group is doing exactly that and is backed by company and directors’ personal guarantees.
‘Steller’ was founded in 2006. Since then, they have orchestrated an end to end, property development business that delivers high quality residential real estate. They continue to have an appetite for other innovative property opportunities.
So why are they putting together an AUD 50 million capital raising at such a tempting rate of interest?
You can thank the APRA/Reserve Bank crackdown on property-focused lending for this opportunity.
The fact is that most of the innovative developments being built by Steller are keenly sought by owner occupiers, mostly downsizing from bigger properties.
This Steller Investment Bond opportunity is attractive for existing and future stakeholders as it diversifies Steller’s source of funding and lowers its cost.
Steller has already pre-sold ~$230 million worth of property in its home region and has a related project pipeline of ~$3 billion.
The Steller Fixed Interest Investment Bonds are issued through Steller Property Funds, a division of the Steller Group, under an Australian Financial Services License (AFSL) 306644.
What’s the risk?
Any company is taking a risk by doing business, but the Steller Group is not only offering a company-backed guarantee to investors, but the directors have also taken the unusual step of offering personal guarantees as an indication of their confidence in Steller.
The minimum investment required is $1 million.
The initial term of the Bonds is three years from the date of issue.
Steller states the interest payments will be calculated daily and paid quarterly in arrears.
Investors should note that the Bonds are not expected to be liquid and that they should be prepared to stay invested for the life of the bond.
The money raised will be lent by Steller Property Funds to Steller Group property development projects.
For a copy of the Information Memorandum, please contact Jarrod Brown.
Written by Andrew Main. Long established and objectively minded financial journalist, Andrew Main has an eye for what counts for investors.