BMT & ASSOC specialise in providing financiers with the most thorough reporting standards, continually improving what we do to meet the changing needs of the construction finance industry. As this service is essentially a role required by the financier, some borrowers do not see the value provided. In attempting to change the perception of some borrowers, we have developed a number of additional services that can be provided directly to the borrower that can be used to assist project success.

Capital Allowance & Tax Depreciation Estimates

BMT & ASSOC can produce depreciation estimates showing a maximum and minimum range of depreciation for marketing purposes. The report will show the expected depreciable ‘plant and equipment’ within the building and the Division 43 construction write off allowance and can be presented to potential purchasers. We will provide enough scenarios to cover the range of property available for purchase within that development. This is a great marketing tool for developers selling the properties they have just finished building. BMT & ASSOC can generally complete these free of charge if we have undertaken previous work for the financier. By encouraging developers to utilise this service, the development may be sold more quickly, as astute investors often request depreciation figures before purchasing a property. Once the development is sold, the developer will be able to pay their loan back promptly, decreasing the risk of the payment defaulting.

Capital Allowance & Tax Depreciation Reports

Many property owners are not claiming the maximum tax depreciation and capital allowances on their investment properties. Any building irrespective of age will attract some tax credit for depreciation with respect to the plant & equipment items contained within the property including air conditioning, carpets, stoves, hot water services, etc. In addition some buildings will qualify for a Division 43 building write off allowance. BMT & ASSOC will:

Replacement Cost Estimates

As construction cost consultants, BMT & ASSOC are qualified to accurately identify the replacement cost of individual buildings for insurance purposes. BMT & ASSOC are able to provide this service on both new and old buildings, addressing such issues as changes in building regulations, fire protection requirements and building security. Replacement Cost Estimates are an essential part of the insurance process. Estimates include the basic replacement cost and allowances for demolition, professional fees and escalation of cost during the redesign and construction period. This ensures the insured value of the property is adequate to cover the full cost should disaster strike. If a new development was to be damaged in the event of a fire or natural disaster, and the developer didn’t have adequate insurance taken out, they could stand to lose a substantial amount of money. This, in turn, could impact the financial institution if the developer is unable to repay the loan amount.

Sinking Fund Forecasts

This report establishes the amount a building owner will need to set aside each year to accommodate future replacement requirements of common property items of strata complexes. Equipped with an expert appreciation of facility life-cycle costing, BMT & ASSOC provide a sinking fund forecast outlining all items, their estimated replacement date together with associated cost. A sinking fund prepared by a specialist helps to protect the developer’s investment by:

Purchasers may be more likely to purchase a property in a strata complex if the expected expenditure for maintenance has been detailed. This means there will be no surprises when it comes to paying for any maintenance issues. Offering this service to the developer may benefit the financier through, again, increased and faster sales of units within the development – thus ensuring the developer is able to repay the loan amount, and to be seen as providing a value adding service to the developer – resulting in increased repeat business.

                                               

Make Good Schedules

A topic of conjecture amongst landlords and tenants often occurs at the end of a lease when it is required that the premises be returned to ‘base’ condition. A report that outlines the amount and cost of work required to bring the building ‘back to base’ condition is often referred to as a make good schedule. Make good schedules can be prepared during a lease; as the expiry of a lease approaches; and after a lease has expired. BMT & ASSOC has the expertise to produce a report for either the landlord or tenant that is accepted as an independent assessment of costs, and is often used as a tool for negotiation between parties. Providing information to the developer on make good schedules will educate the developer on a service they may not have known existed and again, be seen as the financier providing a value added service.

Information for Developers

BMT & ASSOC are continually improving our report and service quality in order to keep up with the ever changing needs of the construction finance industry. This includes providing additional services where necessary.

Should you require information to pass onto your developer clients about the extra services BMT & ASSOC can provide, please don’t hesitate to contact our office. We can arrange information packs that detail all our services, and these can be easily handed out to developers during the loan process. This information may educate the developer about services that exist and could potentially aid in the overall success of the project.

Recently Completed Projects

Location: Central Coast, NSW

Project type: 68 unit aged care facility
Approx. Construction Cost Per Square Metre: $1,800/m²

Location: Port Stephens, NSW

Project type: 11 unit mixed use development
Approx. Construction Cost Per Square Metre: $1,100/m²

Location: Western Sydney, NSW

Project type: 47 industrial unit development
Approx. Construction Cost Per Square Metre: $750/m²

Location: Hunter Valley, NSW

Project type: 5 residential units
Approx. Construction Cost Per Square Metre: $1,200/m²

Location: North Sydney, NSW

Project type: Executive Residence
Approx. Construction Cost Per Square Metre: $1,500/m²

Disclaimer: This information should be read subject to the following conditions:

• Information is published as a matter of interest only and is not intended to be relied upon by readers. In any
situations which may be similar to matters herein readers should exercise and rely upon their own judgement.
• Neither BMT & ASSOC Pty Ltd nor any of its officers or employees bear any responsibility for any error in the
material published in this publication or in any previous publication, or for any damage or loss resulting from any reliance on any material published in this publication or in any previous publication.
• This newsletter is issued as a helpful guide and is not intended to, and does not cover all aspects of the topics discussed. Professional advice should be sought before any action upon these topics is undertaken.