PET - Plain English Taxonomy

Label:	Financial Risk Market Exposure Actual Property Land Development Amount
TREF ID:	DE8739
Data Type:	xbrli:monetaryItemType
Period Type:	instant
Balance Type:	debit
Business Description & Guidance:	This is the value of the reporting party's actual commercial property exposure to land development and subdivision, which should include: - claims and commitments recorded on-balance sheet; and - the credit equivalent amounts of off-balance sheet claims and commitments. Commercial property exposure is defined according to the nature of the risk. An exposure should be classified as commercial property risk, if the exposure is subject to the performance of the property market. For reporting purposes, an exposure exists when a facility has been provided for the development and/or subdivision of land, and the servicing and repayment of the facility is dependent on the cash flows generated through sale of the land, and/or from cash flows generated from other land development or subdivision activity owned by the borrower.

Usage

Form	Labels
ARF_230_0	Label: Guidance:	Actual Exposure Commercial Property - Land development and subdivisions The following points may assist to further clarify this general definition: - The definition excludes residential property loans for owner occupation and loans to individuals or families for investment in residential property. - Exclude loans to private family companies and/or family trusts where the residence is occupied by the directors or principal beneficiaries of the family trust. - Exclude loans to builders, construction companies or sub-contractors who are paid for the execution of their contracts by a third party and not out of the sale or rental of the property upon completion. If, however, they assume development risk, whether recognised as a developer or not, the exposure is classified as property exposure. - Rural exposures will generally not meet the definition of commercial property, unless the property has been acquired specifically for lease or resale, and where the servicing of the debt is dependent on such lease or resale (and/or the lease or resale of other properties). - Facilities to investment companies, property management companies and unit trusts whose success in business (and therefore the servicing and repayment of the debt) is predominantly dependent upon the performance of the property market are included in commercial property exposure. - Facilities provided for the acquisition of property to be used for generating income other than through rental or sale are classified under the industry from which the cash flow servicing the debt is derived. In such owner-occupied properties where part of the debt servicing is derived from rental income, the classification depends on the predominant source of debt servicing. If most of the servicing is by way of income derived from the owner's business, the exposure is classified under that business. However, if most of the servicing derives from the property itself, it is a property exposure. - The Australian and New Zealand Standard Industrial Classification (ANZSIC) codes may be used as a guide. Although ANZSIC was not developed for this purpose, property exposures will generally be to enterprises classified under ANZSIC 771 (Property Operators and Developers), and exclude those under subdivision 57 (Accommodation, Cafes and Restaurants). Also excluded are loans to enterprises classified under subdivision 41 (General Construction) unless they assume the development risk, as described above.

Form

Labels

ARF_230_0

Label:

Guidance:

Actual Exposure Commercial Property - Land development and subdivisions
The following points may assist to further clarify this general definition:
- The definition excludes residential property loans for owner occupation and loans to individuals or families for investment in residential property.
- Exclude loans to private family companies and/or family trusts where the residence is occupied by the directors or principal beneficiaries of the family trust.
- Exclude loans to builders, construction companies or sub-contractors who are paid for the execution of their contracts by a third party and not out of the sale or rental of the property upon completion. If, however, they assume development risk, whether recognised as a developer or not, the exposure is classified as property exposure.
- Rural exposures will generally not meet the definition of commercial property, unless the property has been acquired specifically for lease or resale, and where the servicing of the debt is dependent on such lease or resale (and/or the lease or resale of other properties).
- Facilities to investment companies, property management companies and unit trusts whose success in business (and therefore the servicing and repayment of the debt) is predominantly dependent upon the performance of the property market are included in commercial property exposure.
- Facilities provided for the acquisition of property to be used for generating income other than through rental or sale are classified under the industry from which the cash flow servicing the debt is derived. In such owner-occupied properties where part of the debt servicing is derived from rental income, the classification depends on the predominant source of debt servicing. If most of the servicing is by way of income derived from the owner's business, the exposure is classified under that business. However, if most of the servicing derives from the property itself, it is a property exposure.
- The Australian and New Zealand Standard Industrial Classification (ANZSIC) codes may be used as a guide. Although ANZSIC was not developed for this purpose, property exposures will generally be to enterprises classified under ANZSIC 771 (Property Operators and Developers), and exclude those under subdivision 57 (Accommodation, Cafes and Restaurants). Also excluded are loans to enterprises classified under subdivision 41 (General Construction) unless they assume the development risk, as described above.