Owned Occupied Property Acquisitions & Shareholder Buyout

$7.7m Commercial Facilities

Business & Corporate Finance, Debt Advisory

$7.7m

Commercial Property Purchases & Shareholder Buyout

Furniture Retailing

The Scope

Our client, a retail business with operations in all states, was reviewing the option of purchasing their own commercial properties for storage rather than using a mix of rented warehouses and self-storage across the capital cities.
After completing preliminary cost benefit, debt capacity & leverage analysis, we determined the cash cost to borrow for their own premises would be cheaper than the self-storage and conveyed our confidence in their ability to borrow 100% of the purchase price for commercial properties they were considering.
The cost savings, along with an ability to generate wealth creation outside of their core business, was very appealing to the client.
On the back of our advice, the client purchased two commercial properties totalling $3.5m.
In conjunction with pursuing the strategy of owning their own storage facilities, the client had to facilitate a shareholder buyout which included removing a number of residential properties acting as security for their facilities.
Nexus was engaged to arrange funding for the two commercial properties whilst also manage the shareholder buyout and security release with the existing financier.

Nexus prepared a comprehensive information memorandum that illustrated the strength of the business, the resilience of its cash flow in the face of cost of living pressures, and the significant reinvestment in the business over the past 2 years.
Highlighted the competitive advantages of the business which underpinned the strong credit risk profile.
Completed detailed debt servicing modelling, cost benefit analysis and debt capacity & cash flow leverage analysis.
Managed the valuation process including the selection and instruction of the valuers. To do so we leveraged our local valuer network to obtain trusted parties in other states.

We received a credit approval from their existing Bank within 2 weeks of submitting the application.
Total commercial funding package of $7.7m with commitment of continued support of the commercial property acquisition strategy.
The approved finance for the commercial properties was 100% of the purchase price over a generous 15 year payback (generous given the high LVR).
The shareholder buyout funding was approved with the release of three residential securities and the extension of the repayment term reducing the annual repayment by $225k.
In addition to above, where the security position of the bank was actually deteriorating, the customer margin was reduced by 0.50%, saving the client nearly $20k p.a.
The client now has the confidence to continue their property acquisition strategy which not only provides cost saving benefits but also enables them to grow their wealth outside of their core business.