Construction of Retail Development

$22.5m Commercial Facilities

Property Construction & Development Finance

$22.5m

Construction Finance To Develop Mixed Retail Asset

Property Development

The Scope

Clients had owned the parcel of land for +5 years before commencing the DA for a brand-new mixed retail centre.
We were engaged in the development some 12 months before the start of construction finance process; as there were different strategies and stages to model out for debt and with an everchanging risk appetite settings within the debt & capital markets, it was important we were involved with this project from the very beginning and were part of the entire project team.
The development had pre-commitments to GYG, 7/11, Oporto and Starbucks and is a long-term hold investment asset.
The client wanted to engage Nexus to manage the entire debt exploration process, provide advisory services on multiple funding scenarios and manage the entire valuation and QS process (instructing process and managing to ensure a smooth senior debt application process).

Having worked with the family group for +7 years and having been involved with the site from day one, we had an acute understanding of the group’s assets, background and cashflows which enables us to drive much more favourable outcomes within the debt market as lenders are comforted by the information quality and knowledge of the sponsors i.e. we know what lenders want to know.
The group is complex with numerous assets and diverse cashflows, so we needed to illustrate and “carve” this asset out to be stand-alone with no linkage to other group assets or cashflows.
We modelled out a variety of scenarios on a completed position and forecasted high-case and low-case LVRs and Interest Coverage Ratios; as this was an asset to hold for long-term investment.
We presented numerous strategies to stakeholders with our recommendations and suggested funding solutions for both stage 1 and stage 2.

We arranged a new construction finance debt facility for $22.5M with a non-traditional alternative lender i.e. a large non-bank fund.
We negotiated pricing of 1% upfront application fee with a 2.30% (+BBSY) Interest Margin and 2.30% Line Fee. At the time of the transaction, this was slightly above that of major banks; but it is offset by a swift approval (3 weeks) minimal contractor DD compared to a major bank, higher gearing, and minimal loan conditions.