High-End Showroom/Office Development

$9.3m Commercial Facility

Property Construction & Development Finance

$9.3m

Construction Finance to Develop High-End Showroom/Offices

Property Development

The Scope

An experienced builder-developer had an established relationship with an existing Bank who had provided funding for a number of developments, including some projects that were mid-construction.
The existing Bank had been supportive of the Group whilst they were in their infancy, and the Group had repaid the support by successfully delivering nearly 10 projects.
The Group had traditionally arranged the funding themselves and whilst they managed the process effectively, they admitted there was some information gaps throughout the funding process, particularly in relation to timing the amount of equity contributions.
A review of the recent funding arrangements suggested that the finance terms had not been adjusted to the lower risk profile of the Group after the successful delivery of the projects.
Nexus was engaged to manage the debt raising process for their next upcoming project – a high-end showroom/office project.

Prepared a comprehensive Information Memorandum that not only provided a detailed analysis of the current project, but also highlighted the quality of previous projects and proven ability to exit successfully.
Provided a recent Information Memorandum prepared on the building company that illustrated the strength of the building company on a stand-alone basis, providing additional support for the credit-worthiness of the Group.
Ran a formal tender process across the four major banks.
Compiled a summary of the Offers into a dashboard to enable the client to clearly see the pros and cons of each Offer, along with our recommendations.

We received three credit-endorsed Term Sheets from major banks, with the fourth bank advised not to present a Term Sheet as initial feedback indicated their terms were well outside of market.
Achieved gearing of 80% of TDC when assessed against PRSV (including value uplift) and 85% against actual TDC – meaning the client didn’t have to contribute any further equity after achieving the DA (i.e. nothing towards construction) and saving over $500k in cash
Pre-sale requirement of 50%.
Combined Line Fee & Drawn Margin of < 3.00% - a reduction of over 0.50% on current projects.
The received terms were an improvement from the incumbent bank on both LVR and pricing, and for this project the client has selected to start a relationship with a new bank.
The client still has a very good relationship with the incumbent bank and will maintain this – but it illustrates the benefit of introducing competitive tension to a finance relationship.
In outsourcing the finance process to Nexus, the client now has a proper understanding of the finance process & requirements, and it has saved them countless hours which has been reinvested into both their building and development companies.