Neighbourhood Shopping Centre Acquisition
$46.5m Property Purchase
Service
Commercial Property Investment
Funding Amount
Undisclosed
Funding Purpose
Neighbourhood Shopping Centre Acquisition
Industry
Property – Retail
The Scope
- Clients purchased a retail asset to add to their investment portfolio for $46.5M and were seeking a firm to run a tender process for the debt. At the same time they requested multiple options on the wider Group assets for the best approach to raise equity towards the purchase.
- The Group’s preference was to achieve the highest gearing possible to preserve cash reserves whilst also seeking feedback from on debt capacity and forward interest coverage scenarios as this asset was purchased at a time when most of the banking sector was adjusting risk appetites on retail assets and BBSY was moving upwards weekly.
- Our client engaged Nexus to run a formal debt tender process primarily to introduce competitive tension to ensure the lowest possible funding costs. Given they were managing a number of other significant projects in WIP, they didn’t want to divert time and energy into engaging the entire market themselves for this substantial purchase.
What We Did
- Prepared appropriate information memorandum with comprehensive group background and asset details for the market tender process. The material was prepared in such a way to ensure bank credit executives would understand and any potential risks could be mitigated very early on in the tender process.
- We instructed and handled the entire valuation process to ensure the report would be acceptable for 1st mortgage purposes.
- We formally engaged four financiers to pitch on the transaction.
- The client had very little involvement in the handling of conditions precedent of the loan and settlement; we take care of all of that to ensure a smooth process and most importantly saved the client hours of time.
The Result
- We received credit-endorsed term sheets on average within 3 weeks.
- Minimal covenants and reporting requirements.
- The transaction was settled with a bank at a margin of 1.85% above BBSY (at the time 5.10% all-up rate) with gearing that exceeded client expectations.
