Refinance & Equity Release

$15.25m Property Investment Facility

Commercial Property Investment

$15.25m

Property – Medical Centre

The Scope

A brand new medical Asset was developed 12 months ago and was leased to around 66% occupancy at the time of the client engaging us.
The asset was geared at around 45% with a major bank but was also tied into other facilities as security.
On a standalone basis; the servicing was below 1x interest cover, as the asset was still being leased up.
The client wanted to realize equity against the asset and at the same time had the desire to look at options and advice on how to structure the asset to be standalone, which is challenging when interest cover is <1x

We started with commissioning a new valuation and we handled that for the client; ensuring the asset was valued at the best possible yields to extract maximum equity
We prepared the funding material and put together a group cashflow and asset summary and provided our non-bank capital partners a robust summary of the group and also provided what were in our opinion multiple exit strategies for the non-bank lender within the next 12 months.
We presented multiple funding scenarios for client consideration; a complex group with multiple asset classes, entities, and cash flows.
Highlighting the sponsor’s strength and asset quality were key factors in obtaining funding at 70% LVR.
To justify a higher funding premium over the major bank; we needed to structure the facility with uncontrolled cash-out equity release (Circa $4M) and also capitalize interest on a standalone basis until such time the asset is 100% leased and this would assist the wider group cashflows.

Credit approval in 3 weeks at 70% LVR against the standalone medical centre
12mth facility to enable ample time to have the asset 100% occupied and then refinance to a bank for cheaper funding costs.
The fund we partnered with for the transaction was very bullish on the asset class, the funding was approved with the $4m equity release and the exit strategies we presented were agreed upon as realistic.
An interest rate of 8.70% for an asset that couldn’t demonstrate 1x interest cover and a 70% LVR was a great result and enabled the equity release to be diverted to other projects.