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February 2012
$14.5M
67%
9.25% p.a. variable rate loan
Non-bank solution for a residual stock loan comprising 50 strata industrial properties in several locations within metropolitan Sydney. Assets predominately leased providing short term holding income to developer pending selldown into the owner occupier market. Concurrent settlement with two Lenders’ negating the need for the borrower to negotiate partial security releases with the outgoing bank. A single solicitor documenting both loans ensured this was a relatively seamless process.
Non-bank solution for a residual stock loan comprising 50 strata industrial properties in several locations within metropolitan Sydney. Assets predominately leased providing short term holding income to developer pending selldown into the owner occupier market.
Concurrent settlement with two Lenders’ negating the need for the borrower to negotiate partial security releases with the outgoing bank. A single solicitor documenting both loans ensured this was a relatively seamless process.
November 2011
“Stand alone” loan product with assessment based on the incumbent property lease alone with no undue reliance on other components of the client’s portfolio. This reduced complications that had arisen with alternate lenders who were requiring to analyse and determine the overall portfolio debt servicing feasibility – i.e. including consideration for related party commitments. Balmain in this instance was able to provide a simplified finance solution without the interest rate premium generally associated with such loans.
“Stand alone” loan product with assessment based on the incumbent property lease alone with no undue reliance on other components of the client’s portfolio.
This reduced complications that had arisen with alternate lenders who were requiring to analyse and determine the overall portfolio debt servicing feasibility – i.e. including consideration for related party commitments.
Balmain in this instance was able to provide a simplified finance solution without the interest rate premium generally associated with such loans.
Balmain structured a loan to a 75% LVR that enabled an equity release to be used for capital expenditure on other assets within the borrower's portfolio. This negated the need to divest assets to raise these funds. The borrower has the option (not obligation) to pay down the debt to a 70% or 65% LVR and receive a reduction in the interest rate margin at each step down hurdle. The loan was funded through a Non-Bank Institutional Lender that relied on a stand-alone interest cover of 1.2x without the need for related company guarantees. The transaction settled in 6 weeks from the borrower instructing Balmain to commence work.
Balmain structured a loan to a 75% LVR that enabled an equity release to be used for capital expenditure on other assets within the borrower's portfolio. This negated the need to divest assets to raise these funds.
The borrower has the option (not obligation) to pay down the debt to a 70% or 65% LVR and receive a reduction in the interest rate margin at each step down hurdle.
The loan was funded through a Non-Bank Institutional Lender that relied on a stand-alone interest cover of 1.2x without the need for related company guarantees.
The transaction settled in 6 weeks from the borrower instructing Balmain to commence work.
June 2011
Balmain has funded a number of similar transactions recently and our mortgage funds are open for business. Depending on your individual circumstances, this may present a cost effective way to: Pay down existing senior debt following a security property revaluation. Bridge a new commercial property purchase whilst selling down another asset. Fund minor building works, including building sustainability upgrades. Repay existing subordinated debt, shareholders loans or exiting JV partner. Release equity for another worthwhile purpose. Depending on the lease covenant, gearing and sponsor, we could provide a 75% LVR total interest rate (weighted average) between 8.45% and 8.75% p.a.
Balmain has funded a number of similar transactions recently and our mortgage funds are open for business.
Depending on your individual circumstances, this may present a cost effective way to:
Depending on the lease covenant, gearing and sponsor, we could provide a 75% LVR total interest rate (weighted average) between 8.45% and 8.75% p.a.
May 2011
The client is a long term property investor and developer with a large retail property portfolio. Following the completion of a shopping centre, their existing ‘Big 4’ lender failed to acknowledge the reduced risk in the client’s portfolio and was continuing to apply hefty interest rate margins and excessive loan covenants. We were of the strong belief that the lender had grossly undervalued the shopping centre. An accurate valuation was vital to the transaction and Balmain drew upon its property analysis skills to facilitate this and utilised its industry contacts to negotiate the refinance of the shopping centre to a more competitive deal. The regional bank that Balmain arranged the funding through was so appreciative of the quality business that we were able to negotiate that the valuation, legal and origination fees be reimbursed by the new lender. Balmain's expertise was utilised at many stages during the transaction and our new client was thrilled to be able to improve their lending structure on competitive yet straightforward terms.
The client is a long term property investor and developer with a large retail property portfolio. Following the completion of a shopping centre, their existing ‘Big 4’ lender failed to acknowledge the reduced risk in the client’s portfolio and was continuing to apply hefty interest rate margins and excessive loan covenants. We were of the strong belief that the lender had grossly undervalued the shopping centre.
An accurate valuation was vital to the transaction and Balmain drew upon its property analysis skills to facilitate this and utilised its industry contacts to negotiate the refinance of the shopping centre to a more competitive deal.
The regional bank that Balmain arranged the funding through was so appreciative of the quality business that we were able to negotiate that the valuation, legal and origination fees be reimbursed by the new lender.
Balmain's expertise was utilised at many stages during the transaction and our new client was thrilled to be able to improve their lending structure on competitive yet straightforward terms.
The client was a ‘new to bank’ borrower with a successful track record in property syndicates. Given the nature of the borrowing entity a non-recourse loan facility was required. The client purchased the property on favourable terms and executed a pre lease commitment with a major tenant. The pre lease included a commitment from the borrower for a post settlement fitout totaling $3M which was also required to be financed approx 4 – 6 months post settlement. The client's house bank could not match the structure, pricing and level of gearing offered by Balmain. We also funded the GST. During a period of economic uncertainty and a constrained credit market Balmain successfully: Work shopped the transaction with client, and the bank's credit, property risk and valuations team to ensure successful finance delivery and loan structure. Delivered a loan amount totalling 98% of purchase price or 65% of valuation. Secured finance against the future uplifted valuation amount once the lease commenced 4 months post settlement. Arranged for a 3 year fixed rate of 7.95% p.a. Significantly reduced the equity requirement for the borrower Provisioned potential finance for a $30M expansion on the residual undeveloped land
The client was a ‘new to bank’ borrower with a successful track record in property syndicates. Given the nature of the borrowing entity a non-recourse loan facility was required.
The client purchased the property on favourable terms and executed a pre lease commitment with a major tenant. The pre lease included a commitment from the borrower for a post settlement fitout totaling $3M which was also required to be financed approx 4 – 6 months post settlement.
The client's house bank could not match the structure, pricing and level of gearing offered by Balmain. We also funded the GST.
During a period of economic uncertainty and a constrained credit market Balmain successfully:
November 2010
Obstacles to Overcome Developer had 6 presales supported by 5% deposits (major banks require 10% deposits in the current funding environment). Developer unable to demonstrate ancillary income to service the residual debt once the project is completed The Solution Balmain has access to funds where presale requirements can be met on the basis of a satisfactory quantity of 5% deposit presales. We were also able to mitigate the development financier's concerns regarding servicing of debt once the project is complete by doing two things: Structure the loan to include an extra interest reserve for use when the development is completed. This allows the developer sufficient time to lease-up the unsold units and service the remaining debt through rental income. Demonstrated that Balmain has the capability to refinance the residual debt once the project is completed if required. By refinancing the loan quickly once construction is complete, the construction loan can be swapped for a more sharply priced term loan. This enables the developer to sell down the remaining stock over a 2 year period if this is the preferred strategy.
Obstacles to Overcome
The Solution
The borrower had an existing commercial loan with a major bank. The client needed $300,000 in additional funds to contribute towards a new project. Although the existing loan was lowly geared the bank would not advance any additional money as the client did not have adequate Group financial statements in place to support an additional advance. Balmain was able to raise the required funds with an alternate lender who considered the required loan amount on a ‘stand alone’ basis on the strength of the incumbent lease alone. No financial statements were required at all. We simply provided the lender with a copy of the lease and, as the annual rent could meet the required repayments, the lender was able to advance the required loan of $1,000,000, including $300,000 in 'cash out'.
The borrower had an existing commercial loan with a major bank. The client needed $300,000 in additional funds to contribute towards a new project. Although the existing loan was lowly geared the bank would not advance any additional money as the client did not have adequate Group financial statements in place to support an additional advance.
Balmain was able to raise the required funds with an alternate lender who considered the required loan amount on a ‘stand alone’ basis on the strength of the incumbent lease alone. No financial statements were required at all. We simply provided the lender with a copy of the lease and, as the annual rent could meet the required repayments, the lender was able to advance the required loan of $1,000,000, including $300,000 in 'cash out'.
October 2010
Borrower comprises a group of investors managed by a financial advisory company, so a non recourse facility was highly valued by the investors. The loan term was set at 3 years to minimize interest rate margins while giving the Borrower the comfort of a reasonable tenure. Lender offered various interest rate management tools to deal with a potentially rising rate environment.
Borrower comprises a group of investors managed by a financial advisory company, so a non recourse facility was highly valued by the investors.
The loan term was set at 3 years to minimize interest rate margins while giving the Borrower the comfort of a reasonable tenure.
Lender offered various interest rate management tools to deal with a potentially rising rate environment.
September 2010
The borrower is a professional property investor whose bank undertook a facility review which demanded a principal reduction of $190,000 to reduce the LVR to 65% and also resulted in an increase in their interest rate. Balmain was able to arrange the refinance of this facility through a new lender and provide the following benefits to the borrower: Maintain the existing LVR of 70% and avoid the required principal reduction which would have stressed the group's cashflow and possibly resulted in the sale of one of their properties in unfavourable market conditions Provided a 'set and forget', 15 year facility and the comfort from access to long term capital in the current tight debt market A reduction in their interest rate and improvement to the group's cashflow Provided a facility with the luxury of a 3 year fixed rate but with the flexibility of being able to make principal reductions on the variable portion without penalty
The borrower is a professional property investor whose bank undertook a facility review which demanded a principal reduction of $190,000 to reduce the LVR to 65% and also resulted in an increase in their interest rate.
Balmain was able to arrange the refinance of this facility through a new lender and provide the following benefits to the borrower:
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Snapshot as at 24 January 2020
Balmain Base Rates are our indicative base rates for commercial property lending. A lending margin is added to these rates depending on the nature and term of the transaction.