A prominent luxury residential developer & builder contracted to purchase a city-fringe light-industrial building, which they were going to fit-out to make their own office.
The Challenge
Banks will often structure this as a standard property loan for the purchase, with a separate Equipment Finance loan on a significantly shorter term of around 5 years for the fit-out – which can mean hefty repayments – e.g. a $500k fit-out would cost about $110k per year in repayments, PLUS the property loan interest/repayments.
The Approach
Our first step was to engage a trusted valuer ourselves (rather than letting the bank order a generic valuation), scoped to complete a valuation on an “as is” basis as well as “as if complete” – similar to a property development.
This allowed STAC to negotiate funding terms with a Bank that were structured under a single property loan, thereby significantly reducing the monthly repayments.
The Outcome
Blending the purchase and fit-out funding into an amortisation period of 15 years with an interest rate of 2.48%, the repayments of the ~$3m loan came to approx. $20,000 per month.
Compared to doing a $2.5m property loan and $500k equipment loan, the repayments were about $70k per annum lower under our negotiated structure.
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