Property Finance Structuring
Finance requirements for property development and investment opportunities are far more than getting a loan.
Finance Structuring has become a field of expertise, that if handled correctly, can have enormously positive outcomes in terms of returns to owners and shareholders.
Financial Structuring is all about understanding –
The Asset Parameters
Investors’ expectations
Risk Profiling
But how does that work?
Financial Structuring is all about understanding –
The Asset Parameters
Investors’ expectations
Risk Profiling
With that understanding then the correct combination of funding sources can be structured to include –
Principal debt
Mezzanine debt
Preferential equity
Loan equity
Investor equity
Shareholder structure and share types
Asset Parameters
When analysing a suitable finance structure, the consideration of Asset Parameters is a critical first step. There are several key areas that need analysis including–
Class of Asset
Type
Industrial
Retail
Commercial
Residential
Hierarchical Class
Position of the asset within its own market
Impact of Micro Economic issues relating to asset performance
Market position
Location of competition
Location of Generators
Structural
Structural integrity
Depreciation
Cap Ex Consideration
Maintenance Budget consideration
Tenancy Mix
Internal layout
Obsolescence
Opportunity for redevelopment
Value Analysis
Income analysis
Outgoings review
Energy Audit
Tenancy Mix
Opportunity for expanded development
Investors’ Expectations
Comprehension and understanding of the motivations and expectations of the Investor is of paramount consideration. Motivations can differ from investor to investor, and from property to property and can include –
Cash Flow
Capital Value
Redevelopment Potential
Asset Repositioning
Short term trade
Long term hold
Risk Profiling
In conjunction with the assessment of asset parameters, an asset will be Risk Profiled within the market and within the opinion of principal debt finders and equity investors. To be able to source the best funding structures and produce the best possible returns from an asset or project, means that the Risk Profile must be considered in detail. Rosel Sherwood provides expertise on analysing an assets’ Risk Profiling and providing solutions and outcomes to reduce Risk and increase value.
