Finance for Car Dealership Acquisition
May was a big month for the Red & Co. Commercial brokerage team with some substantial development and investment loans settling. The largest was a $30 million dollar facility for the purchase of a number of car dealerships and storage facilities in the inner city suburb of Newstead, Brisbane. The properties had a combined road frontage of 688m with much of this to Breakfast Creek Rd, offering prominent retail trade exposure for current and future tenants.
Newstead has gone through a rapid gentrification in recent years from a low rise industrial suburb, to hosting many quality new residential and commercial developments. Most recent of these is the $150mil Mercedes Automall (first of its kind in Australia) and the new state of the art Bunnings. It is thought that in the foreseeable future, this site could be re-imagined as a city shaping new development of some sort.
The existing Asset was leased to a single tenant being Australia’s largest car dealership group – an ASX listed business with long wale and solid annual increases.
The transaction represented value for money, with the improvements and prime inner city land holding being acquired for far less than replacement value.
Red & Co. was mandated as the exclusive agents tasked with sourcing the best in market debt facility for the purchase with the final metrics broadly as follows:
- Final Loan amount of $30,250,000
- LVR 55 % (not there was the option to borrow up to 60%)
- Non-recourse borrowing structure (no director/equity holder guarantees with recourse limited to the security only)
- Low bank margin of just 1.67% above the BBSY
- Resultant all in rate for the borrower close to 3% pa Interest only
Through Red & Co.’s signature competitive tender process, we were able to field multiple offers of finance to fund the purchase of this prime asset. Unless you run such a process with the right bankers at each bank, you have very little chance of securing the best debt facility which could cost you $100,000 of thousands in interest and fees over the long term. Best to leave the task to a team of Commercial Brokers who specialise in this type of asset class. If you wish to discuss your asset and funding needs, please contact Greg Turner at [email protected] or Max Laverty at [email protected].
- CATEGORY Commercial Finance