Finance for Commercial Property without a lease
Red & Co Finance recently undertook the task of refinancing a commercial premises in Melbourne. The property was fit-out to cater to restaurant or cafe style tenants in a modern industrial style and presented in very good condition. The property was part of a prominent retail strip in the suburbs of Melbourne. This would have been an easy transaction except for the fact that the tenant was literally moving out just as we started contacting banks to refinance. This meant we didn’t have that all important rental income in place to support the deal.
This presented challenges, as generally, a commercial property is only as good as the lease in place! The borrower had limited other income sources.
Good thing we like a challenge at Red & Co. finance and we were able to utilise our strong relationships with our lenders to achieve the following positive outcome for the client:
- Rate of 7.04% (Interest only)
- LVR up to 65% achievable
- Establishment fee of 2%
- Capitalised interest for 12 months meaning the client did not have to pay the interest monthly
- No penalty for early repayment of the loan should they wish to sell
The benefit of this facility is that it accommodated the fact that the land lord simply needed time to secure a new tenant at which time the income would be rolling in again.
The client was also very fortunate to secure the funds at a rate of only 7% given the lack of income presented to support the transaction.
If you have a similarly interesting funding scenario you wish to discuss, feel free to get in contact with Greg Turner at [email protected] or 0417 698 345.
- CATEGORY Commercial Finance