Case Study: Don’t Give Your Bank More Security Than They Need!

A property investor with a decent portfolio of industrial and commercial properties was purchasing another industrial property. Even though he had quite a strong position, with a pretty low overall LVR and a strong ICR (Interest Cover Ratio, the most important income marker for commercial property investment lending), his bank was defaulting to a bank’s standard position:

“We’ll take security over the new property and bundle it together in our spider web of all securities against all loans”.

But he wasn’t sure if he actually had to do it that way…

After the STAC team undertook a review of his portfolio and the new intended purchase, we quickly identified that it was NOT necessary for him to agree to the bank’s standard structure.

STAC jumped in to negotiate with his existing bank, with our goal being to fund the new industrial property out of his existing debt facilities, keeping the new asset unencumbered.

This put him in a great position for future further acquisition opportunities – with the new property unencumbered, he had the flexibility to go later and seek a significant amount of funding from any bank or lender he liked if and when he chose to.

Not only did this put our client in a the seat of power, it also reduced his stress (it is a great feeling to know you own a property unencumbered!).

This case demonstrates just one way we strive to achieve great outcomes for our clients when navigating their real estate and business investments, as well as their personal wealth generation and protection.

At STAC, we never have a “one size fits all” approach – every individual’s or business’s situation, strategies and goals are different, so we always assess each situation as an individual case, carefully weighing all options, before advising accordingly so that clients may continue towards their goals with confidence.

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