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Property Finance

Commercial and industrial property remains a secure investment for entrepreneurs – either to provide long-term premises for their own businesses or as high-return capital investments.

For the individual small or medium enterprise, renting premises may seem to offer greater flexibility than ownership. However, long-term tenancy may not be guaranteed and the investment made in improving rental premises may be lost if a lease cannot be renewed. Property ownership offers not only security of tenure, but also enables entrepreneurs to grow the overall equity of their businesses. Calculations show that, by purchasing a property or properties for own use, small and medium enterprises can save up to 50% without compromising the business’s own cash resources.

For entrepreneurs seeking a property component for their investment portfolios, multi-tenant properties are a very attractive and viable option, as these can provide both capital appreciation and rental income.

Business Partners offers investment financing for a wide range of commercial and industrial premises and the expertise to match the needs of each individual business and/or entrepreneurial investor with the right property.

Business Partners provides up to 100% finance to SMEs to buy their own business properties.

When considering buying a property, think about the following:

• Is the business potentially able to generate sufficient cash flow to afford the regular repayments required?
• Is this the right property? ― consider location, facilities, size and condition
• Is the purchase price in line with the market value of the property?

• The operating business must be proven to be viable, able to afford the property and must have been in business for at least two to three years
• The property will be evaluated in terms of location, price, purpose build, facilities, size and condition
• The maximum repayment period for any property investment is five years

Business Partners will not only evaluate the property, but will also focus on the operating business. This means evaluating affordability, profitability, track record, and the entrepreneurs behind the business.

Business Partners shares in the appreciated value of the property over a period of time. The result of this transaction for the entrepreneur is the following:

• The entrepreneur secures the property and obtains an asset that may appreciate over a period of time
• The installment will probably be in excess of the rental payable in the short term, but the entrepreneur has no rent escalation concerns afterwards
• The entrepreneur can upgrade the property thereby increasing the value
• There are long term cash flow advantages

Business Partners co-invests in multi tenanted property projects. This arrangement is applicable where the investor is not able to or not keen to invest the full deposit (equity) required by a commercial lending institution. Business Partners will consider co-investing and offer other property related services. The criteria and financing arrangements can be summarised as follows:

• The investor identify a multi tenanted property and do basic due diligence
• Business Partners investigates the proposal and does a detailed due diligence as co-investor
• Both new developments and existing properties will be considered
• • A commercial lender will be invited to offer first bond finance. The balance needs to be contributed by the investors. The shareholding depends on the contribution towards the equity portion. (If the equity required is $1,000,000, then $500,000 contribution provides 50% shareholding.)
• Regular shareholders meetings are held
• The parties may decide when to expand or sell the property in question
• Typical projects are suburban or regional shopping centres, industrial parks and in some instances office units.