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Joint venture property FAQ

Below you will find the most frequently asked questions about financing joint venture, or multi-tenanted, property investments.

  
Description
  

​A multi-tenanted property consists of a number of tenants situated on one property. Typical examples are industrial parks and shopping centres.

  

​Entrepreneurs often identify multi-tenanted properties, but do not have a sufficient deposit required by a commercial bank to purchase the property. BUSINESS/PARTNERS will consider partnering with such an entrepreneur on the basis of forming a joint venture and contributing with the entrepreneur to qualify for bank funding. The shareholding will be based in accordance to the equity contributed by each party.

  

​Each party (BUSINESS/PARTNERS and the entrepreneur/s) contributes towards the equity (deposit) and a commercial bank is approached to finance the balance. The equity is normally in the format of a shareholders loan account that may be redeemed once the cash flow permits this.

  

​Acquiring premises for investment purposes offers benefits such as long-term capital appreciation, reliable and market-related rental income and the possibility of a post-retirement income from the property.

  

We have a dedicated team with specialist property knowledge. The team assists in the viability analysis, negotiating a transaction, and utilises a team of specialists when necessary – often the case when a building needs to be erected.

The entrepreneur does not need to be involved in the management of the property. Our property management division can be contracted to manage the property. This includes maintenance, administration and tenanted placements.

  

​This varies from industrial parks (where the size of the units will cater for SMEs) to suburban or smaller regional shopping centres. The total value of these properties would be between R4 million to R75 million. The current average value per transaction is approximately R20 million.

  

​The entrepreneur identifies the property and approaches us with a reasonable portion of the required deposit available. We will then use a specialist team to work with the entrepreneur on the due diligence process and put together a proposal for all parties to consider. BUSINESS/PARTNERS will then forward the proposal to a bank for first bond consideration.