Introduction
Our client is a property developer and investor active in several major cities in the Netherlands, with a strong focus on the redevelopment of noteworthy and iconic properties that shape the city's image.
The project encompassed financing the partial redevelopment of a historic building on the outskirts of downtown, coupled with new construction development on the neighboring property. In total, 114 housing units were built as part of this undertaking.
Asset Partners was enlisted to aid the client in securing financing on the most favorable terms.
Client goals
The client sought financing for both the construction phase and long-term investment financing. We aimed to secure this funding from a financier with whom our client had not previously established a financing relationship, thus enhancing our client's funding source diversification.
Our client's primary goal was to swiftly gain insight into the options and terms for the desired financing while minimizing interest rate risk. Key conditions included i) low interest expenses, ii) minimal to no repayments, iii) lenient covenants, iv) restricted collateral requirements, and v) unrestricted access to surplus liquidity during the investment phase.
Activities
Our initial work involved identifying the client's requirements and analyzing the available project information. In collaboration with the client, we refined the construction cost overview and developed comprehensive financial models. Additionally, we prepared a comprehensive financing memorandum for the project, with a particular focus on highlighting our client's track record.
Using the financing memorandum as a foundation, we conducted an extensive market survey that involved reaching out to both domestic and international financiers. The objective was to identify the most advantageous and optimal financing structure tailored to our client's needs.
We asked funders to lenders a funding proposal for:
1. onstruction financing only;
2. Investment financing only; and
3. Construction financing followed by investment financing
This approach is motivated by the fact that certain financiers are unable to offer construction financing but can provide highly favorable terms for investment financing. As a result, it might be advantageous to secure construction financing from financier A and arrange investment financing with financier B.
After evaluating the financing proposals received, we conducted an analysis to identify the most advantageous combination of financing options, determining the optimal financing structure for our client. Subsequently, we selected one financier from the received offers and engaged in final negotiations on the terms, ultimately concluding the transaction. Asset Partner oversaw the entire process, from inception to closing and the release of funds from the construction deposit.
Result
The efforts led to our client successfully securing the desired financing, achieving all objectives, and locking in favorable long-term interest rates at an opportune moment. The process provided our client with a comprehensive understanding of the market's available options, enabling them to make informed decisions and select the most optimal financing structure. Furthermore, a new financier was added to their existing financing relationships. An additional benefit is that we were able to secure a Green Certificate for a portion of the principal, which grants the client a 0.5% annual interest discount for a duration of 10 years.
Get in touch
Interested in expanding your funding networks? Contact Asset Partners and find out how we can help.
