Helping a College Operator Move From Renting to Owning Commercial Premises
In this case study
Scenario
A mid-sized college operator had been paying a significant amount in rent for several years and wanted to purchase its own commercial premises.
The client had considered buying for some time, but the finance structure had not been clear enough to proceed with confidence.
The proposed purchase price was approximately $7 million, with the client seeking 80% lending.
The challenge
This was not a standard commercial property loan. The transaction involved:
- A trust holding the property for asset protection purposes
- The trading business providing corporate support
- Owner-occupied commercial property use
- An existing building with multiple tenants
- Rental income that appeared to be below broader market levels
- A high-LVR commercial finance structure
- A two-month settlement timeframe
The lender needed to understand both the property position and the underlying business strength.
How Bridle Partners assisted
Bridle Partners worked through the structure with the client, lender and valuer. The application was positioned around:
- The client's established business operation
- The strategic rationale for purchasing instead of continuing to rent
- The trust ownership structure
- The corporate guarantee from the trading business
- The owner-occupied nature of the property
- Valuation and tenancy considerations
- The proposed debt structure and servicing position
The focus was to present the transaction as a structured commercial finance proposal, not just a property purchase.
Outcome
Funding of approximately $5.6 million was arranged against a $7 million commercial property purchase, representing approximately 80% LVR.
The approved structure included a 3-year loan term, a 1-year fixed component, a majority interest-only structure and a partial principal-and-interest component.
The client was able to move from long-term renting toward owning their own premises.
Key lesson
For business owners paying substantial rent, purchasing commercial premises can be a strategic option — but the lending structure needs to be prepared properly before approaching the bank.
Thinking about buying your own commercial premises? Speak with Bridle Partners about the right finance structure before you approach the bank.
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