Using commercial property to raise capital
Commercial properties are the largest asset for a number of New Zealand businesses. However for the majority of these organisations the asset sits relatively unproductive, generating little to no cash flow.
At Avant-Garde Capital we partner with the property owner to convert this asset into cash, whilst ensuring the business retains the benefit of the property through a long term lease. The partnership is designed to ensure the business operates exactly as they would had they retained ownership of the property, but they benefit from a large scale cash injection that can be deployed to enhance their business.
Traditionally many businesses have preferred to keep their commercial property on their balance sheet, however when you look at the majority of large scale organisations such as banks, national and international retailers and almost every NZX50 company, you will see that they have sought liquidity to inject into their business, rather than having been focussed on building a large asset base through property. With our unique model your premises are protected through the lease, but your financial position is drastically improved through the sale of the property.
What we look for when assessing commercial property investments
There are a range of factors we take into consideration when assessing whether an investment is beneficial for all parties. Whilst some investors will buy anything for the right price, we are very specific about the commercial properties we purchase. A few key factors that we are looking for include:
The tenant and their history, both at the property in question and with prior locations
The length of the lease and the willingness of the tenant to commit to a long term relationship
The location of the property and any seismic strength of the building
The industry risk associated with the tenant and surrounding properties
What's different about Avant-Garde Capital and an ordinary commercial property investor?
The major difference with our business model is that we're looking for long term relationships. Whereas many commercial property investors simply want to ramp up the cap rate and sell the property for a quick capital gain, we're looking for predictable long term returns.
This provides an element of certainty for the business throughout their occupancy, and we've proven that all parties can benefit from the sale of the commercial property, both in the short and the long term.
What's involved for Avant-Garde Capital to buy a commercial property?
The first thing to do is to reach out and see if the property is going to meet our investment criteria. The contact form at the bottom of this page can be used to provide an overview of the property, and from there we will make contact to discuss the next steps. The whole process is relatively simple, with most of the due diligence being able to be completed remotely, however we always like to get on a plane and meet the people we're partnering with. We will ask for the lease agreement, alongside any other information specific to the property, and we're always willing to sign an NDA should confidentiality be important.