Bank Commercial Property Loans

Traditionally Commercial Property Loans are done by major banks.

Major banks are by design very sponsor centric. Their philosophy is that if we follow a good sponsor, then chances are that they will pick good properties and deliver good outcomes. So effectively a bank would first decide whether they are comfortable with the sponsor and only then would they look at the property and the location.

Bank Commercial Property Loans Sponsor Requirements

The minimum requirements of Bank Commercial Property Loans Sponsor would typically include:

Signed assets & liabilities statements and personal taxation returns for all the directors of the borrowing entity;
Past 2 years full financial statements, including balance sheet & profit and loss statements, for the borrowing entity and parent company;
Copies of ATO portals confirming that there are no outstanding or pending ATO liabilities; and
Full Group Cash Flow; providing the bank with insight into the next 12 months’ projected cash flow across all the projects of the group.
Stringent WALE requirements; and
Minimum of 1.5 times Interest Cover Ratios

In addition to the above Sponsor requirements, banks will also have Stringent WALE requirements; and the minimum requirements of around 1.5 times Interest Cover Ratios, the level of equity required, location and product mix.

It is important to note that banks, like any other lender, change their appetites from time to time. Just because you could borrow 60% of value from your bank 24 months ago, does certainly not guarantee that they would do the same loan parameters today.

Typical Lending Parameters for Bank Commercial Property Loans

Up to 65% LVR

MIN WALE of 4.5

Interest Rates from 3.5% p.a.

Typical Contributions for Properties with Bank Finance

Total Development Cost

40% Borrower Equity

60% Bank Debt

Bank Commercial Property Loans

Bank Commercial Property Loans

Bank Commercial Property Loans Sponsor Requirements

Signed assets & liabilities statements and personal taxation returns for all the directors of the borrowing entity;

Past 2 years full financial statements, including balance sheet & profit and loss statements, for the borrowing entity and parent company;

Copies of ATO portals confirming that there are no outstanding or pending ATO liabilities; and

Full Group Cash Flow; providing the bank with insight into the next 12 months’ projected cash flow across all the projects of the group.

Stringent WALE requirements; and

Minimum of 1.5 times Interest Cover Ratios

Typical Lending Parameters for Bank Commercial Property Loans

Typical Contributions for Properties with Bank Finance

Total Development Cost

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