Specialised Securities

[Zedlum]

For my benefit and all the others new to this I thought it might be an idea to create a list of what are "specialised securities" from a financing perspective.

So far we have petrol stations due to EPA requirements and the possibility of large cleanup costs and child care centres due to over reliance on government policy to make the business model work.

Anyone got anymore to add to that list?

 

[datto]

taxis - govt policy - govt is to release 300 new taxi plates this year. This will create more competition.

 

[Zedlum]

Yeah, I have noticed quite a few taxi operations (multiple cabs) for sale over the last year or two.

 

[Scott No Mates]

Plenty of specialised securities out there: Telco leases (phone towers/rooftop installations), marinas, golf courses, long-term leaseholds, toll roads, special use properties eg laboratories, treatment works, petro/chemical plants, foundries, schools, contaminated sites (in general).

Those are from a valuation point of view (plenty of others out there as well). Some of the above are infrastructure (PPP others can be private or public ownership).

 

[Rolf Latham]

anything you cant use for a normal office or retail space, and sometimes mixed use space, because some comm lenders dont like the NCCP implications of the resi bit

ta
rolf

 

[Shahin_Afarin]

Buying a taxi licence is a poor investment IMO.

EDIT - in Sydney

 

[Shahin_Afarin]

Depends on what the loan type is. If its Resi then the list is huge.

 

[Aaron_C]

Add hotels/motels too.

 

[Zedlum]

Add hotels/motels too.

What is the issue with them? Are $$$$ tight for a freehold? I have seen some @ big yields and of course the leases are as long as you could want. I would assume it is simply that they are a single purpose building.

 

[Aaron_C]

I would assume it is simply that they are a single purpose building.

That is correct. They have no other use.

 

[Zedlum]

That is correct. They have no other use.

So are they hard to finance generally? or is it just a matter of the specifics i.e. the business case for each site? Are banks actually qualified to access this or do they rely on a third party to access the viability of a site? or is it one size fits all?

Lots of questions I know, just trying to get a handle on how this works. i.e is it a logical process based on real world site specific data or is it a finance sausage factory with some arcane set of rules?

Thanks for your time

 

[Aaron_C]

Some have an appetite for it, some don't. Some wil lend on it at a lower LVR (say 50%), others won't lend at all. Commercial is a bit hit and miss.

 

[Zedlum]

This is sounding like a crapshoot. Just keep rolling the dice until you get what you want.

 

[Aaron_C]

This is sounding like a crapshoot. Just keep rolling the dice until you get what you want.

Feels like that sometimes
That's for specialised securities though...not your standard shop/office.

 

[Zedlum]

anything you cant use for a normal office or retail space, and sometimes mixed use space, because some comm lenders dont like the NCCP implications of the resi bit

ta
rolf

OK.

I'm trying to get a handle on where there maybe some advantage to me not needing finance, at least in the initial phases of getting a commercial portfolio established. Take child care for example, if I take the time to get to grips with the real risks it looks quite probable that I can select a good site and get good returns simply due to the unwillingness of many financiers to go there.

I am wondering what other special cases are being treated unduly harshly by the banks. Cases where the group are being held accountable for the sins of a few.

 

[Zedlum]

Feels like that sometimes

Must make it tough to be professional! As a lay person I would expect you to be able to say to me... if you tick these boxes I can get you finance at around x for y type of property. Where as it sounds so very much more uncertain in many cases.

 

[Aaron_C]

Must make it tough to be professional! As a lay person I would expect you to be able to say to me... if you tick these boxes I can get you finance at around x for y type of property. Where as it sounds so very much more uncertain in many cases.

You can always find a lender. The question is how much do you want to pay? People all want 75% leverage, paying 5% interest rate and offer a petrol station as security. Ain't gonna happen.

 

[Zedlum]

You can always find a lender. The question is how much do you want to pay? People all want 75% leverage, paying 5% interest rate and offer a petrol station as security. Ain't gonna happen.

Yeah...

I wondered about the BP properties that have been on the market, long lease, good net, how wrong can it go? I guess that the banks know the net is good so they will want as much of it as they can get.

but then.... if you need little or no finance and the lessor is responsible for getting the site OK'd by the EPA at the end of it all... then maybe the risk is not that high in reality.

It may well be an opportunity if you take the time to understand all the issues.

 

[Rolf Latham]

You can always find a lender. The question is how much do you want to pay? People all want 75% leverage, paying 5% interest rate and offer a petrol station as security. Ain't gonna happen.

u can insure a burning house for the right premium

ta
rolf

 

[Rolf Latham]

but then.... if you need little or no finance and the lessor is responsible for getting the site OK'd by the EPA at the end of it all... then maybe the risk is not that high in reality.

in general, the risk assessors of lenders have a decent idea of what goes pear shaped mainly by experience I guess ?

ta

rolf