A Ghanaian real estate developer and manager has approximately $ 40 million of commercial real estate portfolio. Of this, $ 15 million financed by medium-term loans from African banks. The interest rate of these loans is extremely high. This is also the reason that the company is looking for a refinance at fair interest rates. This is thought to be 8% to 10%, depending on the further conditions. It is a client of a Dutch corporate finance office in Africa, with which we cooperate.
The total rental income in 2016 is expected to be $ 1.8 million. There is sufficient cash flow for debt service. According to recent estimates the total market value is about $ 40 million and the liquidation value approximately $ 32 million. This structure certainly offer plenty collateral against a loan of $ 20 million.
The real estate developer has the Ghanaian government awarded two high school projects that the government will take over after completion. For the construction of the two schools, the company needed $ 5 million expansion financing. Upon the sale of the schools to the government, the company realized an immediate profitable results.
The total capital thus amounts to $ 20 million:
- $ 15 million for refinancing existing loans;
- $ 5 million for expansion, which amount seeking to hold the company after the sale of the two schools to develop new projects.
For those interested, a teaser and after a confidentiality agreement available a comprehensive business plan.