Rent Roll Refinancings

Challenge

This company is a real estate holding entity that we began working with through engagement with the owners, on one of their separate operating companies. The owners had purchased a building with both the anticipation of growth within their operating company, as well as the goal of enhancing the value of the building itself via upgrades and remodels. The building required major renovations and was in need of additional tenants to support the mortgage payments. The owners came to us following successful collaboration on their operating company to help with financial reporting and monthly accounting. After successful renovations, the owners were looking to refinance the building in order to recoup contractor costs and needed us to help develop rent rolls and aid in banking conversations.

Solution

GrowthLab got this entity up and running on Quickbooks, while leveraging classes as well as bill pay software. Once historical cleanup and set up was completed, Growthlab worked with the management team to develop and then fine tune their rent rolls for the purpose of planning and refinancing potentials. As part of the rent roll process, GrowthLab did some research and analysis to understand local rent comps to drive cash flow, and therefore cap rates. In addition, we worked on setting up ongoing reporting for the higher purpose of understanding expenses, late payments from tenants, debt service covenants, etc.

Results

We were successfully able to work with this customer’s banking relationships in order to refinance at their desired cap rate and then pull some cash out of the building to help continuously grow their endeavors. Our goal was not only to help them recapitalize the equity of the building, but also help them deepen their relationship with the bank for ongoing and future work together. We simplified the accounting systems and financial reporting to streamline the ongoing monthly work needed and make it more efficient for the client. On an annual - and sometimes quarterly - basis, we continue to sit down with this customer and review cash flows, with a particular eye towards tax planning, tenant vacancies, building upgrade planning, and more.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice.