Cabernet Capital (“Cabernet”) offers a range of services to meet all the requirements of property developers and builders, including a capital raising package, project management services, assistance with “exit” of the development via underwrites and sales, and a full financial management service.
The capital raising package offered by Cabernet includes:
- A full project appraisal, incorporating a quantitative sensitivity analysis, sales appraisal and statutory compliance analysis.
- An analysis of the different capital options, including primary debt, subordinated debt (mezzanine finance) and equity.
- The writing of Information Memoranda for presentation to potential financiers and investors.
- Negotiating with potential financiers to achieve the optimal outcome for the developer, or builder.
The broad definition for each form of funding is as follows:
- “Capital” includes all types of capital, including equity and debt, regardless of the source of that capital.
- “Primary Debt” includes all debt that is secured via a primary, or “first tier” security.
- “Subordinated Debt” or “mezzanine finance” includes all debt that ranks below primary debt in respect of security (often has quasi equity characteristics).
- “Equity” includes all capital that is not primary or subordinated debt.
Our close working relationship with Luxwood Homes enables us to offer the complete project package, including housing – at market competitive prices. Indeed, currently many developments lack feasibility because the underlying land was not purchased at a realistic price. By introducing our Luxwood homes packages into the project, we are often able to structure profitability into the project.
Cabernet can also provide to the developer a full project financial management package, including:
- Maintenance of a bank account and payment of trade creditors.
- Payment and authorisation of progress claims and critique of any variation claims.
- Liaison with the project quantity surveyor, valuer, territorial authorities, engineers, sales personnel, et al.
- Liaison with, and reporting to, funders and investors.
- Preparation of monthly management accounts, and actual versus budget analysis.
- Attendance at design group meetings, site meetings and other project related meetings.
- Monitoring of key performance indicators.
Cabernet’s personnel possess a blend of experience and expertise in the construction, property development and manufacturing industries, enabling the company to offer comprehensive investment banking and project management services.
Relationships with parties that add value to the business operations of both Cabernet and its clients are particularly important, enabling Cabernet to offer a superior service to clients. It has strong relationships and unquestioned credibility with providers of primary debt (from both trading banks and non-banks) and mezzanine finance throughout New Zealand. (Notwithstanding, the majority of projects are funded by private debt providers, not trading banks).
In addition, Cabernet has a close association with other organisations that provide significant value enhancing services to Cabernet’s customer base. By utilising these relationships, Cabernet can arrange pre-sales and underwrites, and access funding packages throughout New Zealand.
Pre-Sales and Underwriting
Cabernet has relationships with many wealthy individuals, trusts and investment companies willing to underwrite the sales revenue for house and land packages, as required by financiers of property developments. Underwrites enable Cabernet to give comfort to the lender and can often determine the success or otherwise of a capital raising exercise. Cabernet practices a conservative approach to capital raising, a practice congruent with use of underwrites.
Mezzanine and Equity Funding
Many projects require mezzanine and equity funding, in addition to primary debt funding. Cabernet has excellent sources of the mezzanine and equity funding often required to finance a project, from a variety of sources, including non-bank lenders and individuals.
In very rare situations, Cabernet is required, on behalf of it’s clients and other parties with a vested interest in a project, to implement site and strategic management disciplines for the purpose of ensuring the successful completion of a project. The other duly appointed professionals engaged in the project (the quantity surveyor, project manager, engineers, et al) are often too close to the various parties involved in the project to be effective in such situations. Cabernet can objectively and fairly impose the changes needed from an arms-length perspective.