Commercial Property Finance Lending Newmarket

Broker a Commercial Property Loan

Case Study: Commercial Property Purchase and Renovation Finance – Newmarket, Brisbane

Overview

Mortar Finance was engaged by an experienced property investor looking to acquire and reposition a commercial property in Newmarket, Brisbane. The client had identified a strong opportunity: a vacant or under-rented asset with clear potential to increase returns through renovation and re-leasing.

The strategy was sound, but the challenge was funding. The property was non-income producing at the time of purchase, and the client needed a lender who could look beyond standard servicing models and support both the acquisition and the renovation.

Through a tailored finance strategy using private lending and a planned exit refinance to a major bank, Mortar Finance helped the client purchase the asset, execute the renovation, secure new tenants, and refinance the project with a Big 4 bank, ultimately turning a $2.2M purchase into a $4M revaluation within nine months.

The Client’s Goal

The client’s objective was to acquire a commercial property that was either vacant or under-rented, renovate it, and lease it at market rates. This approach would allow them to:

• Purchase below full market value due to vacancy risk
• Improve the property through a strategic renovation
• Increase net rental income through improved tenancy mix
• Generate a significant uplift in valuation
• Refinance onto long-term bank debt once stable income was established

It was a classic “value-add” commercial property strategy, but one that requires the right finance structure to work.

The Challenge

While the client had a substantial property portfolio, their situation presented a common obstacle in commercial finance.

Even with significant equity across multiple properties, the client had limited free income available to support a new loan under traditional bank servicing requirements, especially for a property that was not generating rental income at the time of purchase.

The main hurdles included:

• The property being vacant or under-rented, meaning limited or no income for the bank to assess
• Banks generally requiring strong lease coverage before approving commercial lending
• The need to fund both the purchase price and renovation costs
• Tight settlement timelines that required a lender who could move quickly
• A clear refinance strategy needed to ensure the private loan was temporary and not long-term

The client required a lender who could support the entire journey: purchase, renovation, re-lease, and refinance.

Mortar Finance’s Solution

Mortar Finance designed a staged lending strategy that matched the client’s end goal and supported their immediate needs.

Instead of forcing the project into a traditional bank structure (which was unlikely to be approved in time, if at all), we worked with the client to use their existing equity and access private finance to fund:

• The property purchase
• The renovation works
• The short-term holding period while leasing was secured

Private lending was the ideal tool for this phase because it focuses on the strength of the asset, equity position, and exit plan rather than requiring full servicing on day one.

The strategy was built around one key principle: short-term private finance with a planned exit refinance to a major bank once the property was income producing.

The Value-Add Renovation Strategy

After settlement, the client moved quickly to implement the renovation and repositioning plan.

The renovation works were targeted and commercially strategic, focusing on improving the building’s layout and increasing the number of income streams. The client:

• Completed a full renovation of the property
• Reconfigured the space to improve lettability
• Converted three tenancies into six smaller tenancies
• Increased flexibility for tenant demand in the local market

This repositioning made the property more attractive to a broader range of tenants and reduced vacancy risk by spreading income across more leases.

Following the renovation, the client successfully leased all available space to new tenants on 2–3 year lease terms, creating stable income suitable for bank assessment.

Approval & Funding Process

Mortar Finance worked closely with the client and the private lender from the outset to ensure the proposal was structured correctly and approved quickly.

Key steps included:

• Detailed discovery with the client to understand their portfolio, equity position, and investment strategy
• A clear breakdown of the renovation plan and costings
• A well-defined refinance strategy showing how the private lender would be paid out
• Communication with the private lender to confirm appetite, funding limits, and conditions

Because the lender received a complete strategy upfront—including the exit plan—approval was fast and efficient.

Private finance was approved in just 7 days and the loan settled in line with the contract requirements.

Refinance Outcome: Big 4 Bank Funding

Once the renovation was completed and the property was fully leased, Mortar Finance initiated the refinance process.

With the new leases in place and improved cash flow established, the property was revalued at $4 million, up from the original purchase price of $2.2 million.

Using the new valuation and lease income, Mortar Finance refinanced the private loan to NAB, providing the client with:

• A lower long-term interest rate
• Stable commercial bank lending
• Improved cash flow outcomes
• A strong uplift in equity position

The refinance to NAB was completed within 9 months of the initial settlement, which was three months ahead of the private loan term.

Final Result

This strategy delivered an outstanding commercial outcome for the client:

• Purchased a vacant/under-rented property for $2.2M
• Renovated and repositioned the asset
• Increased tenancy count from 3 to 6
• Leased the entire building on 2–3 year leases
• Achieved a revaluation of $4M
• Successfully refinanced from private finance to a Big 4 bank within 9 months

Conclusion

This Newmarket project is a strong example of how the right financing strategy can unlock commercial opportunities that traditional lenders may not initially support.

By using private finance as a short-term tool, and planning the refinance pathway from day one, Mortar Finance enabled the client to acquire, renovate, re-lease, and refinance, creating significant value and equity in under a year.

For investors seeking to purchase vacant or under-rented commercial properties, this case study demonstrates the power of structured lending, strong lender relationships, and clear exit planning.

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