Commercial Property Investment
Commercial property lending is a numbers game. Getting those numbers right and knowing which lenders want your deal — is where the real value lies.
Rated 5 from 32 Reviews
Commercial property lending is a numbers game. Getting those numbers right and knowing which lenders want your deal — is where the real value lies.
Rated 5 from 32 Reviews
Tim Sheehan spent seven years in commercial banking with NAB before founding TS Finance Broking in 2013. That background wasn't just a starting point, it shaped how we approach commercial property lending and it's the reason our commercial clients keep coming back.
Commercial property investment lending is a different discipline to residential. Lenders assess it differently, price it differently and apply very different criteria depending on the asset type, tenancy profile and portfolio metrics. A broker without a deep understanding of commercial credit policy won't necessarily know which lender is right for a deal, how to present the metrics, or where there's room to negotiate. We do.
Our commercial property clients typically hold portfolios of investment properties — industrial, warehousing and office assets — and we work with them on an ongoing basis, not just at acquisition. Getting the right loan at the right time is important. But so is monitoring the portfolio, understanding when conditions favour a repricing or refinance, and actively managing the cost of debt over time.
In commercial property, a small difference in interest rate across a large portfolio can represent tens or hundreds of thousands of dollars annually. That's not a rounding error, it's the difference between a portfolio that's cashflow positive and one that isn't.
Unlike residential lending, which is largely driven by borrower income and LVR, commercial property lending is primarily assessed on the income-producing capacity of the asset itself and the quality of the tenancy profile. Lenders have clear appetite statements in this space and the metrics they focus on are specific.
Understanding these metrics and how to present them is fundamental to getting a deal approved at competitive terms.
| Term | Abbr | What it means | Why lenders care |
|---|---|---|---|
| Interest Cover Ratio | ICR | The ratio of net rental income to interest expense. Measures whether the property generates sufficient income to service the debt. | Most lenders require a minimum ICR - typically 1.5x or higher depending on asset type. A stronger ICR signals lower risk and can attract better pricing. |
| Unrecoverable Outgoings & Net Passing Rent | NPR | Understanding what outgoings are covered by the tenant and what are covered by the landlord is vital in determining what the actual NPR is. | NPR is the actual cashflow generated by the asset, prior to financing costs. It is a key element in calculating an accurate ICR, which is a key metric in Commercial Investment lending. |
| Weighted Average Lease Expiry | WALE | The average time remaining across all leases, weighted by income. Measures the stability and longevity of the rental income stream. | A longer WALE means more income certainty. Lenders prefer it - shorter WALEs increase vacancy risk and can reduce lending appetite or increase pricing. |
| Tenancy Schedule & Profile | A detailed summary of all tenants, lease terms, rental amounts, expiry dates and any incentives or options to renew. | Lenders assess tenant quality, concentration risk and lease structure. A diversified, high-quality tenancy profile with staggered expiries is far more bankable than a single-tenant asset with a short lease. | |
| Loan to Value Ratio | LVR | The loan amount as a percentage of the assessed property value. Commercial LVRs are typically lower than residential. | LVR limits vary by asset type. Industrial and warehouse assets typically attract higher LVRs than office or specialised assets. The right lender match matters significantly here. |
Asset type matters — lender appetite varies significantly
Not all commercial property is assessed the same way. Lenders apply different LVR limits, ICR requirements and pricing depending on the type of asset. Some lenders actively seek certain asset types; others have limited appetite or apply more conservative policy.
Common asset types we work across include:
Knowing which lenders are actively seeking which asset types and where current appetite and pricing is strongest is part of what we bring to every commercial deal.
Commercial property investment is fundamentally a cashflow business. Rental income typically grows over time through annual fixed increases or CPI-linked reviews built into commercial leases. But the cost of debt is the largest variable expense in the portfolio and it's the one most within your control.
When you're carrying $10M, $20M or more in commercial debt, a 20 basis point reduction in your interest rate isn't a minor improvement. It's $20,000 to $40,000 per year in savings — every year, for as long as the facility runs. The difference between a portfolio that's cashflow neutral and one that's genuinely cashflow positive can often come down to whether the financing has been actively managed or simply left to sit.
This is why we don't just arrange finance and move on. We maintain ongoing relationships with our commercial clients, monitor their portfolio metrics and actively look for opportunities to improve their position, whether that means repricing with the existing lender, refinancing to a better option, or simply being ready to move when market conditions shift.
One of the most important things we bring to commercial clients is a clear understanding of when a portfolio is genuinely positioned to attract competition from lenders — and when it isn't.
A portfolio with vacancies, a short WALE or a tight ICR will have limited lender appetite regardless of who you approach. Pushing for a refinance before the metrics support it typically results in disappointing outcomes — higher rates, reduced leverage or outright declines.
The right approach is to understand what lenders want to see, work towards those metrics, and move when the timing is right. That requires a broker who understands commercial credit policy, monitors your portfolio on an ongoing basis and is willing to be patient rather than transactional.
Both of our case studies below illustrate exactly this point.
MS
Martin Seehuusen
Superb service, knowledge and friendliness. We are very happy that family put us in contact with Tim and his crew. It's been a great outcome each and every time!
SW
Shannon Wilkins
Tim you and your team were very helpful though out the whole process answering our questions very quickly and giving us advice all the way through the whole process. Would recommend you to anyone.
BS
Brendan Sheehan
We had a terrific experience with Tim and Jayden for what is typically a stressful process. In particular, the clarity and consistency of their communication were exceptional. Their solution-oriented approach, depth of expertise, and ability to address and resolve issues in a timely and effective manner made for a seamless process.
| Scenario | Challenge | Strategy | Outcome |
|---|---|---|---|
| Long-term commercial investor referred by existing client | Client accepted bank's assurances at face value | Conducted detailed portfolio review against commercial credit benchmarks | Interest costs reduced by $150,000 per annum |
| Substantial portfolio held with a major bank for decades | No competitive tension had ever been created | Presented portfolio strengths in language aligned to lender risk assessment | Achieved without refinancing - no valuation fees, no establishment costs |
| Consistently told by their bank that rates were competitive | Portfolio strength was not being reflected in pricing | Created genuine competitive tension without committing to refinance | Implemented within weeks |
| Low LVR, strong ICR, solid WALE across the portfolio | Refinancing would trigger valuation costs, fees and disruption | Engaged existing lender directly - challenged assumption that pricing was market-leading | Existing banking relationship retained |
| Scenario | Challenge | Strategy | Outcome |
|---|---|---|---|
| Long-term client with growing commercial portfolio | Portfolio not yet positioned to attract aggressive lender competition | Maintained ongoing relationship and monitored portfolio metrics closely | $20M portfolio repriced from BBSY + 2.30% to BBSY + 1.58% |
| Portfolio funded through our office over several years of purchasing | Key metrics - ICR, WALE, occupancy - needed improvement | Recognised when ICR, WALE and occupancy reached a bankable threshold | Interest savings of more than $100,000 per annum |
| At time of acquisition: vacancies and weaker metrics | Refinancing prematurely would not have achieved a better outcome | Assessed lender market for active appetite at that point in time | Multiple lenders competed for the business |
| Pricing accepted at BBSY + 2.30% to support growth strategy | Client needed to build and stabilise before going to market | Approached incumbent lender first, then created genuine market competition | Significantly improved portfolio cashflow |
Whether you're looking to acquire a new asset, refinance an existing portfolio or simply want a second opinion on whether your current pricing reflects your risk profile — we'd welcome the conversation. Book an appointment and let's look at where your portfolio sits and what's possible.
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TS Finance Broking ABN: 30 162 136 790, TS Finance Broking Pty Ltd ABN: 30 162 136 790. Credit Representative #436865 is authorised under Australian Credit Licence #389087.
Disclaimer: This page provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances and your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.
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