Receivables Monetisation Funding Solution for Real Estate-focused Sponsor (Lender)

CLIENT CHALLENGES

A real-estate-focused client was looking to fund an under-construction development project for a key relationship
Key challenges faced by the client were as follows:
- The client was unable to fund the project owing to internal investment limit guidelines on single-party exposure
- It wanted to propose a non-traditional deal structure to its Investment Committee
- It suggested a receivable monetisation plan for the developer’s multiple projects to distribute counterparty risk
- The client sought Acuity Knowledge Partners’ help to execute the proposed solution, as it wanted to proceed with the deal to maintain its relationship with the developer

Acuity Knowledge Partners conducted a detailed white boarding session to understand the deal’s background and the funding solution to be executed
The cost outlay, receivable realisation, cost mismatch, debt requirement and paying capacity of each project and the cluster as a whole were analysed to evaluate the repayment capacity of the said projects under different scenarios
Key projects nearing completion and with a clear visibility on short-term cash flows were identified to mitigate completion and default risks
All-encompassing qualifying criteria were developed for individual receivable accounts and cash flows, deal covenants and coverage ratios were calculated under various stress scenarios for better visibility
The funding was structured with a defined sweep-based repayment by ring fencing cash flow releases of the projects identified

The analysis prepared by Acuity Knowledge Partners’ team provided flexibility to dynamically change the projects included, individual receivable accounts, credit assumptions, asset characteristics, etc., which helped finalise the structure
The team also helped with discussion materials, along with detailed analyses and industry research for the client to build a case for the proposed solution with both the internal and external stakeholders
With Acuity Knowledge Partners’ performing the required modelling and analyses on this time-consuming and complex deal, the client was able to structure the deal and run it with internal stakeholders and proceed with deal execution

Download as PDF

Your file will start downloading automatically

If it does not download within 1 minute,

Share this on