Projects - Asset Restructuring
Spare Room Holding Pty Limited
Management and restructure
Summary
- Storage facility
- St Leonards, NSW
- Administrator for financier
- Senior debt ($40m)
Issues
- Overcapitalised facility, too large (at 52,000 m2) for catchment. Market demand was only around 32,000sqm resulting in substantial vacancies
- Managers/owners had limited experience managing storage facilities (this was the only facility operated)
- Complicated management agreement
- Industry participants reluctant to purchase facility that was managed by a competitor
- Investors reluctant to purchase a purpose-built asset
Solution
- Set up a new entity and assigned customer contracts/plant and equipment which effectively replaced Spare Room as business owner
- Salvaged customer and supplier arrangements
- Terminated Spare Room’s contract and entered into new contract with National Storage (an experienced ASX-listed operator) as replacement manager of business
- Negotiated put and call option with National Storage to exit asset
Outcome
- Business was sold to National Storage for $36.5m (above valuation)
- Provided exit for the financier within 12 months