Commercial Property Finance

Flexible Commercial Property Finance

The realm of commercial real estate in South Africa presents immense opportunities for investors and businesses alike. Whether you’re looking to invest in a prime office space, a lucrative retail complex, or a promising industrial property, having the right financial backing can significantly amplify your prospects. Here, we introduce you to our bespoke Commercial Property Finance offering, also known in some circles as Interest Only Bonds, tailored to suit the dynamic needs of South Africa’s bustling property market.

Understanding Commercial Property Finance

In essence, commercial property finance is a loan instrument designed for businesses to purchase or refinance commercial real estate. Unlike residential property finance, the terms, requirements, and structures of commercial loans are often more complex and adaptable to different business models.

Interest Only Bonds, a subtype of this finance, require borrowers to pay only the interest on the principal balance, with the principal amount remaining unchanged. This type of finance can offer businesses flexibility in their repayment structure, especially if they anticipate higher cash flows in the future or are planning for a strategic sale of the property.

Why Opt for Commercial Property Finance?


Customize your loan structure to match the nature and requirements of your commercial venture.

Liquidity Maintenance

Especially with interest-only bonds, businesses can maintain liquidity by paying just the interest, preserving capital for other strategic investments or operational needs.

Asset Acquisition

Secure prime commercial real estate assets that can appreciate over time, providing substantial returns on investment.

Refinancing Opportunities

Consolidate and refinance existing commercial debts under better terms and rates.

Commercial Property Finance Application Criteria

For businesses and investors eager to step into the realm of commercial property ownership or refinancing in South Africa, it’s essential to understand the application criteria that guide our finance offering. Ensuring a clear match between applicant profiles and our criteria will help in streamlining the process:

  • Loan to Value (LTV): We finance up to a maximum of 75% of the property’s market value.
  • Ownership Tenure: Applicants should have a minimum of 3 years of ownership experience in commercial properties.
  • Property Type: Our finance offerings cater specifically to the Retail, Office, and Industrial sectors of commercial real estate.
  • Vacancy Rate: We ensure the properties we finance are largely occupied, with a vacancy rate of not more than 5%.
  • Interest Rates: Depending on various factors, our interest rates range from Prime plus 1% to Prime plus 3%.
  • Fixed Interest: To provide stability against fluctuating market rates, we offer an option to fix the interest rate for a period of 5 years.
  • Loan Values: Our financial offerings for commercial property are tailored for significant investments, ranging from R 20 million to R 80 million.

By aligning with these criteria, applicants can position themselves for a successful finance application, unlocking opportunities in the vibrant South African commercial property market.

Example: ABC Enterprises Commercial Property Finance Application

Property Type: Office Space in Cape Town’s Central Business District

Property Value: R 50 million

Based on the maximum Loan to Value (LTV) of 75%, ABC Enterprises can get financing up to R 37.5 million.

Given their interest rate at Prime plus 2%, their total annual interest rate would be 13.75% (11.75% Prime rate + 2%).

Fixed Interest Option: ABC Enterprises opts to fix their interest rate for 5 years, ensuring they’re insulated from potential market rate changes during that period.

Again, considering an interest-only bond or payment for the first year, ABC Enterprises would pay interest on the R 37.5 million for that duration.

Monthly Interest Payment = (Annual Interest / 12 months) = (13.75% of R 37.5 million) / 12 = R 429,687.50 per month

Thus, for the first year under an interest-only repayment structure, ABC Enterprises would have a monthly repayment of approximately R 429,687.50.

APR Costs: The Annual Percentage Rate (APR) encompasses the total borrowing cost, which in this case, with no additional fees mentioned, would align with the interest rate of 13.75%.

Subject to lenders Terms and Conditions at time of quote.

FAQs on Commercial Property Finance & Interest-Only Bonds

Q: What distinguishes commercial property finance from residential property loans?

A: Commercial property finance is tailored for businesses and investment in commercial real estate, whereas residential loans are for individual homeowners. The terms and structures of commercial loans are often more adaptable to different business models.


Q: How do interest only bonds work?

A: With interest only bonds, borrowers repay only the interest on the principal for a set period, leaving the principal amount unchanged. This offers flexibility in repayments.


Q: Are there any specific eligibility criteria for availing commercial property finance? A: Criteria can vary, but generally, lenders look at the business’s financial health, the viability of the property in question, and the potential return on investment.

Q: How long is the term for an interest only bond?

A: The term can vary but is often set for a few years, after which it can either be converted to a conventional loan or refinanced.


Q: Is commercial property finance suitable for any type of commercial property?

A: Yes, it can be availed for various types of commercial real estate, including office spaces, retail complexes, industrial properties, and more.


Q: What are the typical interest rates for commercial property loans in South Africa?

A: Rates can vary based on various factors, including the lender, the property’s viability, and market conditions. It’s advisable to consult with financial experts for the most current rates.


Q: Can I refinance my existing commercial loan with this finance?

A: Yes, many businesses opt for refinancing to consolidate debts and avail better terms or rates.


Q: How does the repayment structure change once the interest-only term ends?

A: After the interest-only period, borrowers typically begin repaying both the principal and interest, unless another arrangement is made or the loan is refinanced.


Q: Are there any additional fees associated with commercial property finance?

A: This can vary by lender. Some might charge application fees, appraisal fees, or other associated costs. It’s essential to clarify all potential costs upfront.


Q: Can I repay my interest only bond before its term ends?

A: Typically, yes. However, it’s crucial to check for any early repayment fees or penalties with your lender.