Page 312 - James Caan - The Real Deal

The Real Deal

I knew that financial engineering like this is what frequently
enables entrepreneurs and investors to make money. Debt can be
a lever that creates profit, as thousands of property owners
discovered in the 1990s and early 2000s before the credit crunch
hit. They could have bought a property worth £250k with a £50k
deposit and an 80 per cent loan, then, when the property was
worth, say, £325k, they refinanced with another 80 per cent loan
that allowed them to pay off the first loan and take their original
£50k back: they had none of their cash left in their investment any
more but they still owned 100 per cent of the property.
Although I knew all about these kinds of arrangements, I still
couldn’t quite believe David’s plan would work. Even though I
couldn’t work out what the catch was, I thought there had to be
one. However, if David was right it was a spectacular opportunity
and so Hamilton Bradshaw invested. We called the company
Avanta and David went looking for his first property. He found it
in Victoria and within three months he had refurbished the
building. Hamilton Bradshaw then moved in as one of the first
tenants and before long the building was at full capacity. Hamilton
Bradshaw then went to the bank to revalue the building and we
refinanced for the increased amount. Blimey! It had worked!
David had such good contacts in the industry that he quickly
hired a team – a sales director, a finance director and regional
director – and together they started rolling Avanta out. We opened
another one in Great Titchfield Street, then Margaret Street, and
the formula kept working. Within a few years, there were ten
Avanta centres in Britain, one of which happens to be managed by
my youngest sister, Irem. After a couple of years, we started to get
approaches from people wanting to buy the freehold of Avanta’s
first building in Victoria. Freehold buildings with good tenants are
seen as sound investments by pension funds and other institutional
investors, and when we got an offer that was substantially higher
than what we’d paid for it we decided it was the right level of

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