FNB Urges Landlords To Leverage Equity And Move Beyond Passive Asset Ownership

Makhosini Ndlovu, Product Head, Commercial Property Finance, FNB

Landlords often build up a strong-performing asset over time, with a stable tenant mix and reliable rental inflows. As a result, they manage to pay the original debt down, and once it is settled, they overlook the potential to leverage it. There’s no reinvestment, no strategic leveraging of the asset and, as a result, no portfolio growth. They’re no longer investors; they’re merely asset holders.

On the other hand, we also see many investors, particularly new players, who have much leaner balance sheets, but are always looking for opportunities to snap up distressed assets, scaling up their portfolios smartly and building equity off the back of finance.

This mental shift from wealth preservation to strategic growth is one that many seasoned investors need to make. This is done by refinancing a paid-up commercial property to unlock trapped capital and put it to work, without giving up control of the asset.

Leveraging equity to drive momentum

Refinancing a commercial property can unlock capital to fund portfolio growth, renovations, or improvements such as solar, boreholes, and backup systems — elements that attract tenants and control utility costs. Interest on a refinanced loan is also tax-deductible, helping reshape cash flow for better tax efficiency.

Beyond funding improvements, refinancing can enable diversification. A single asset, no matter how well it performs, carries concentration risk. By acquiring multiple properties in different locations with varied tenant profiles, landlords build resilience into their portfolios.

We’ve seen this strategy continuously work for businesses. They start with one building, refinance after a few years, buy a second, improve both, and acquire a third. Within a few years, they’ve moved from being a landlord to a portfolio investor.

While paying off a building might give peace of mind, it doesn’t create momentum or scale. This isn’t about over-extending or ‘betting the business’ — it’s about using equity strategically and seeing the day the loan is paid off as the moment to really get started.