The dramatically changing funding climate
Whilst the mainstream media have focussed on the increasing difficulty experienced by buyers in obtaining home loans (as a consequence of the newly tightened Bank Credit Standards), the availability of commercial finance has hardly been mentioned.
And yet this sector’s Bank funding disruption has been so extreme, as to make it extremely difficult to finance development projects in the sub $15 million range at all- regardless of the quality, type of, or demand for the property.
But this problem hasn’t occurred overnight.
The Hayne Royal Commission certainly caused a dramatic culture shift in the Banking sector, highlighting both irresponsible lending practices and an over exposure to property- which directly created the sector’s current reactive environment of risk aversion and lack of appetite for further Bank investment in development.
But internationally, both pre and post GFC, successive increases in Banking capital adequacy requirements have reduced Banks’ capacity to lend, with APRA further tightening requirements in 2018, and Banks voluntarily tightening both client and property qualification standards to the point of complete exclusion of some market sectors, and prohibitively onerous lending conditions across the board.
The evolution of the non-bank, private lending sector
The international experience has seen the evolution of a strong non-bank, private lending sector, where in some cases private lending now constitutes the vast majority of commercial and property development funding.
Locally, the result of this credit crunch, in which there can be no guarantee even for quality long term bank clients of securing bank funding on legitimate quality developments, is that developers are becoming increasingly focussed and dependent on private financing, as the only means of guaranteeing essential funding.
And of equal importance in this new environment of caution and lack of appetite, Bank funding complexity, uncertainty and extended processing times are driving borrowers to deal with private organisations who have a clear understanding of the local development market, and the capacity to work with borrowers to structure appropriate funding for quality developments.
While during this recent evolving period of increasing market uncertainty, investors are becoming less inclined to invest in additional property or equity investments, and are searching for an alternative, risk adjusted debt investment.
In response to this dramatically changed lending environment, PrivateInvest has designed and introduced its Alternative Finance Fund, as a private non-bank source of development funding, and as a robust investment alternative for increasingly risk averse wholesale investors.
Who is PrivateInvest?
PrivateInvest is a team of highly experienced, forward thinking finance professionals who specialise in designing and managing alternate asset vehicles and finance opportunities for both wholesale and professional investors.
Our founders, CEO and senior executives have unparalleled experience in the finance sector, with a combined history of developing and managing investment funds in excess of $4 billion, developing more than $2 billion in a broad range of property asset classes, managing more than $3 billion in investment banking transactions, and managing more than $10 billion of property assets.
Key executive managers include Mark Roberts, with over 25 years’ experience in the property industry who was previously managing director of an ASX listed property asset management company that was the largest in its sector in Australia, Grant Ross, with over 25 years’ experience in funds management and investment, with a history of establishing and managing over 40 funds, and Tim Killian, with over 20 years’ experience in managing more than $1.25 billion of commercial real estate in the funds management and superannuation sectors.
PrivateInvest’s Alternative Finance Fund
The Alternative Finance Fund was specifically designed in direct response to excess development funding demand in the sub $15 million sector, directly related to the effective withdrawal of the Banks.
This debt income Fund, is an open, pooled investment vehicle, crafted for professional and wholesale investors who wish to participate in the funding of a diversified and balanced property portfolio, with above average risk adjusted returns of 9% per annum.
The Fund invests in loans secured mainly by first mortgages, and where appropriate, by additional assets. With its independent national loan origination process PrivateInvest has direct access to an evolving volume of 1st mortgage loan opportunities, and can offer investors the opportunity for both syndication and co investment. The Fund is highly diversified, with a selective portfolio of investments across different property asset types, borrowers, market timing and locations in the undersupplied range of $5 million to $15 million.
Key investment benefits:
The benefits of this fund include the following:
- Attractive above average returns.
- Quarterly distributions.
- Generally 1st Mortgage security to investors.
- Exclusive opportunities not available to individual investors.
- Opportunity to invest in large projects.
- Highly diversified investments.
- Professional funds management.
- External oversight.
With the current volatility of the equity markets and Australia’s generally overvalued property markets, the Alternate Finance Fund represents a secure investment opportunity with a higher return than most traditional fixed interest options.
It enables property developers to access non-bank funding for their projects, bypassing the banks and their increasingly unpredictable and restrictive lending standards.
- This Fund addresses the void created by the global changes to Banking regulations. It offers a strong focus on capital preservation, risk adjusted returns and commercial property assets. PrivateInvest, helps wholesale investors to secure unique and profitable investment opportunities, whilst property developers enjoy more flexible and reliable non-bank finance options, especially where speed to market is important.
- For more information on the Alternative Finance Fund or to find out if you qualify to invest in this fund, please contact us on 07 3303 8590 today.
Telephone: +61 8 9288 4590
Email: [email protected]
PrivateInvest operates as a corporate finance advisor and Funds Manager, specialising in the operation of alternative asset investment vehicles. It structures, finances and actively manages real estate and investment capital, to achieve superior risk-adjusted returns for wholesale and professional investors.
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