As a non-bank lender of construction and development projects of the east coast of Australia, Trilogy operates with the philosophy that every project must be successful.
Our Head of Lending, Clinton Arentz, explains that because Trilogy is more agile than the major banks and other large lenders, we’re able to adopt an intensively hands-on approach to managing client relationships.
“We facilitate construction finance for projects such as apartments, townhouses, commercial and industrial properties in the $3 million to $15 million range,’’
“We are asset-based lenders, so we generally lend based on the realisable end value of a proposed construction project, but we’re very much about building long-term relationships and attracting repeat business too.”
“Because we have the same vested interests they have, we see ourselves as working with our developers. It’s a win-win approach and it’s highly effective; after they’ve worked with us once they tend to see the benefits of our model.’’
Clinton says in the current climate many developers are finding that selling projects off the plan can be tough. Not only is construction finance harder to arrange than in the past, but buyers are also very wary of being promised the world and then let down on timing or build quality. Investment in property is not for the risk-averse.
“Even a high-quality developer with a strong balance sheet might go to his favourite big four bank and be told ‘come back and see us when you’ve got 100 per cent debt cover’ with sales contracts on every unit,’’ says Clinton.
“That might take one month, three months or a year. It could cost $50,000, $100,000 or even $500,000 in terms of advertising costs, increased marketing costs and increased agency costs. And all the while, site expenses keep growing.”
“But at Trilogy if we’re satisfied with the metrics of a project then we’re quite happy to fund it with a lesser number of pre-sales. We know that better-quality sales come when there is physical construction activity on site, because it’s so much easier for buyers to have confidence the project will be completed on a given date if it is actually underway.”
“Our approach gives developers the certainty of a finite total development cost because they know exactly when they’re going to start, how long the construction will take to complete, and they’ve got a level of sales expectation over the top of that so they can plan their business model well.’’
After advancing a loan, our lending team continues to work closely with each client over the life of the project. With considerable expertise in the industry, we’re often able to help property developers head off potential construction problems before they escalate.
Because a dedicated Trilogy portfolio manager deals with the client from the initial loan application onwards, they develop a deep understanding of the project.
“By the time a loan is approved we will have been to the construction site, looked at the site conditions ourselves and instigated independent valuer reports and quantity surveyor reports.’’
‘’And each month thereafter we will visit the site to check on construction and call for an updated quantity surveyor’s revised cost to complete estimate.’’
Such a high level of involvement means we soon become aware of issues such as a project falling behind schedule, or a likelihood of construction cost overruns.
“The important thing is that we monitor these issues and address them as soon as they arise,’’ says Clinton. “So for example, if there was a variation in the construction cost relative to the original plan then we would call the developer, arrange a meeting with them and work through that together.”
“In some cases we might make suggestions such as increasing resources in a particular area or element of construction delivery so that we can get the project back on track.’’
We also work with clients to develop an effective exit strategy, ensuring a project meets the market to repay the loan and generate a profit for the developer.
“If there are variations beyond the original sales forecast we will talk to the appropriate parties managing the project to try and address that and bring it in line. Just as we do with construction solutions, we have a range of marketing solutions and exit strategy solutions that we can bring to the table where needed,’’ says Clinton.
“All in all it’s a level of service and commitment that we believe separates us from other lenders.’’
Our successful partnership model has resulted in strong loan book growth and an expanded geographic focus.
“Whilst the origins of Trilogy were largely Brisbane centric we’ve now grown to a spread across Southeast Queensland, from Tweed Heads to Toowoomba and the Sunshine Coast,’’ says Clinton.
“And more recently we’ve been able to augment that with considerable growth into Sydney and Melbourne. We have a Sydney office which we have been expanding, and now into the Melbourne market as well.”
“There’s enormous untapped potential, we believe, for our style of development financing.’’
Trilogy is not a licensed credit provider and does not make loans regulated by the National Credit Code. The source of Trilogy’s loans may include managed investments schemes registered with ASIC, as well as other private lending arrangements with high net worth investors. If you would like more details on our investment opportunities, then please contact us. The material on this website is intended only to provide a summary and general overview on matters of interest. Trilogy is only licensed to provide general financial product advice on its own products and does not consider your objectives, financial situation or needs when providing any information or advice. You should consider whether the advice is suitable for you and your personal circumstances and we recommend that you seek personal financial product advice on your objectives, financial situation or needs and obtain and read the relevant product disclosure statement before making any investment decision.