As a non-bank lender to the property development and construction sector, Trilogy has a relationship with borrowers to help facilitate them to achieve their project goals.
Trilogy’s Head of Lending and Property Development, Clinton Arentz, explains that when the coronavirus pandemic struck, Trilogy’s tailored finance solutions and personalised service meant Trilogy’s Portfolio Managers were able to reach out to each borrower individually and ensure they were well-placed to navigate the challenging times ahead.
“Our main areas of operations – South East Queensland, and metropolitan Sydney and Melbourne – were all significantly impacted by COVID-19, so we acted quickly to head off any potential issues,’’ Clinton said.
“The first thing we did in the earliest stages of the pandemic was work through our loan book, talking to each client about their supply chains to see if the existing projects were delayed, and whether there could be knock-on effects due to supplier chain disruption.
“While we were alert to the risk of supply disruptions for materials, fixtures and fittings as a result of the China manufacturing shutdown, that didn’t eventuate. Fortunately, Australian suppliers had good stocks, and China resumed manufacturing quite quickly.”
Clinton and the Trilogy Lending team also ensured that all borrowers were maintaining COVID-safe practices in their workplaces.
“We identified this as an important issue with the potential for severe ramifications if not managed well. We checked that all of our borrowers’ construction sites were being correctly run with regard to social distancing for employees and sub-trades and that site access was being properly controlled,’’ Clinton said.
With portfolio managers based in each of the three development hubs – Brisbane, Sydney and Melbourne – the Trilogy lending team has been able to maintain regular site visits to all developers despite interstate travel restrictions.
“Had we been more exposed to retail assets or commercial office projects, I’m sure we would have seen a more significant impact. However, our loan book is focused on smaller, median-price-range, residential products in well-established suburbs,’’ Clinton said.
“That’s always been our focus, and it’s proven to be a wise approach because it’s a highly resilient market in Australia and, from what we’ve seen, construction activity in this sector has continued mostly unaffected.
“As a result, construction draws on our loans have generally remained as budgeted in all three states – albeit somewhat apportioned in Victoria with the on-site personnel limits – and we’ve had eight loans repaid in full in the past two months alone.”
Pictured: A loan to finance the development of seven residential apartments in Maroubra, NSW was fully repaid during COVID-19.
On the other side of the property development equation, government support and stimulus packages have been instrumental in maintaining strong demand for homes and healthy sales levels for our customers.
“Sales have been remarkably brisk, to the extent that we’ve even seen an uplift in some volumes and prices, most notably in southeast Queensland.”
“In Melbourne, of course, sales have been a little patchier with auctions suspended. However, we’re still seeing our borrowers making sales on their development projects in Melbourne using virtual and electronic channels,” Clinton said.
Demand for new loans has also remained strong. During the worst of the pandemic-driven national business restrictions from 1 March to 31 August, Trilogy settled 18 new loans with an average approved loan amount of $3.6 million and an average Loan-to-Valuation Ratio of 54.73% on an as-if-complete basis.
“We have also received good support from our investor base. We’ve been fortunate that all key parts of our market have held up well and at this time, continue to do so, for Trilogy over the COVID-19 period.”
“During what has been a difficult time for so many businesses, we are continuing to prudently, yet aggressively, expand our market share,” Clinton said.
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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.