The media may be full of reports on fallout from the Hayne royal commission into misconduct in the financial sector, but for some non-bank lenders the impact has been quite the opposite.
Credit supply is tight but demand remains strong as property developers continue to find good opportunities in high-growth areas, and more agile lenders are manoeuvring to fill the gaps left by the big financial institutions.
We sat down with our Head of Lending & Property Developments at Trilogy, who says he is currently busier than ever, to discuss the current state of play for non-bank lenders.
“The royal commission has obviously created disturbance in the market and a change of some banks’ practices, so we’re enjoying a very good rate of inquiry which has given us the opportunity to stretch our legs into the market,’’
“At the same time, we’ve found that the quality of borrower out there at the moment has improved because in many cases they’ve been traditional bank borrowers for many years and the banks have now withdrawn from development lending almost unilaterally, whereas that’s our forte. It’s a space we are very active and skilled in.’’
But our relationship with our borrowers and developers is very different to that between the big institutions and their clients, explains Clinton.
“In this era where the world is run by algorithms, and everything seems to be churn and burn, we’ve taken a very different path,’’
“We put a lot of work into building personal relationships. For example, we never lend sight unseen. We always meet every borrower, and we really try to achieve alignment between their aspirations and what we think makes good commercial sense.
“We get to know our borrowers/ developers before the loan is set, and then we basically work with them in the transaction right through to the sale of the last unit or house, and we’re happy to celebrate with them at that stage.’’
“We see a lot of product get developed every year, we see a lot of methods of operating and we see a lot of skilled players in the market, so we like to think we can add our fair share of value for our clients,’’
To ensure that it never loses the personal touch, we restricts ourselves to a maximum loan size of $15 million and manage a loan portfolio that typically sits around 60 loans at any one time, with an average value of around $5 million.
This intensively hands-on, relationship-focused approach does have its drawbacks, Clinton admits.
“It does put a bit of a limit on how fast we can grow because of the amount of time we spend with each client.’’
We have offices in Sydney and Brisbane and are also active in Melbourne, and across many regional areas. The majority of our loan portfolio is in residential, but we’re currently seeing increased interest from other sectors.
“Given the demand we are looking more at smaller developments in the commercial and industrial space that suit our portfolio size, while still remaining focused on our traditional markets in land subdivision, unit and apartment development, and house and land packages.’’
“No matter the type, what we look for is projects that make good commercial sense, where all of the risk elements have been addressed. We look closely at local market conditions to see what the project might be competing against.
“And of course we look for experienced, reputable and innovative developers with well-thought-out schemes.
“If they can meet all our criteria then we offer them the very best product and service, and we do everything we can to ensure that they perform to their very best too.’’
Considered funding your next project with finance from a non-bank lender but not sure if it’s the right fit for you? Check out the top 4 myths about non-bank lending or learn how you could obtain development and construction finance in just five steps.
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.