Australian banks have really tightened the purse strings on lending to property developers in recent years, and this has created a gap in the market for smaller and more nimble non-bank lenders.
The big institutions’ new-found conservativism has left many developers caught in a financing vice, with the banks on the one hand often insisting on high (100% or more) debt cover from presales on developments, and on the other hand cutting back on residential mortgage lending and thus restricting presales buyers’ access to finance.
And media reports of construction defects in a small number of apartment blocks in Sydney have only made the developers’ job of generating presales more difficult by creating a stigma around off-the-plan purchases.
Trilogy is a specialist non-bank lender to the property construction and development industry with over 20 years’ experience, and we pride ourselves on developing long-term relationships with our clients.
We specialise in construction loans ranging $3 million to $15 million for developments such as apartments, townhouses, land subdivisions, commercial buildings and house and land packages.
Our flagship fund, the Trilogy Monthly Income Trust, is a pooled mortgage fund, and it has capital readily available to deploy for suitable projects across the eastern seaboard of Australia, including in regional centres. The trust currently has a portfolio of 80 loans with a book value in excess of $470 million as at 30 November 2019.
By working with Trilogy, developers are able to leverage their equity effectively so that returns on a project-by-project basis are optimised.
This is because we can provide generous loan-to-value ratios of up to 65% of GRV inclusive of GST and we will consider lending with no presales or pre-commitments in place, thus minimising the costs of project delays and hefty commissions associated with generating presales.
But we also add value for developers in many other ways.
How the Trilogy team adds value
Our lending team are specialists in property development and finance, with decades of experience between them. We know and understand the industry and we work closely with our clients, providing a personalised service to ensure successful delivery of their development projects to our mutual benefit.
Our experts bring value-add skills to the process including on quantity surveying, project management and real estate agency services. And we can provide exit strategy assistance through our proprietary sales management platform.
Loan application to indicative offer in 24-48 hours
To enable us to process loan applications as quickly and efficiently as possible, borrowers can assist by providing well-prepared documentation. This would typically include a project feasibility study, relevant DA approvals and a fixed-price construction contract, as well as borrower details such as asset and liability and financial statements and substantiation of the borrower’s background and track record in construction and development.
Some non-banks lenders are more reliable than others
The retreat by the banks from the development finance market has created an opportunity for several non-bank lenders, but some are better than others. As a developer, when choosing a finance partner it is important to consider the following:
- Is the funder reputable and well established?
- Is the fund they operate contributory or pooled, as this can have a big impact on whether or not the lender will actually have the funds available to disburse when required
- Do they have a genuine capability to manage construction progress draws?This is a very complicated and involved process.
- Be wary of uncommercial loan terms. All loan documentation and letters of offer are binding and should always be checked by your own solicitor.
At Trilogy, we’re experts in construction and property development financing, and we pride ourselves in developing long-term relationships with our clients.
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.