Boundless opportunities in commercial property finance
The commercial property lending sector is bouncing back after COVID-19. La Trobe Financial is ready to service this appetite for finance and help brokers provide the best solutions for their clients in a competitive market
Industry experts
AAA general manager Melissa Ashcroft (BA/LLB) has over 10 years’ general management experience in SMEs. She started her journey at AAA in 2002, originally as office manager, and from there learnt the fundamentals of business management and growth. Ashcroft is committed to excellent customer service and to continuing the momentum of the AAA legacy as a family-owned and operated business since 1988. In 2020 and 2021 Ashcroft was a finalist for a number of awards, including the MFAA Excellence Awards and Australian Mortgage Awards. She placed sixth in MPA’s list of Top 10 Commercial Brokers in 2021 and was the first women to make this list in over five years.
AAA Mortgages
Melissa Ashcroft
Cory Bannister is senior vice president and chief lending officer at La Trobe Financial. He joined the company in 2000 and has held both head of credit and head of distribution roles, which has given him a rich understanding of the loan origination process and the approval and settlement of institutional and retail loans. Bannister’s portfolio management experience extends to the selection and allocation of assets for multiple wholesale mortgage portfolios in excess of $1bn. He is the chairman of both the Origination & Credit Committee and the Large Loan Sub-Committee and a member of the Executive Committee and the Asset & Liability Committee.
La Trobe Financial
Cory Bannister
Michelle Bannister joined La Trobe Financial in 1996 and is senior executive, head of distribution for its real estate credit division, responsible for the national sales team. Prior to this leadership role, Bannister was a senior manager client partnerships subsequent to leading La Trobe Financial’s credit department for eight years. She is widely recognised for her extensive knowledge and experience in the mortgage industry. Bannister has won several awards, including the MFAA Excellence Award for BDM of the Year in 2014 and 2015, and Aggregator BDM for Commercial Finance across multiple industry aggregation groups in 2016, 2018 and 2019.
La Trobe Financial
Michelle Bannister
Jeremy Enconniere is currently based in Melbourne in La Trobe Financial’s Real Estate Credit Finance Division. As a specialist commercial analyst, he manages the company’s major client and broker relationships across Australia, specialising in commercial credit and development finance. He has over seven years’ experience in banking and financial services, including the mortgage industry across lending, distressed asset management and credit within the non-bank sector. His deep understanding of complex debt structuring helps him achieve the best outcomes for La Trobe Financial’s clients.
La Trobe Financial
Jeremy Enconniere
After starting out as a graduate at NAB in 2003, Matt Johnson spent 12 years in its Business Bank, where he held roles in the acquisition business and managed a senior portfolio of commercial Sydney CBD clients across a range of industries for six years. Since moving into broking in 2014, Johnson has originated transactions across all industries and client types, from construction projects to investments for wealthy families, to overseas-owned enterprises. He now focuses on leading the group’s strategy and operations as Simplicity grows into a national finance business.
Simplicity Loans & Advisory
Matthew Johnson
COVID has been a major disruptor of the economy. What effect has it had on the commercial lending market, particularly construction? With the economy now rebounding, what appetite is there for commercial mortgages – office, retail and industrial?
Cory Bannister said there had been no more uncertain or complex time since the GFC, and it was important to recognise how brokers had guided businesses with the right advice, including strategies to protect them initially and then to help them accelerate and rebound as things improved.
“There’s a lot of Australian businesses and business owners that probably owe their current position today to the great work that brokers did to guide them through,” he said.
“The events of the past two years will be a real catalyst for growth in both the broker and non-bank sectors going forward.”
He added that broker market share should increase, and there was “a ton of opportunity” in commercial.
“We’ve seen numbers come through from the industry that showed the number of brokers writing commercial loans tripled over the past four years.”
“I can’t remember a point in my career where there’s been more liquidity in markets. There’s certainly an appetite from lenders to do deals, and we’ve never been busier”
MELISSA ASHCROFT, AAA MORTGAGES
“Diversification is something that should be on every residential broker’s radar. Partner with a trusted lender, but more importantly, partner with a trusted broker to advance their education”
Jeremy Enconniere,
La Trobe Financial
Lo Surdo said commercial office, fast food and retail were all areas that were doing well.
Enconniere commented that due to the lower cost of funds, the interest coverage ratios needed to buy large commercial buildings were a lot less taxing.
“If you can get funds at sub-2% on a $30m building, that makes a big difference for larger purchasers in the commercial space.”
Ashcroft said that when it came to commercial mortgages the big four banks were more averse to property investment due to the pandemic, but there was appetite among other banks and non-banks.
“If you can get funds at sub-2% on a $30m building, that makes a big difference for larger purchasers in the commercial space”
Domenic Lo Surdo,
Stamford Capital
The property market is booming. What, if any, impact has that had on the demand for construction and development loans?
Ashcroft said most of her developer clients were not enjoying the property boom, because they wanted to buy, but not at a premium price.
“But that’s not to say they’re not always exploring opportunities. It’s about being on the front foot with them and being able to navigate what it is they’re looking for.
“A lot of developers are concerned that land is running out, so they’re trying to buy big patches as much as they can, because infrastructure doesn’t go out as far as we want it to.”
Jan-04
Jan-07
Jan-10
Jan-16
5
3
2
1
0
All ADIs
Construction
Mutual Banks
Value of new construction loan commitments (seasonally adjusted), Australia
Karam said the last 12 months had been an unusual time, with a lot of deals won, lost and put on hold as business uncertainty was reflected in brokerages.
“In construction, when they haven’t got an appetite to develop, or they see too much risk in starting a project, that has an ultimate effect on our business too,” he said. “But the property market has held up amazingly well, and that’s probably as a function of how much cash has been pumped into the market.”
The government deserved credit for the way it had distributed money, Karam added, with banks and non-banks “turned on” at the same time.
Johnson said that after the outbreak of the pandemic there was a “slight pause” in lending, then a real rush back, and by last June it was almost back to normal.
Karam said that with lots of liquidity in the market and new property players exuberant because of price rises, it was difficult for brokers to compete, because lenders were knocking on clients’ doors.
“It’s hard to get in front of the right type of customer and have the right type of conversation when money’s so easily available.”
As soon as interest rates rose it would be easier for brokers to “be able to play again”, he said.
In response, Michelle Bannister said it then came down to post-construction activity and the value-add of brokers and lenders.
“We’re really identifying residual stock opportunities – rent-to-build, build-to-hold opportunities. We’re seeing a big uptake in post-development.”
Does the increase in private lenders pose a risk for brokers, and, if so, how?
Cory Bannister said he shared Karam’s concerns about a lot of private money coming into the commercial finance market.
“I do fear that with money chasing clients without [them] being properly advised, combined with a strong property market, this could cause a deterioration of credit standards in pockets of the market, in particular those with a limited track record of operating in the space who may be capitalising on the high level of liquidity chasing yield in the system.
“It’s important for everyone that lenders and brokers maintain a prudent and disciplined approach to credit in specialist areas of lending, which construction and development finance forms part of. Concerningly, there are stories circulating that suggest there are deals being done where the risk-return profile appears to be out of balance by entities that are backed by investors chasing a yield that’s better than cash.”
This may work out fine when markets are good, Bannister said, but when they “turn” it could raise concerns about whether those entities had sufficient liquidity to complete projects, which could then expose brokers, aggregators and lenders to risk.
Lo Surdo said brokers had an important role to play in this discussion.
“Where there’s any doubt whether that lender is going to stump up with the third progress call or the 10th progress call, those lenders shouldn’t be engaged with.”
He said Stamford Capital would only engage with lenders in which it had absolute confidence.
“There's definitely been a deterioration in credit standards. I think to some extent the brokers have to take some responsibility for that because it's our job to represent clients and to push those limits. And I'm not afraid of that; it’s part of our remit.
Source: Australian Bureau of Statistics, January 2022
“We were seeing a whole bunch of additional competition come into the market too around construction and commercial lending. Now there’s more lenders playing in that space, which has driven down price.”
This competition meant better, more flexible terms on offer for clients, and brokers needed to deliver on that.
Johnson said there was a big increase in commercial property investment assets, particularly suburban and regional office space.
Lo Surdo pointed out that in the construction sector in NSW, the Building Commissioner had added to the uncertainty created by COVID.
“And then we saw a shift in product mix to smaller projects, which were easier to finance and de-risk from a financing perspective,” he said. “Interestingly, now we’re starting to see the re-emergence of the large projects, which we haven’t seen for a couple of years.
“I can’t remember a point in my career where there’s been more liquidity in markets. There’s certainly an appetite from lenders to do deals, and we’ve never been busier. I do think that’s probably going to change with inflationary pressure and the likelihood of increased interest rates.”
“It’s about who you align yourself with and making those relationships with bankers and non-bankers,” she said.
Michelle Bannister said Trobe Financial’s appetite in the commercial space was very strong, noting that industrial warehouse space in particular was an area of growth across the non-bank lender’s portfolio.
She said La Trobe Financial was also known for its expertise in construction and development lending, and had been fielding strong enquiries in this space, in part due to the flexibility of its product settings.
“We know that it’s become very, very competitive, so it’s trying to find ways to work with a good-quality broker and tailor the products that they need.”
Read on
As one of Australia’s leading credit asset managers specialising in asset management and credit, La Trobe Financial is committed to making a positive impact on its community. With seven decades of proven credit management behind it, La Trobe Financial has funded over $36bn of investment for more than 205,000 customers. Its investors include large global institutions, Australia’s major banks, family offices, fund managers, and 55,000 everyday investors in its award-winning credit fund. Since 1952, La Trobe Financial has been driven by one cause – to place “others before self” and make a positive impact by helping people create wealth with its specialist and investment solutions. To see a full list of La Trobe Financial’s awards, visit the ‘Awards and ratings’ page on the company’s website. La Trobe Financial Services Pty Limited ACN 006 479 527 Australian Credit Licence 392385.
Find out more
“The events of the past two years will be a real catalyst for growth in the broker and non-bank sectors. We’ve seen numbers that showed the number of brokers writing commercial loans tripled over the past four years”
MICHELLE Bannister,
La Trobe Financial
George Karam is the founder and managing director of BF Money. Based in Sydney, the mortgage brokerage has been meeting the needs of high-net-worth and aspirational property investors and developers since 1999. Karam is Australia’s most awarded commercial finance broker and has taken out many industry awards, including the MFAA’s national Commercial Finance Broker Award. BF Money is a direct, organic business model that burns the midnight oil to understand its clients’ businesses and constraints and present to lenders for appropriate funding. Karam sits on the CAFBA board as chairperson of its Self-Regulation Committee. He is working towards steering the association towards the PSS – the Professional Services Scheme.
BF Money
George Karam
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“Diversification is something that should be on every residential broker’s radar. Partner with a trusted lender, but more importantly, partner with a trusted broker to advance their education”
“If you can get funds at sub-2% on a $30m building, that makes a big difference for larger purchasers in the commercial space”
“I can’t remember a point in my career where there’s been more liquidity in markets. There’s certainly an appetite from lenders to do deals, and we’ve never been busier”
“AAA has had a long-standing relationship with La Trobe, and I don’t think we’ve had one issue with any of our loans, because they do their due diligence and uphold their credit standards, where others might not”
“The events of the past two years will be a real catalyst for growth in the broker and non-bank sectors. We’ve seen numbers that showed the number of brokers writing commercial loans tripled over the past four years”
“If you can get funds at sub-2% on a $30m building, that makes a big difference for larger purchasers in the commercial space”
Domenic Lo Surdo is the founder and joint managing director of Stamford Capital. With over 20 years’ experience in property investment and development, he has exceptional knowledge of property finance, from debt through to equity. He began his career in institutional banking at ANZ, then moved to Gresham Partners to work in property funds management. At Stamford Capital, Lo Surdo focuses on managing key client and capital relationships as well as the strategic direction of the group. He is also currently vice president of CAFBA, where he’s been a board member since 2019, and regularly speaks on panels and at industry events.
Stamford Capital
Domenic Lo Surdo
AAA Mortgages
Cory Bannister
La Trobe Financial
Michelle Bannister
La Trobe Financial
Jeremy Enconniere
La Trobe Financial
Matthew Johnson
Simplicity Loans & Advisory
George Karam
BF Money
Domenic Lo Surdo
Stamford Capital
Jeremy Enconniere
La Trobe Financial
Michelle Bannister
La Trobe Financial
Cory Bannister
La Trobe Financial
Melissa Ashcroft
AAA Mortgages
Domenic Lo Surdo
Stamford Capital
George Karam
BF Money
Matthew Johnson
Simplicity Loans
& Advisory
Domenic Lo Surdo is the founder and joint managing director of Stamford Capital. With over 20 years’ experience in property investment and development, he has exceptional knowledge of property finance, from debt through to equity. He began his career in institutional banking at ANZ, then moved to Gresham Partners to work in property funds management. At Stamford Capital, Lo Surdo focuses on managing key client and capital relationships as well as the strategic direction of the group. He is also currently vice president of CAFBA, where he’s been a board member since 2019, and regularly speaks on panels and at industry events.
Stamford Capital
Domenic Lo Surdo
George Karam is the founder and managing director of BF Money. Based in Sydney, the mortgage brokerage has been meeting the needs of high-net-worth and aspirational property investors and developers since 1999. Karam is Australia’s most awarded commercial finance broker and has taken out many industry awards, including the MFAA’s national Commercial Finance Broker Award. BF Money is a direct, organic business model that burns the midnight oil to understand its clients’ businesses and constraints and present to lenders for appropriate funding. Karam sits on the CAFBA board as chairperson of its Self-Regulation Committee. He is working towards steering the association towards the PSS – the Professional Services Scheme.
BF Money
George Karam
After starting out as a graduate at NAB in 2003, Matt Johnson spent 12 years in its Business Bank, where he held roles in the acquisition business and managed a senior portfolio of commercial Sydney CBD clients across a range of industries for six years. Since moving into broking in 2014, Johnson has originated transactions across all industries and client types, from construction projects to investments for wealthy families, to overseas-owned enterprises. He now focuses on leading the group’s strategy and operations as Simplicity grows into a national finance business.
Simplicity Loans & Advisory
Matthew Johnson
Jeremy Enconniere is currently based in Melbourne in La Trobe Financial’s Real Estate Credit Finance Division. As a specialist commercial analyst, he manages the company’s major client and broker relationships across Australia, specialising in commercial credit and development finance. He has over seven years’ experience in banking and financial services, including the mortgage industry across lending, distressed asset management and credit within the non-bank sector. His deep understanding of complex debt structuring helps him achieve the best outcomes for La Trobe Financial’s clients.
La Trobe Financial
Jeremy Enconniere
Michelle Bannister joined La Trobe Financial in 1996 and is senior executive, head of distribution for its real estate credit division, responsible for the national sales team. Prior to this leadership role, Bannister was a senior manager client partnerships subsequent to leading La Trobe Financial’s credit department for eight years. She is widely recognised for her extensive knowledge and experience in the mortgage industry. Bannister has won several awards, including the MFAA Excellence Award for BDM of the Year in 2014 and 2015, and Aggregator BDM for Commercial Finance across multiple industry aggregation groups in 2016, 2018 and 2019.
La Trobe Financial
Michelle Bannister
Cory Bannister is senior vice president and chief lending officer at La Trobe Financial. He joined the company in 2000 and has held both head of credit and head of distribution roles, which has given him a rich understanding of the loan origination process and the approval and settlement of institutional and retail loans. Bannister’s portfolio management experience extends to the selection and allocation of assets for multiple wholesale mortgage portfolios in excess of $1bn. He is the chairman of both the Origination & Credit Committee and the Large Loan Sub-Committee and a member of the Executive Committee and the Asset & Liability Committee.
La Trobe Financial
Cory Bannister
AAA general manager Melissa Ashcroft (BA/LLB) has over 10 years’ general management experience in SMEs. She started her journey at AAA in 2002, originally as office manager, and from there learnt the fundamentals of business management and growth. Ashcroft is committed to excellent customer service and to continuing the momentum of the AAA legacy as a family-owned and operated business since 1988. In 2020 and 2021 Ashcroft was a finalist for a number of awards, including the MFAA Excellence Awards and Australian Mortgage Awards. She placed sixth in MPA’s list of Top 10 Commercial Brokers in 2021 and was the first women to make this list in over five years.
AAA Mortgages
Melissa Ashcroft
Jeremy Enconniere
La Trobe Financial
Michelle Bannister
La Trobe Financial
Cory Bannister
La Trobe Financial
Melissa Ashcroft
AAA Mortgages
Domenic Lo Surdo
Stamford Capital
George Karam
BF Money
Matthew Johnson
Simplicity Loans
& Advisory
Industry experts
Domenic Lo Surdo is the founder and joint managing director of Stamford Capital. With over 20 years’ experience in property investment and development, he has exceptional knowledge of property finance, from debt through to equity. He began his career in institutional banking at ANZ, then moved to Gresham Partners to work in property funds management. At Stamford Capital, Lo Surdo focuses on managing key client and capital relationships as well as the strategic direction of the group. He is also currently vice president of CAFBA, where he’s been a board member since 2019, and regularly speaks on panels and at industry events.
Stamford Capital
Domenic Lo Surdo
George Karam is the founder and managing director of BF Money. Based in Sydney, the mortgage brokerage has been meeting the needs of high-net-worth and aspirational property investors and developers since 1999. Karam is Australia’s most awarded commercial finance broker and has taken out many industry awards, including the MFAA’s national Commercial Finance Broker Award. BF Money is a direct, organic business model that burns the midnight oil to understand its clients’ businesses and constraints and present to lenders for appropriate funding. Karam sits on the CAFBA board as chairperson of its Self-Regulation Committee. He is working towards steering the association towards the PSS – the Professional Services Scheme.
BF Money
George Karam
After starting out as a graduate at NAB in 2003, Matt Johnson spent 12 years in its Business Bank, where he held roles in the acquisition business and managed a senior portfolio of commercial Sydney CBD clients across a range of industries for six years. Since moving into broking in 2014, Johnson has originated transactions across all industries and client types, from construction projects to investments for wealthy families, to overseas-owned enterprises. He now focuses on leading the group’s strategy and operations as Simplicity grows into a national finance business.
Simplicity Loans & Advisory
Matthew Johnson
Jeremy Enconniere is currently based in Melbourne in La Trobe Financial’s Real Estate Credit Finance Division. As a specialist commercial analyst, he manages the company’s major client and broker relationships across Australia, specialising in commercial credit and development finance. He has over seven years’ experience in banking and financial services, including the mortgage industry across lending, distressed asset management and credit within the non-bank sector. His deep understanding of complex debt structuring helps him achieve the best outcomes for La Trobe Financial’s clients.
La Trobe Financial
Jeremy Enconniere
Michelle Bannister joined La Trobe Financial in 1996 and is senior executive, head of distribution for its real estate credit division, responsible for the national sales team. Prior to this leadership role, Bannister was a senior manager client partnerships subsequent to leading La Trobe Financial’s credit department for eight years. She is widely recognised for her extensive knowledge and experience in the mortgage industry. Bannister has won several awards, including the MFAA Excellence Award for BDM of the Year in 2014 and 2015, and Aggregator BDM for Commercial Finance across multiple industry aggregation groups in 2016, 2018 and 2019.
La Trobe Financial
Michelle Bannister
Cory Bannister is senior vice president and chief lending officer at La Trobe Financial. He joined the company in 2000 and has held both head of credit and head of distribution roles, which has given him a rich understanding of the loan origination process and the approval and settlement of institutional and retail loans. Bannister’s portfolio management experience extends to the selection and allocation of assets for multiple wholesale mortgage portfolios in excess of $1bn. He is the chairman of both the Origination & Credit Committee and the Large Loan Sub-Committee and a member of the Executive Committee and the Asset & Liability Committee.
La Trobe Financial
Cory Bannister
AAA Mortgages
Melissa Ashcroft
Melissa Ashcroft
REPRESENTATIVES OF La Trobe Financial and some of its key broker partners gathered in Sydney recently to discuss commercial lending opportunities.
Participants included La Trobe Financial’s senior vice president and chief lending officer, Cory Bannister; senior executive – head of distribution, Michelle Bannister; and specialist commercial analyst, Jeremy Enconniere. They were joined by Simplicity Loans & Advisory managing director Matthew Johnson, Stamford Capital joint managing director Domenic Lo Surdo, AAA Mortgages general manager Melissa Ashcroft, and BF Money managing director George Karam.
“The events of the past two years will be a real catalyst for growth in the broker and non-bank sectors. We’ve seen numbers that showed the number of brokers writing commercial loans tripled over the past four years”
Cory Bannister,
La Trobe Financial
4
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Jan-19
Jan-22
$ billion
Karam said the reverse was also true: lenders needed to be equally diligent about which brokers they dealt with.
“Who’s bringing that deal to the table, and are they going to be able to rescue that deal if there’s not as much liquidity in the market?”
Johnson added that brokers could provide value to clients by directing them to the right lenders.
“I guarantee you all the brokers have lost a bit of skin off their elbows and knees at different times, dealing with lenders who haven't delivered to whatever extent that might be ... off the back of that experience it then allows you to know the ones to avoid and the ones to deal with.”
How easy is it as a broker to do business with La Trobe Financial?
Karam said La Trobe Financial was “a horse you can absolutely back”.
“We've had such a long and very important relationship both with the individuals but also the company. They’re one of the good guys.”
Ashcroft added that AAA Mortgages only used lenders it could trust, and that was how it gained clients’ trust too.
“AAA has had a long-standing relationship with La Trobe, and I don’t think we’ve had one issue with any of our loans, because they do their due diligence and uphold their credit standards where others might not. I’d prefer to get a ‘no’ from La Trobe than a ‘yes’ that might fall through.”
“The non-bank space is becoming very sophisticated, and just like the builder and the developer need to transition and upskill, so too does the commercial finance broker”
George Karam,
BF Money
Enconniere said that while La Trobe Financial had its own credit risk department, it helped knowing that major brokerages provided a “second layer of credit risk” run by the brokerages' own teams.
Johnson added that one thing Simplicity Loans valued about
La Trobe Financial was the flexibility of its loan transactions,
but “more importantly, when they say they’ll do something they do it”.
Consistency between term sheet and settlement was also important to Stamford Capital when representing clients, Lo Surdo said, and this was “definitely a feature of our engagement with
La Trobe Financial”.
“We were seeing a whole bunch of additional competition come into the market too around construction and commercial lending. Now there’s more lenders playing in that space, which has driven down price”
Matthew Johnson, Simplicity Loans & Advisory
How can brokers diversify into construction finance, and how do you source customers?
Michelle Bannister said education was the key to a broker transitioning from residential loans into the commercial construction development space through industry bodies and lenders.
“I think something we do really well, whether via webinars or our experienced BDMs, is to actually sit down and work through it with the broker and help them bring the client all the way through,” she said.
“Diversification is something that should be on every residential broker’s radar. Partner with a trusted lender, but more importantly, partner with a trusted broker to advance their education.”
Karam noted that the construction and development space had changed a lot – rezoning meant that builders and developers had expanded from three-level walk-ups to apartment towers very quickly, but their skills hadn’t kept pace, which is why a NSW Building Commissioner had been appointed.
Value of new construction loan commitments (seasonally adjusted), Australia
Interest rates for loans to small, medium and large businesses (% per annum)
Source: Australian Bureau of Statistics, January 2022
Jul-19
Jan-20
Jul-20
Jul-21
Jan-21
Jan-22
6%
5%
4%
3%
2%
1%
Small business
Medium business
Large business
“The non-bank space is becoming very sophisticated, and just like the builder and the developer need to transition and upskill, so too does the commercial finance broker,” Karam said.
Ashcroft added that for any broker who was interested in construction finance there were resources available through industry bodies, such as the MFAA, or non-bank lenders.
“If you’ve got the aptitude for it and you're interested in building and property, you start small, and you can only learn from doing each loan as you go.”
Johnson said education played a key part in ensuring that brokers could “walk before they run”. He pointed out that aggregators could also help with training and development and mentoring.
“You also only learn by doing. If you want to have a crack at it, pick off a small project to get a feel for it,” he said.
What role have non-banks such as La Trobe Financial played in construction and development lending? What products can they offer brokers that banks can’t?
Michelle Bannister said La Trobe Financial had worked closely with brokers over the years to tailor its offering to what was missing in the market, especially in niche sectors.
“More recently, this has included residual stock, retention finance, bridging finance, really catering our portfolio to every broker and client need,” she said. “That starts from residential transactions all the way to multiunit larger developments.”
“Being able to hit the market at the $25m loan amount puts us in a nice sweet spot, and we'd like to build on that over the coming years.”
Enconniere said being able to offer a finance option that didn’t include presales for larger construction projects made a big difference to some developers, and this was where La Trobe Financial had filled a large gap in the market.
Lo Surdo commented that the pressure on the banks to comply with internal policy constraints or APRA would inevitably result in non-bank growth in commercial real estate, including construction, development and investment.
“As banks have constrained their lending appetite, non-banks have an opportunity to fill that void,” he said.
Johnson added that the big banks had taken a step back from the construction space about six years ago, and La Trobe Financial was the first of the big non-banks to come in and take advantage of that opportunity, and it had grown exponentially.
Ashcroft pointed out that a lot of developers had been loyal to one particular bank, but that loyalty had disappeared because of changes to the sector, including regulations, and it had created opportunity for non-banks.
She said it was up to brokers to forge relationships with clients and provide a non-bank solution that didn’t feature “mountains of requirements” and would provide a deal that “gets the job done”.
Sources: APRA; RBA
From left: Matthew Johnson, Simplicity Loans & Advisory; Michelle Bannister, Jeremy Enconniere and Cory Bannister, La Trobe Financial; George Karam, BF Money; Melissa Ashcroft, AAA Mortgages; Domenic Lo Surdo, Stamford Capital
“Diversification is something that should be on every residential broker’s radar. Partner with a trusted lender, but more importantly, partner with a trusted broker to advance their education”
MICHELLE Bannister,
La Trobe Financial
Lo Surdo said commercial office, fast food and retail were all areas that were doing well.
Enconniere commented that due to the lower cost of funds, the interest coverage ratios needed to buy large commercial buildings were a lot less taxing.
“If you can get funds at sub-2% on a $30m building, you can afford to stomach a 20% vacancy rate. This has made a big difference for larger purchases in the commercial space.”
Ashcroft said that when it came to commercial mortgages the big four banks were more averse to property investment due to the pandemic, but there was appetite among other banks and non-banks.
The property market is booming. What, if any, impact has that had on the demand for construction and development loans?
Ashcroft said most of her developer clients were not enjoying the property boom, because they wanted to buy, but not at a premium price.
“But that’s not to say they’re not always exploring opportunities. It’s about being on the front foot with them and being able to navigate what it is they’re looking for.
“A lot of developers are concerned that land is running out, so they’re trying to buy big patches as much as they can, because infrastructure doesn’t go out as far as we want it to.”
Jan-04
Jan-07
Jan-10
Jan-16
5
3
2
1
0
All ADIs
Construction
Mutual Banks
Value of new construction loan commitments (seasonally adjusted), Australia
“I can’t remember a point in my career where there’s been more liquidity in markets. There’s certainly an appetite from lenders to do deals, and we’ve never been busier”
Domenic Lo Surdo,
Stamford Capital
“AAA has had a long-standing relationship with La Trobe, and I don’t think we’ve had one issue with any of our loans, because they do their due diligence and uphold their credit standards, where others might not”
Melissa AshcrofT,
AAA Mortgages
“The non-bank space is becoming very sophisticated, and just like the builder and the developer need to transition and upskill, so too does the commercial finance broker”
GEORGE KARAM,
BF MONEY
“The non-bank space is becoming very sophisticated, and just like the builder and the developer need to transition and upskill, so too does the commercial finance broker”
MATTHEW JOHNSON,
SIMPLICITY LOANS & ADVISORY
AAA general manager Melissa Ashcroft (BA/LLB) has over 10 years’ general management experience in SMEs. She started her journey at AAA in 2002, originally as office manager, and from there learnt the fundamentals of business management and growth. Ashcroft is committed to excellent customer service and to continuing the momentum of the AAA legacy as a family-owned and operated business since 1988. In 2020 and 2021 Ashcroft was a finalist for a number of awards, including the MFAA Excellence Awards and Australian Mortgage Awards. She placed sixth in MPA’s list of Top 10 Commercial Brokers in 2021 and was the first women to make this list in over five years.
“AAA has had a long-standing relationship with La Trobe, and I don’t think we’ve had one issue with any of our loans, because they do their due diligence and uphold their credit standards, where others might not”
MELISSA ASHCROFT,
AAA MORTGAGES
“The non-bank space is becoming very sophisticated, and just like the builder and the developer need to transition and upskill, so too does the commercial finance broker”
GEORGE KARAM,
BF MONEY
“The non-bank space is becoming very sophisticated, and just like the builder and the developer need to transition and upskill, so too does the commercial finance broker”
MATTHEW JOHNSON,
SIMPLICITY LOANS & ADVISORY