MPA Brokers on Non-Banks 2021 - Brand Recognition
Accolades
Media
Milestones
2019
2020
2021
2022
The company’s head office relocates to Pallas House in Double Bay, Sydney
2021
CRC eclipses $500m in funded loan facilities. It engages Ernst & Young to procure a $100m-plus warehousing facility and later increases this facility to $200m
2022
Central Real Capital breaking barriers
Established just over two years ago, Central Real Capital (CRC) has already passed $500m in loans funded, and momentum doesn’t look set to slow in the months ahead.
“One thing that we definitely are seeing is increased requirements from borrowers when it comes to leverage,” says chief executive David Stone.
Non-banks like CRC have always given mainstream lenders a run for their money when it comes to certain sectors of the market, but the fact that the boutique private lender can hit such a milestone so quickly speaks to the increasingly important role alternative lenders are now playing in the economy.
Regular banks are saddled with more restrictive lending criteria, and many of their clients are also concerned about the impact of higher rates.
“We've seen a number of borrowers turn to private lenders, some that we ordinarily wouldn't have thought would be banking with private lenders,” says Stone. “There [seems] to be nervousness when it comes to obtaining finance from your mainstream banks.”
As recently as in 2020, industry surveys showed that brokers in Australia felt some 30% of their clients were not open to considering non-bank products, but this has now dropped to around 10% – underscoring a level of borrower trust in alternative lenders that’s much higher than in many other countries.
This is partly due to economic disruptions caused by COVID and the transitioning of the economy to a new and more challenging phase, causing banks to be more circumspect in their lending practices.
“We like to see ourselves at Central Real Capital as plugging that gap,” says Stone.
“We now have $400m available to lend – a combination of $200m from our founder, Tony Denny, and $200m of institutional capital via a warehouse facility. It’s been a pretty impressive start to private lending for us, and unique in that there is one high-net-worth individual behind the business.”
He cites speed to settlement, greater flexibility on covenant suites and improved leverage as key factors for customers who turn to CRC.
Spotlight
As a boutique private lending business, Central Real Capital offers fast and flexible debt solutions as an alternative to mainstream banks. The firm prides itself on a commercial approach to lending criteria and a genuine speed to market as the ultimate decision-makers for all credit applications. As a privately funded lender, CRC can offer a customised loan that is faster and more flexible than those of the big institutions, as well as a collaborative approach throughout the life of a loan with guidance from an experienced team.
Company Profile
$500m
Value of loans funded to date
$8.3m
Average
loan size
60%
Proportion of women in leadership
64%
Weighted
average LVR
2.5
Years in operation
Bio
Spotlight
Milestones
Media
Accolades
Company Profile
Years of experience
20
FAST FACT
Favourite quote
Stone has financed more than
$2.5bn in mid-market real estate transactions over his banking career
David Stone
CEO at Central Real Capital
David Stone highlights the rapid success of the new non-bank lender, which is hitting milestones quickly as borrower demand accelerates for fast and flexible funding with better leverage
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David Stone,
Central Real Capital
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Milestones
2011
2016
2019
2021
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2011
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2012
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2015
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2021
Central Real Capital breaking barriers
Spotlight
Years of experience
20
Tenure at current position
3 years
Fast Fact
Has financed in excess of $2.5bn in mid-market real estate transactions over his banking career
Karen Adams
CEO at Central Real Capital
David Stone highlights the rapid success of the new non-bank lender, which is hitting milestones quickly as borrower demand accelerates for fast and flexible funding with better leverage
Read on
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The need for speed
The main advantage CRC offers is expeditious assessment and execution of loan applications, compared with the frustrations that crop up at regular banks when a fast decision can make all the difference to a deal.
Its founder, Denny, spent 25 years in Eastern Europe establishing a motor vehicle distribution group that became one of the largest automotive dealership networks in the world. His business experience taught him that delays and red tape are anathema to getting business done.
“When we talk to our borrowers, more often than not they do have a bank, or preferred banking institution to work with. But at times they've found that the process can be quite cumbersome, and it might take a long time to get them to a settlement,” says Stone.
Industry surveys show that two in five brokers relied on non-banks for at least 20% of their loan flows in 2021. Faster turnaround times are frequently cited as a reason for choosing to go with a non-bank over a bank.
“We can pick up an application very, very early and get it to a point of approval and term sheet very, very quickly.” says Stone.
“We have a number of bank clients that are just struggling to get that speed which they require.”
Speed is also important regardless of whether a loan is approved or not. Some of the most frustrating situations for brokers arise from delays in assessment, followed by a decline, as this leaves the client back at square one with nothing to show for the broker’s efforts other than a time loss.
A streamlined management and decision-making process is the secret sauce behind a quick answer at CRC.
“Our speed comes from having one ultimate decision-maker, being our founder, whose private balance sheet coupled with the addition of flexible institutional capital underpins our lending,” says Stone.
CRC is catering to an expanding range of customers who are looking for a more nuanced assessment of their situation than a straight credit score check.
MPA Brokers on Non-Banks 2021 - Foreign Non-Residents
AMA 2021 Non-Bank of the Year Excellence Award
AMA 2021 Best Non-Major Bank BDM
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“From a demand perspective, we're seeing a vast array of all sorts of different borrowers.”
Other factors attracting clients include flexibility and reliability.
“Flexibility comes about with having a more flexible and more convenient covenants suite for the borrower,” says Stone.
CRC looks at both first and second mortgage opportunities as well as preferential equity opportunities with experienced sponsors. Its loans average $8.3m with a weighted average LVR of 64%.
In terms of reliability, CRC can provide confidence due to its solid financial backing.
“The reliability comes from being backed by a genuine high-net-worth private balance sheet, in addition to some institutional capital,” says Stone.
“When we write a term sheet and we sign one, we deliver on it.”
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“We've seen a number of borrowers turn to private lenders – some that we ordinarily wouldn't have thought would be banking with private lenders”
“We now have $400m available to lend – a combination of $200m from our founder, Tony Denny, and $200m of institutional capital via a warehouse facility”
“We've seen a number of borrowers turn to private lenders – some that we ordinarily wouldn't have thought would be banking with private lenders”
Victoria, Australia
FAST FACT
1999
2003
2007
2021
Joins NAB as executive broker distribution
2021
Named captain of the Waratahs
2007
Named vice-captain of Australia's Rugby World Cup team
2003
Waugh debuts as a professional rugby player with the Waratahs; makes Test debut with the Wallabies
1999
Milestones
David Stone,
Central Real Capital
The future presents opportunity
The role of non-banks is coming into greater focus as the client base for lenders like CRC grows.
A number of players in the financial industry see significant opportunity over the next few years for non-banks to increase their market share at the expense of banks, given the best interests duty requiring brokers to provide a suite of lending options to customers.
Even if times get a little bit tough for borrowers going forward, brokers who are well skilled and well versed in the options available can help them find solutions, Stone says.
CRC aims to ride this momentum with plans to increase its office footprint in Double Bay. It will expand into another commercial office building, taking an extra 250sqm at the corner of Cross and Bay Street to house its expanding credit team as well as more BDMs.
Stone is convinced that the CRC formula of speed, flexibility and reliability will allow it to become a key player in this new lending world. But being a 100% third party-originated business, getting brokers on board is key to this vision.
“When it comes to supporting brokers, what's key to us is just making sure we offer term sheets that we're going to support,” he says.
“The way that we try and help brokers is to ensure that whether the answer be yes or no, we provide a genuine answer with speed.”
Esse quam videri
(“To be rather than to seem”)
-Cicero
IN PARTNERSHIP WITH
CRC writes its first commercial loan
2020
Central Real Capital is born, opening its head office on the NSW Central Coast
2019