This article is from the Australian Property Journal archive
COMMERCIAL real estate investment manager Pallas Capital has sailed past the $1 billion mark in cumulative transactions since its inception in 2016, recording $653 million in transactions in the past 12 months as investors turned towards real estate credit.
Pallas Capital raised the funds from its high net worth and family office investor base and more recently by issuing a four-year fixed rate tradable bond with the underlying security being a pool of first mortgages.
It said that of the 115 transactions managed to date, 65 have been repaid, with the rest continuing to perform satisfactorily. None of the investments have suffered any credit impairment.
The funds have been allocated across a range of new and existing first and second mortgage investment products across Sydney and Melbourne. Many of these include inner Melbourne boutique residential projects in Glen Iris, Toorak, Brighton, and Malvern, and a commercial project in Richmond.
The end values of these projects range from about $20 million to $50 million and were funded with minimal presales or pre-leases.
Pallas Capital is part of Pallas Group, which also includes development arm Fortis. Pallas Capital is part of Pallas Group, which also includes development arm Fortis.
“The focus with these projects were the delivery team, the blue-chip location and the quality of product being delivered rather than pre-selling or pre-leasing in the tough market conditions of 2020,” Pallas Capital said.
A similar approach was followed in Sydney along with a focus on providing acquisition funding of future development sites for both residential and commercial uses in city fringe suburbs. The end values of these projects in Double Bay, Rose Bay and Edgecliff range from about $35 million to $70 million.
Fortis acquired a Point Piper site alongside Dare Property Group last month for a $120 million boutique apartment. Pallas Capital will fund the acquisition and construction of the project.
“CRE lending, funded by private investors, established itself in the US and Europe many decades ago. It seems clear that it will become a very large asset class here in Australia over the next few years,” Pallas Group chairman, Patrick Keenan said.
“The planets have aligned to create the perfect environment for the growth of this class of assets,” Keenan said.
“The banks and other traditional lenders are hamstrung, investors are searching for yield without taking on high levels of risk and borrowers need fast response times and reasonable flexibility in loan terms. Only CRE lending by the non-bank lenders, and funded by private investors, can answer all of these needs.”
Pallas Capital provides funds for loans secured against non-specialised property assets – mostly city-fringe assets with values between $5 million and $40 million in Sydney, Brisbane and Melbourne.
Early last year, Pallas Capital bought specialist capital placement advisory firm Gravitas Group to add to its presence in Melbourne and grow funds under management.
