Pallas Capital has successfully refinanced its flagship New Zealand lending facility, Pallas NZ Funding Trust No. 1 (PFT NZ).
Westpac NZ have provided new funding lines to support the NZ$360 million facility, underscoring the continued success of Pallas Capital’s fast growing lending platform. PFT NZ is the first structured facility of its kind from a main New Zealand bank.
Since its launch in December 2022, PFT NZ has funded 60 Commercial Real Estate (CRE) loans with a total value of approximately NZ$300 million.
PFT NZ lends money to borrowers across a range of CRE loan products including pre-development loans, residual stock loans and investment property loans. Most of its loans are between NZ$2 – 15 million in size, although it is able to fund larger loans where its credit criteria are met. It targets medium sized borrowers who can find it challenging to work with established bank and non-bank lenders in New Zealand.
PFT NZ is modelled on a corresponding Australian facility that was launched by Pallas Capital in November 2021, Pallas Funding Trust No. 2 (PFT No. 2)*, which has so far lent a total of approximately AU$800 million to medium sized SMEs in Australia.
Examples of how the institutional funding is being deployed across loans include a recent CRE loan by PFT NZ of NZ$22 million to a developer based in Auckland. This loan was secured against five separate properties in Auckland and Napier with proceeds funding development activity on some of those properties. Another loan of NZ$3 million was secured against a project set to deliver 18 luxury townhouses in Mount Victoria, a premium suburb in central Wellington. Additionally, a third loan of NZ$16 million was secured against a retail and accommodation property in Queenstown, which was repaid through a new bank loan.
Dan Gallen, Chief Investment Officer of Pallas Capital, commented, “We are delighted to announce our collaboration with Westpac in New Zealand. With such strong and experienced funders backing us, we look forward to expanding our suite of lending products and building upon our successes in the local market.”
“Although other non-bank lenders compete with PFT NZ, many of these lenders are funded by retail or ‘high net worth’ investors. These investment flows can be volatile, making it harder for them to consistently compete with lenders like Pallas Capital with committed institutional capital behind them,” he added.
Westpac NZ Managing Director of Institutional and Business Banking, Reuben Tucker says the funding deal is the first structured finance facility of its kind from a main New Zealand bank.
“Our team have worked hard with Mr. Gallen and the team at Pallas Capital to come up with an innovative funding pathway that will allow them to be a competitive non-bank funder of Commercial Real Estate debt products in Aotearoa,” Mr. Tucker says.
“We believe this funding structure will provide New Zealand borrowers access to alternative funding sources, and we’re looking forward to seeing the impact Pallas Capital will have in the market.”
Although PFT NZ will not undertake construction loans, these are offered in New Zealand through the existing Pallas Capital lending business.
Pallas Capital is one of the fastest growing non-bank lenders in Australia and New Zealand, offering brokers and developers lending solutions that are tailored to their needs. It offers borrowers five core loan types, being acquisition, pre-development, construction, residual stock, and vacant land loans, along with the flexibility to negotiate LVRs and the required level of pre-sales for construction loans.
Pallas Capital manages funds invested in commercial real estate loans secured against property assets with values between $1 – $50 million in major metropolitan areas. Wholesale investors are offered investment opportunities providing fixed or variable rate returns supported by loans on single property assets or through ‘warehouses’ that invest in a pool of such loans. Pallas Capital’s loans are supported by robust due diligence on each borrower and the security property, a realistic and multi-faceted exit strategy, and active management of all loans by the Pallas Capital team throughout the term.
Pallas Capital and development manager Fortis comprise Pallas Group, a business that provides specialist investment, lending, and development solutions in the boutique property market in Australia.