“Pallas Capital is excited to be on the leading edge of this transformation, bringing superior solutions to private investors and borrowers alike.”
Commercial real estate (CRE) investment manager Pallas Capital has now reached the $1 billion mark in cumulative transactions since its inception in 2016. The milestone was reached as Pallas Capital recorded $653 million in transactions in the last 12 months, as investors turned towards real estate credit as an attractive and secure investment despite the onset of COVID-19.
Pallas Capital raised these funds from its HNW 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. These investors recognised the strength of real estate credit as an asset class, with the last 12 months demonstrating its superior defensive qualities, continually providing investors with high yield, fixed income returns.
Of the 115 transactions managed to date, 65 have been repaid, with the rest continuing to perform satisfactorily. None of these 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 boutique residential projects in Melbourne’s inner-city suburbs, such as Glen Iris, Toorak, Brighton, Malvern and a commercial project in Richmond. The end values of these projects range from about $20 million – $50 million and were funded with minimal presales or pre-leases. 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.
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 – $70million.
“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,” says Patrick Keenan, Chairman, Pallas Group.
He adds, “The planets have aligned to create the perfect environment for the growth of this class of assets. 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 is excited to be on the leading edge of this transformation, bringing superior solutions to private investors and borrowers alike.”
Established in 2016, Pallas Capital is one of the fastest growing structured property investment arrangers in Australia, having doubled its staff since the start of 2021 to accommodate its strong growth in the non-bank lending space.
Pallas Capital provides funds for loans secured against non-specialised property assets – chiefly premium, city-fringe assets with values between $5 – $40 million in Sydney, Brisbane and Melbourne. Its loans are supported by detailed due diligence on the borrower, a realistic and multi-faceted exit strategy, and active management of all loans by the Pallas Capital team throughout the term.
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