We have banged on ad nausea in these commentaries about why it is important that developers get good help when trying to secure the best possible development funding solution for their next project and how hard it is to stay abreast of the constantly shifting appetite of lenders. 

This was brought home to us on two fronts over the past week when we prepared and released our latest product guide and also undertook a cursory analysis of where our business has been set over the past twelve months.

The final settlement numbers will not be in until the end of the month but on a preliminary examination of the numbers by dollar value we found that in the past 12 months just under 10% had been placed with the major banks, 12% with private lenders and the remaining 78% with various investment funds with the bulk of that set across three or four major players.

Interestingly, a look back at last years numbers sees the major banks were holding down around 27% market share having dominated in 2015 with around 64%.  Private lenders on the other hand have slipped from 32% last year although that number skewed by one large transaction and an analysis by deal numbers sees them steady at around 12%. So the real winners continue to be the non-bank lenders who continue to grow market share while the number of entrants also continues to grow. We will publish the final numbers in due course. 

Turning to the guide itself, it was again interesting to look at the range of choices available to developers as well as the wide range of appetite expressed by the various lenders.  

With limited interest from the banks, there is strong interest from the non-bank lenders who range from those seeking to do traditional construction funding, largely occupying the space vacated by the banks, to those with niche appetites such as site acquisitions or residual stock funding.

For the most part the pricing is representative of the market risk being taken but from time to time. Particularly when a private lender has pref equity or mezzanine money coming back from a previous loan, there are opportunities to pick up funding at attractive levels.

The guide itself provides a concise directory on what funding will cost and the salient terms for each of the general categories including site acquisitions, small, medium and large residential development projects, mezzanine debt and preferred equity funding, residual stock loans and commercial investment funding. 

While our previous guide provided detailed case studies, the purpose this time round was to provide a quick ready reckoner providing developers with the ability to apply the likely loan terms to their own feasibility prior to contacting their finance consultant to get a more accurate reading around where best to place their project.

Click here to download HoldenCAPITAL's Elite Property Developers Product Guide.

This article was written by Dan Holden of HoldenCAPITAL, a bespoke construction finance firm. HoldenCAPITAL arranges construction finance and invests in projects through their equity trust, HoldenINVEST. To discuss your project finance requirements please call (07) 3171 4200 or visit www.holdencapital.com.au.

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