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MFAA Prosper : Mortgage and Finance Brief 06
Allan and Greg Marcello had approved plans to subdivide a large residential block in south western Sydney and build four townhouses in a good area where sales were strong , says their mortgage and finance broker G reg Parkins. “These are long-term, good clients and the deal was clearly very good,” says Parkins . “But the first major bank we went to demanded all four pre-sales before they would commit.” Parkins says the bank manager was ver y keen on the deal but the credit department said no without 100% pre-sales. Banks are lending in the construction arena but with high pre-sale commitment requirements, says AAA Mortgages’ John Macalyk. “But many well-positioned properties are getting up to 100% pre-sales no w. Plus there are specialist real estate project marketing companies, including Excelsior and AMT, that can help achieve the pre-sales a developer needs in order to get a construction loan. “In some cases, if applicants have good up-front equity, co nstruction loans have been approved with only 30-50% pre-commitments.” Greg Parkins ended up doing even better than that for his happy long-term clients, the Marcellos. “ We got the deal pushed through by another of the major banks,” explains Parkins . “ They also wanted pre-sales but in the end they settled for o ne pre-sale by completion. “Of course, I don’t know what they could have done if there was no pre-sale by completion, which there was of course, because they had already given us the money. “Those are the kinds of, sometimes nonsensical, little conditions that are put on good deals and good clients by big lenders these days.” Greg Parkins: ‘We are getting things through, but only after a lot of pain and time.’ September, from 2.35% to 2.51%. The big banks remain Plan A for the big deals, says Macalyk. “If you’re looking at loans over $10m you most probably will have to approach a major bank. But don’t give up when rejection comes because lots of bigger and smaller non-bank and second- tier lenders are coming back to market.” Some of the second-tier banks and non-banks are assertively and competitively lending in the $10m-plus seg ment again too, says Macalyk. Non-banks looking for business Some of the smaller players actively seeking business are said to include Merchant Mortgages and Think Tank in Sydney, as well as the Banksia Financial Group in Melbourne. Banksia’s standard commercial, retail, industrial facility for purchase, debt consolidation or refinancing is lending from $100,000 to $10m on LVRs of up to 70%. Think Tank has been lending since 2006 and promotes property loans from $100,000 to $5m with LVRs up to 85%. Currently Think Tank’s rates for a full-doc commercial property finance deal start at 8.6% . Lite-doc loans start at 9.2 per cent, and the self- verified “Quik-Doc” loan is at 9.55%. “Think Tank is definitely open for business lending, we have been back in the market strongly and looking to grow lending again since early 2010,” said Peter Kearns, Managing Director of Think Tank. Kearns said some Think Tank deals are approved after being rejected by the banks. “It is not that common but we do take a different approach to risk,” he says. “ We are a purely commercial lender with a straightforward approach to business.” Wealthy private investors are back with a vengeance Off the top of his head, Macalyk can drop half a dozen names of wealthy investors you have heard of who have been in contact just very recently. “Yes, I’m taking a few calls from contacts recently looking for good investments, cheap distressed assets, industrial business properties in the western suburbs,” he says. “And yes I’m also getting calls from the big guys, the wealthy families who have made money from iconic brands. People are looking for investments, properties and even brand name businesses based on leaseholds if they are strong.” Spotlight on: Pre-sales “I’m getting calls from the big guys, the wealthy families who have made money from iconic brands.” Mor tgage & Finance brief | 37 Commercial
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07