I have met recently with a number of debt fund providers, niche property lenders and market participants.
These are some of my (and other’s) observations about the current state of the market:
- There is A LOT of capital (domestic and foreign) coming into the market to establish debt funds and other alternate lending vehicles.
- Some participants are familiar with the Australian market (property development in particular) however many are not. For those that aren’t I hope that the fund managers are applying sound credit analysis to the projects/businesses being funded.
- Many alternate lenders are not being advised by specialist finance lawyers and are not using adequate documentation – leading to increased risk.
- Interest rates among debt funds and alternate lenders are reducing due to increased competition in this sector.
- Over the next few years we will likely see (a) further pressure on interest rates in this sector; and (b) consolidation due to failed funds and acquisitions by larger greater capitalised funds.
What are you seeing in the market… ?
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