La Trobe Financial Emerges as Key Player in Housing Delivery

Australia’s housing crisis poses a major challenge as developers strive to meet the National Housing Accord, yet the banks are not in a position to finance it.

Hamstrung by size, lending criteria and presale requirements, the majors by and large remain focused on only the largest projects, leaving the gate open for the private credit market to do much of the heavy lifting.

In the past 10 years private credit has taken over financing small to mid-sized projects, which is where much of the new housing stock will be provided.

One of the biggest alternative asset managers is La Trobe Financial, which has scaled to $21 billion in assets under management and 120,000 investors^.

That has positioned it at the forefront of the lending movement across the country.

As activity returns in Melbourne, demand in South-East Queensland remains strong and upsizing opportunities open in NSW, the sheer number of projects is growing rapidly.

La Trobe Financial chief lending officer Cory Bannister (pictured above) said they had seen it all over the past 70-plus years and that decision-makers were really weighing up finance options.

“When we think about the issues that developers face in the segment, often there’s lack of credit availability, particularly when liquidity markets are tight,” Bannister said.

“Banks have stepped out of the small to medium space and are operating north of $50 million typically, and larger non-bank financial institutions have similar restrictive terms.”

In the US, private credit is a vast and respected sector, however in Australia, the market has lagged, but momentum is building for the industry here.

“Given our long track record and renowned expertise in the sector, we’re well positioned to bring a confidence that’s generally held by large institutions.

“Combine that with developer-friendly flexibility and a very stable and consistent credit appetite, is why we’re trusted by developers and finance brokers.”

The non-bank lender provides end-to-end support for developers from acquisition to completion, offering flexible financing options up to $50 million.

Bannister said they had a consistent credit policy and unparalleled lending solutions, which provided confidence in all market conditions.

“We’ve got a unique funding model, we raise money from both global and domestic banks,” Bannister said.

“However, the predominant source of our funding is our retail credit fund. We raise our own money and have over $14 billion in assets under management in the fund, and that gives us incredible firepower to draw upon.

“This means we truly are the only bank alternative a developer needs in the sub-$50 million debt space.

“That covers the whole development life cycle—from site acquisition to the development finance itself, to residual stock funding and also any retained stock funding at the end.”

La Trobe Financial can refinance completed but unsold stock in a development to unlock equity, consolidate other debts or to fund their next project.

“We provide site acquisition on terms that give the developers some time and flexibility to source plans, approvals, permits,” Bannister said, “then rolling into the development finance solution, products are structured in a way that is developer-friendly.”

Bannister said that if it was a larger project of 70 to 100 apartments, developers do not have to put it on the market at once but rather can stage the sales.

“We have limited or no presales requirements on developments, which means they can turn dirt faster and hopefully realise a bigger profit at the end,” Bannister said.

“The residual stock funding has an interest budget built in, so it gives the developer time to sell down in an orderly fashion, they don’t have to flood the market with products.

“Then we recapitalise and give them more time to sell into the market. That’s been popular in the market, particularly when conditions have been a little bit patchy.

“Increasingly we’re seeing developers looking to hold onto stock for longer to take advantage of GST benefits and the like, so we can do some retained stock funding as well for them.”

One of the key things that La Trobe Financial has at heart is a consistent appetite in the market which has been able to deliver that across multiple economic and interest rate cycles.

Partner with La Trobe Financial for your next development project. Speak to your broker or contact La Trobe Financial on 13 80 10.

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