Liquidity Opportunity for Australian Developers | Property developers are unearthing liquidity, despite current market slowdown with Australia’s premier finance and banking intermediary Alpha Financial Solutions.
Property developers are under pressure, with more than ever struggling with blocks of unsold apartments. Facing serious liquidity issues, many developers are simply lacking the cashflow to pay off construction loans and begin their next projects.
Developers are turning away from major banks to take advantage of residual stock loans and other non-bank lender solutions, to combat their liquidity quandaries.
Finance specialists at Australia’s premier finance and banking intermediary, Alpha Financial Solutions, share how they are bringing cash flow opportunities to developers, despite the current property finance squeeze.
Senior Partner at Alpha Financial Solutions, Steve Morant.
“Our solution for property developers is lending against large pools of units so developers gain working capital as well as time to work through their residual inventory,” Steve Morant, Senior Partner at Alpha Financial Solutions said.
“We are seeing the market slowing down,” Mr Morant said. “Over the last eighteen months, we have seen loans increase from an average of $20 million to $40 million, to a current loan average of $50 million to $100 million.
“Clever property developers can use funds to repay construction loans out in entirety”, says Mr Morant. “By rolling over a mezzanine loan, the developer gets more liquidity now, instead of having all their profit locked up in unsold units.”
“We are lending to established commercial properties that wish to upscale but can’t win finance from the mainstream lenders”, Mr Morant adds.
With the commercial real estate debt tally nearing $290 billion in the local market, and the retreat of the major banks, there is considerable scope for other non-bank lenders. On some estimates, the funding gap could grow to $50 billion or more over the next five years.
National Finance Specialist, Property Development and Investment Acquisition for Alpha Financial Solutions, Denver Rommel explains how developers are benefiting from choosing a finance and banking intermediary over a bank.
“We have access to such a wide pool of loans, we can offer favourable interest rates, fast turnaround times and customised solutions,” says Mr Rommel.
“We are currently experiencing a surge in growth across our non-bank commercial property loans, preferential equity and mezzanine finance solutions,” said Mr Rommel.
“With the residential market fundamentals still strong, we are preparing for the upcoming resurgence of construction activity, once pre-sales regain traction,” Mr Rommel comments.
“The next two years will require a large increase in construction financing, and developers will continue to turn to financial intermediaries over banks for loans with greater loan flexibility,” asserts Mr Morant.
About Alpha Financial Solutions
Alpha Financial Solutions is Australia’s premier finance and banking intermediary, specialising in development finance, loans and mortgages and business advisory services. Alpha Financial Solutions specialists provide finance advice beyond what the banks want you to know.
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