Melbourne based Supra Capital has opened a Brisbane office.
The alternative lender, whose board includes Melbourne Cricket Club president Michael Happell, AFL commissioner and ex-Hawthorn Football Club president Andrew Newbold and former CGA Bryson managing director, Neil Bryson, has always considered Sunshine State projects.
Part of the decision to establish a Queensland branch follows a rise in the number of applications, often by Melbourne developers, managing director Adriana Zuccala said.
“Whilst Supra has been open to lending in Queensland since inception, the move to create a Queensland base has been on the agenda for around 18 months driven by the rise in the number of applications, the clear benefits arising from a dedicated and experienced originator based in the state and the anticipated population growth,” the executive added.
The office will be led by former Westpac executive Matt Golledge.
Supra is also planning a Sydney branch.
Post pandemic boom
Led by interstate migration, in the 12 months to March, 2021, Queensland’s population increased by 43,900 – almost triple that of the next best performing state (Western Australia, at 15,200), according to recently released Australian Bureau of Statistics data.
In its latest budget, the federal government forecasts the state’s permanent population will surge by 250,000 over the next four years – to 5.44 million (this factors in international migration, expected to flow after this year).
“With a population of 3.7m, Queensland’s south east is Australia’s fastest growing zone,” Ms Zuccala said.
“Once interstate borders reopen and overseas migration resumes, it will be an attractive destination for local and overseas migrants and tourists,” she added.
Brisbane Olympics effect
The Palaszczuk government’s management of the COVID pandemic has seen Queenslander’s incomes largely uninterrupted, assisting with affordability at a time of historically low interest rates, Ms Zuccala said.
“The state also continues to be very affordable, with Brisbane’s median house price of $691,000 still less than half of each of Sydney and Melbourne’s,” the executive added.
In its recent state budget, the government tipped in $27.5 billion for roads and transport, including for the Cross River Rail, Brisbane Metro and Coomera Connector.
All the major banks are forecasting Brisbane’s house prices to rise by between 16-21 per cent in the next 12-18 months too.
“The resulting migration from the pandemic has accelerated the ‘coming of age’ for the city and south east Queensland, and this is underpinned by infrastructure spending and associated job creation leading up to the Brisbane Olympics in 2032 with some predicting a ‘golden age’ of property,” according to Ms Zuccala.
“It is also estimated the Olympics will bring $8b of economic and social benefits to Queensland through an increase of tourism and the creation of approximately 91,600 full time jobs.
“Historically, the Olympics host city experiences positive trends to its property market – leading up to and afterwards – not directly attributed to the hosting of the games but rather the improvements of infrastructure, job creation and increased tourism, foreign investment and trade”.
Private lending filling a gap
Established more than 20 years ago initially as a property developer, then as a real estate fund manager, Supra entered the private lending market in 2016 “with a long track record of raising capital and deploying it into property developments”, according to Ms Zuccala (story continues below).
Dealing in, amongst other sectors, residential, retail, office and industrial, as well as specialised product such as childcare, petrol and medical, the lender provides funding secured by first mortgage across the project life cycle from early stage land banking to construction and residual stock.
It also provides mezzanine finance.
“In a market where quality developers with strong track records, experienced project teams, solid asset positions and sound exit strategies are struggling to secure finance from traditional lending sources on acceptable terms or at all, non-bank lenders are stepping in to fill the gap,” Ms Zuccala said.
“Obtaining finance from major funders has undoubtedly become more prescriptive in recent years both at site acquisition stage and into construction and sell-down,” the executive added.
“The assessment of traditional owner-builders and developers by major funders can at times be onerous and complex relative to their clearly demonstrated property ‘smarts’ and track record.
“In addition to flexible and tailored terms, Supra is able to offer higher Loan to Value ratios, lowering the often high equity contributions demanded of developers from banks, therefore freeing up their capital”.
The lender typically provides loans secured by first mortgage from $3-$30m and mezzanine loans between $2-$15m.
“As Supra evolved from a property development business, we understand the issues that are unique to the industry, including risk issues like satisfying requirements related to planning, environment and heritage concerns which may impact project timelines and outcomes,” Ms Zuccala said.
“Banks frequently have lengthy application processes, whereas Supra is able to move quickly across the investment landscape and provide funding in a timely manner, within relatively short time frames,” she added.
“Supra is able to provide a more flexible and tailored approach to developers seeking funding”.
Supra Capital in Queensland
Matt Golledge will lead Supra’s Brisbane office.
“A 15 year property finance bank veteran, Matt is regarded as the state expert on property development funding within Westpac in Queensland,” Ms Zuccala said.
“His local expertise and reputation will support Supra building relationships in the Queensland market and ensure Supra is able to continue its personalised partnering approach,” according to the executive.
“Matt will be a local dealing with a local”.
Via the branch, the lender can facilitate regular inspections of properties and projects, to ensure alignment of interests with its borrowers and ultimately Supra’s investors,” Ms Zuccala said.
“We work with the developers and offer a level of engagement and understanding that can’t be offered by banks and other major lenders who have not had a background in property development.
“Supra’s Queensland base will also allow a personalised and accessible approach to lending which is one of Supra’s key value propositions for its borrowers in Victoria and we know this translates to quality investment opportunities”.
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