Private interest rates fall in competitive market

Interest rates in the private debt funding market has dropped significantly, despite banks closing their lending to property investors said Chrish Samuel Managing Director of Windsor Capital Management. Mr. Samuel said more than a billion dollars has poured into the short-term debt market pushing interest down to recent lows as the weight of money flowed into the sector. He has witnessed rates fall from 12% pa in early 2018 to rates from 7.95% pa today for property backed debt.“This has allowed breathing room for property developers to restructure their developments in a tightening property market and has gone some way to securing their financial position, he said.Mr. Samuel said Windsor Capital Management has lent in excess of $275 Million in the past 12 months to experienced property developers with a track record, with no upfront pre-sale requirements, however borrowers are required to make pre-sale commitments during the course of construction.

“The flow of private capital into the debt market has been extraordinary, as cashed up investors have decided lending is offering better returns than other financial asset classes.“I believe we are going to see banks continue to tighten lending parameters for some time, which will push more developers and investors into the private debt market, Mr Samuel said.Windsor also lends funds to developers and investors looking to landbank properties along with mezzanine debt.“There has been a surge in investors and developers seeking landbank funding as banks withdraw from the market. We are seeing banks lending as little as 20%-30% of valuation or refusing to fund experienced developers and investors altogether, he said.Windsor Capital Management has been lending to property developers and property investors for a decade and has prided itself on its innovation and an entrepreneurial philosophy by going against the grain.By adopting a conservative lending policy Windsor Capital Management has provided secured returns to some of Australia wealthiest individuals and family offices.