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New mortgage lender for developers

A second tier lender has launched a new first mortgage fund to provide loans to property developers.

Friday, March 19th 2021, 8:52AM

Pearlfisher Capital wants its new fund to boost new property development as banks maintain tight credit criteria. 

The non-bank lender says its fund is for developers who are finding it more difficult to secure funding from banks.

Pearlfisher director Tony Abraham said the fund gives borrowers an opportunity to access non-bank funding for well-considered projects that are at the low to medium end of the risk spectrum. And which meet Pearlfisher’s investment criteria.

Abraham says developers will need to have consents and a construction contract in place and have pre-sold a percentage of the development before funding is considered.

“We will only lend at a level that meets our criteria and we are comfortable with.”

He says finance for developments outside the fund can be considered – on a project by project basis – but the fund will have first priority.

The fund is being targeted to help address concerns about the supply of residential housing. And the challenges faced by many borrowers in raising flexible debt for projects.

“It provides a committed line of capital for Pearlfisher to expand its first mortgage lending.”

Abraham says inquiries about developer finance have increased 50% since the fourth quarter of last year.

“Banks’ increased capital requirements and strict lending conditions mean many developers are shifting to non-bank first mortgage funding, which is already well established in offshore markets – including Australia, Europe, UK and the US.

“We are looking to step in and provide debt for housing projects that have been finding it challenging to access finance from banks.”

The fund’s first transaction is a terrace house development that is 100% sold to Kāinga Ora. Abraham says this is a good example of the type of activity the fund expects to participate in.

It is targeting developers who have two to three-level projects of eight to 20 units.

“At this size the cost of obtaining non-bank funding compared to bank finance is of not much concern to developers. They just want to get on with their projects,” says Abraham.

The firm is courting investors for the new fund.

Investor returns are expected to be 6-7.5% yearly (pre-tax, net of fees) on invested capital.

Pearlfisher has funded a variety of developments since its inception 11 years ago. Including numerous residential land subdivisions, multi-unit townhouses, high rise apartments and suburban retail developments.

Until recently funding had been on a deal-by-deal basis. During the past 12 months, Pearlfisher has settled more than $100 million of property development and investment transactions – despite the challenges and uncertainty caused by Covid-19.

Tags: Lending

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 5.44 - - -
AIA - Go Home Loans 7.99 5.99 5.69 5.69
ANZ 7.89 6.59 6.29 6.29
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 5.99 5.69 5.69
ASB Bank 7.89 5.99 5.69 5.69
ASB Better Homes Top Up - - - 1.00
Avanti Finance 8.40 - - -
Basecorp Finance 9.60 - - -
BNZ - Classic - 5.99 5.69 5.69
Lender Flt 1yr 2yr 3yr
BNZ - Mortgage One 7.94 - - -
BNZ - Rapid Repay 7.94 - - -
BNZ - Std 7.94 5.99 5.69 5.69
BNZ - TotalMoney 7.94 - - -
CFML 321 Loans 6.20 - - -
CFML Home Loans 6.45 - - -
CFML Prime Loans 8.25 - - -
CFML Standard Loans 9.20 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - 5.79 - -
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Owner Occ 7.65 5.99 5.75 5.69
Co-operative Bank - Standard 7.65 6.49 6.25 6.19
Credit Union Auckland 7.70 - - -
First Credit Union Special - 6.40 6.10 -
First Credit Union Standard 8.50 7.00 6.70 -
Heartland Bank - Online 7.49 ▼5.65 ▼5.55 ▼5.55
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.00 6.50 -
ICBC 7.49 5.99 5.65 5.59
Kainga Ora 8.39 7.05 6.59 6.49
Kainga Ora - First Home Buyer Special - - - -
Lender Flt 1yr 2yr 3yr
Kiwibank 7.75 6.89 6.59 6.49
Kiwibank - Offset 8.25 - - -
Kiwibank Special 7.75 5.99 5.69 5.69
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 8.44 ▼6.39 ▼6.09 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
SBS Bank 7.99 6.95 6.29 6.29
SBS Bank Special - ▼6.15 5.69 5.69
SBS Construction lending for FHB - - - -
Lender Flt 1yr 2yr 3yr
SBS FirstHome Combo 5.44 ▼5.15 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.75 - - -
TSB Bank 8.69 6.79 6.49 6.49
TSB Special 7.89 5.99 5.69 5.69
Unity ▼7.64 5.99 5.69 -
Unity First Home Buyer special - 5.49 - -
Wairarapa Building Society 8.50 ▼6.19 ▼5.79 -
Westpac 8.39 6.89 6.39 6.39
Westpac Choices Everyday 8.49 - - -
Westpac Offset 8.39 - - -
Lender Flt 1yr 2yr 3yr
Westpac Special - 6.29 5.79 5.79
Median 7.99 6.17 5.79 5.69

Last updated: 30 October 2024 9:36am

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