Non-bank lender secures funding line from Westpac

Pallas Capital has secured the first structured finance facility of its kind from a main New Zealand bank.

Wednesday, July 24th 2024, 1:22PM

Pallas Capital has successfully refinanced its flagship New Zealand lending facility, Pallas NZ Funding Trust No. 1 (PFT NZ), the first structured facility of its kind from a main New Zealand bank.

Westpac NZ have provided new funding lines to support the $360 million facility, underscoring the continued success of Pallas Capital’s fast growing lending platform.

Since its launch in December 2022, PFT NZ has funded 60 commercial real estate loans with a total value of $300 million.

PFT NZ lends money to borrowers across a range of commercial loan products including pre-development loans, residual stock loans and investment property loans. Most of its loans are between $2 and $15 million, although it is able to fund larger loans where its credit criteria are met.

It targets medium sized borrowers who can find it challenging to work with established bank and non-bank lenders in New Zealand.

PFT NZ is modelled on a corresponding Australian facility that was launched by Pallas Capital in November 2021, which has so far lent a total of A$800 million to medium sized SMEs in Australia.

Examples of how the institutional funding is being deployed across loans include a recent CRE loan by PFT NZ of NZ$22 million to a developer based in Auckland. This loan was secured against five separate properties in Auckland and Napier with proceeds funding development activity on some of those properties.

Another loan of $3 million was secured against a project set to deliver 18 luxury townhouses in Mount Victoria, a premium suburb in central Wellington. Additionally, a third loan of $16 million was secured against a retail and accommodation property in Queenstown, which was repaid through a new bank loan.

Pallas Capital chief investment officer Dan Gallen said, “we are delighted to announce our collaboration with Westpac in New Zealand. With such strong and experienced funders backing us, we look forward to expanding our suite of lending products and building upon our successes in the local market.”

“Although other non-bank lenders compete with PFT NZ, many of these lenders are funded by retail or high net worth investors. These investment flows can be volatile, making it harder for them to consistently compete with lenders like Pallas Capital with committed institutional capital behind them,” he said.

Westpac NZ managing director of Institutional and Business Banking, Reuben Tucker says the funding deal is the first structured finance facility of its kind from a main New Zealand bank.

He said they have come up with an innovative funding pathway that will allow Pallas to be a competitive non-bank funder of commercial real estate debt products.

“We believe this funding structure will provide New Zealand borrowers access to alternative funding sources, and we’re looking forward to seeing the impact Pallas Capital will have in the market.”

Pallas does construction loans through the existing Pallas Capital lending business.

Tags: Westpac