Settling a $7.5m commercial property deal just two weeks after being approached is a scenario that would impress many experienced brokers used to slower lender decisions that leave clients uncertain, and at risk.
However, it’s not an unusual turnaround time for non-bank Chifley Securities, says director Joe Morello. “Our credit team responds really quickly to new enquiries, so brokers know they’ll get an answer saying we either like a deal and want to move forward, or that we can’t proceed. There’s no wasting time.”
Referred by a broker, the client in this case was purchasing a retail centre in Campbelltown in Sydney as an investment. With a number of shop leases either coming to an end or expired, the client’s bank reneged on the deal two days before the start of a two-week notice to complete, requiring urgent action.
“The broker came to us first because he knew he’d get a yes or no fast,” Morello says. “We got the valuation done straight away, and everything stacked up for us – we knew that in this case it was a strong borrower – so we were able to settle in two weeks, ensuring the client didn’t have to lose their deposit.”
Chifley Securities bases decisions primarily on the quality of the asset and the financial position and character of the borrower. That means that, unlike a bank, the lender can take a more flexible, entrepreneurial approach to deals, and because interest is capitalised, it doesn’t need to prioritise monthly loan serviceability to the same extent.
“For us, security comes down to the strength of the asset, which is tested through a valuation, and the borrower behind the deal. Monthly repayments are essentially capitalised into the loan at the outset, and our process doesn’t require clients to jump through as many hoops as a tier one bank,” Morello says.
In another deal, the representative of an investment syndicate was seeking $11m to purchase multiple adjacent sites worth $22m in Sydney’s Wolli Creek for a future development. Although the banks were reluctant to lend because on paper the sites weren’t generating significant income, Chifley Securities was able to act fast to lock in the land, despite a more complicated corporate structure that required more due diligence.
“The representative was in a rush to settle and hadn’t been able to lock anything in, despite having made commitments to investors,” Morello says. “We were able to ensure the client saved face by settling in a little over two weeks, and we continue to receive more business from those investors.”
Fast and clear
Chifley Securities has offered brokers 1% commission on settled deals since launching in 2014. However, it’s the ability to act fast with its total pool of $1.1bn in capital that is setting it apart from other lenders in the market. In fact, the broker who referred both the Campbelltown and Wolli Creek deals is in the process of settling three more deals and entering into a white label agreement.
“The ability to get a decision – even a negative decision – allows brokers to move on, and safeguard the thing that they trade on: their reputation,” Morello says. “No one likes to get a no, but a quick no is always better for the broker.”
Morello says he expects more traditional bank deals to be referred by brokers to Chifley Securities, as these mainstream lenders continue to neglect potentially good investments and clients to maintain more conservative lending standards.
“We are seeing more deals where a client has ample net assets to cover a debt, but they are receiving overly conservative responses from mainstream lenders, and that is good for us.”
Chifley Securities is a non-bank commercial lender who accesses private loans from high net worth investors to promote and build commercial property investment in Australia.
Chifley aims to empower investors with new and unique opportunities, and empower brokers with access to private commercial funds.