- $1B in cumulative transactions has occurred since inception in 2016
- $653M of these transactions have occurred during the past year
- Pallas focuses on inner-city suburbs in Melbourne and Sydney
Commercial real estate investment manager Pallas Capital has reached $1 billion in cumulative transactions since its inception in 2016.
This milestone was achieved after recording $653 million transactions in the last 12 months alone, as investors moved towards real estate credit as a secure investment despite the pandemic.
To accommodate this demand, the company has doubled its headcount this year.
Fundraising
The funds have been raised via Pallas’s high net worth (HNW) individuals and family office investor base, together with issuing of a four year fixed rate tradable bond, with the underlying security being a pool of first mortgages.
65 of the 155 transactions managed to date, 65 have been repaid while the rest are still performing satisfactorily. None have suffered any credit impairment.
The fund includes many boutique residential projects in Melbourne’s inner-city suburbs, such as Glen Iris, Toorak, Brighton, Malvern and Richmond. The end value of the projects ranges from $20 million to $50 million. Many were funded with minimal presales or presales.
A similar strategy of acquiring development sites in inner-city areas was applied in Sydney where sites were acquired in Double Bay, Rose Bay and Edgecliff with a range from $35 million to $70 million.
“CRE [commercial real estate] lending, funded by private investors, established itself in the US and Europe many decades ago. It seems clear that it will become a very large asset class here in Australia over the next few years,” said Pallas Group Chairman, Patrick Keenan.
“The planets have aligned to create the perfect environment for the growth of this class of assets. The banks and other traditional lenders are hamstrung, investors are searching for yield without taking on high levels of risk and borrowers need fast response times and reasonable flexibility in loan terms.
Patrick Keenan, Pallas Group Chairman
“Only CRE lending by the non-bank lenders, and funded by private investors, can answer all of these needs. Pallas Capital is excited to be on the leading edge of this transformation, bringing superior solutions to private investors and borrowers alike.”
Trend
CRE lending, funded by private investors, is an emerging trend in Australia, which lags behind Europe and the US in this asset class.
This class has become more popular since Covid, with investors looking for defensive positions with good returns. Perth-based PrivateInvest trades nationally and has been achieving returns over the last three years with an annualised cash return to investors of 9.23% per annum.
