Investing in RE debt during & post COVID-19
17 November 2020
A recent article in the Australian Financial Review (5th Oct), reported that the major Banks share of the Commercial Real Estate (CRE) debt market had reduced from 85% to 71.6%, with expectation that this will fall further to 65% in the next few years.
The reduction has been driven by tighter regulation, the impact from the Banking Royal Commission and higher bank capital requirements, rather than a negative view of the asset class.
Banner has seen a further tightening in the Bank’s lending to this sector throughout COVID, with some major banks ceasing to lend to new clients entirely, and restricting activity to existing clients only.
With historically low cash rates, wholesale investors (including SMSFs, individuals and institutions) are seeking higher yielding options. To this end, CRE debt products are becoming more accepted given their higher yields, and capital stability when compared to equities and share backed managed fund products.
With the continuing growth of private CRE debt as an investment option, it is important to ensure any intending investor selects an asset manager with experience and depth of expertise. This is necessary to ensure the investments are overseen by a competent and experienced team.
Banner Asset Management has experienced professionals from various backgrounds (legal, property, banking) overseen by an Investment Committee that approves and monitors all investments on a regular basis.