MaxCap & Pitcher Partners’ Inaugural Developers & Dealers’ Forum 2014: Paul Keating and the Big Four Banks’ Heads of Property

• MaxCap brought the Heads of Property from the ‘Big Four’ Banks together for the first time to participate in an intimate property & finance panel discussion on Thursday 16th of October

• The Forum’s guest speaker was the former Prime Minister, the Honourable Paul Keating

• This inaugural, ‘invitation only’ event also brought together the country’s top 150 developers and key stakeholders

• All banks flagged a cautious approach to development; assessing projects in greater depth than pre-GFC and taking into consideration an increasing amount of external factors before funding projects

MaxCap CIO Brae Sokolski moderated the panel discussion, which covered topics such as the competitive banking landscape, market dynamics, policy setting and direction, the influx of Asian capital and the requirement for additional funding.

Take away messages from the forum included the confirmation that a robust real estate debt market requires alternative funding solutions.

Mr Keating said the introduction of an institutional wedge would assist the industry in opening up supply and tackling increasing affordability issues.

“We cannot persist with this position we are in where our children cannot afford to house themselves,” Keating said.

“No amount of demand is going to improve affordability without a supply response, which will determine a price equilibrium over time.”

“And there can only be a supply response if there are financing arms in place to deal with it.”

Mr Keating pointed to the future evolution of superannuation funds, whose assets may eventually eclipse banks, and their future involvement in finance for development projects – traditionally the realm of banks.

“Superannuation funds will have to do things in the spaces traditionally left to banks, such as property development, and we will see a shift in the balance in financing this industry,” he said.

The banks also pointed to future partnership deals with international banks – particularly in the Asia Pacific region – as Chinese investors continue to target Australia.

CBA’s national head of property finance, business and private banking Colin Robertshaw said in years to come Chinese banks may offer an alternative to banks once they hit a capacity.

The banks also warned approvals were secured on the strength and experience of the borrower.

MaxCap Group continues to assist developers, working with Australia’s leading banks to deliver the maximum senior debt within the capital structure and provide optimal debt funding for developers by enhancing the capital stack with second mortgage funding and/or preferred equity.

MaxCap Group Managing Director Wayne Lasky said the forum had kick-started a conversation the industry needs to have.

“There is no doubt that the traditional one-size-fits-all approach to finance is not the optimal solution in the current development environment and has in fact resulted in a shift towards utilising specialist consultants that can bridge the gap between development and finance,” added Brae Sokolski, MaxCap Group Chief Investment Officer.

“What a gig!”
– Eddie Law, Head of Institutional Property, ANZ

“Wow what a show […] that was the best finance lunch event I have ever been to and I have never seen a crowd or speakers like it.”
– Tim Gurner, Founder, GURNER™/ Urban Inc.