MaxCap delivers $1.1bn in private and institutional funding for FY16

MaxCap is pleased to announced its strongest ever capital raising results, achieving $1.1bn in private and institutional funding, in addition to placing in excess of $500m with its major banking partners. 

This strong FY16 result involved direct lending in excess of $280m across 34 transactions to its sophisticated private clients, and a further $820m with its institutional capital partners across 13 deals. These transactions range in geography and asset class type. Facilities included structured finance (mezzanine and preferred equity funding) and more recently, first mortgage and unitranche (stretch-senior).

There has been particularly strong demand for debt solutions for large mixed-use developments in inner Sydney and Melbourne, and MaxCap is proud to have provided funding solutions to many new and returning borrowers over the FY16 period.

This high transactional volume is set against the backdrop of a changing debt capital landscape – one that will distinguish FY17 from other periods when commercial real estate debt is increasingly funded outside of the major banks.

Despite strong demand-side market fundamentals; a growing population, low settlement defaults and a tight rental market, it is in some respects more difficult now to procure debt finance from the major banks than during the Global Financial Crisis. The constrained lending market is almost entirely a regulator-driven phenomenon. The Australian Prudential Regulation Authority (APRA) continues to impose increased capital adequacy ratios on the major banks, where the net effect has resulted in reducing their current real estate exposure, and in turn placed downward pressure on Loan-To-Value (LTV) ratios. The major banks now face substantial challenges to maintain their historical lending activity, with aggregation limits to borrowers and geographic concentration restrictions making securing debt for high density apartment developments a difficult task, even for those with demonstrable experience.

However, in the midst of these challenging times there is positive news; institutional capital is beginning to flow into the Australian debt market to fill the void. MaxCap is leading the charge with a number of significant institutional mandates to provide alternative real estate debt solutions. This institutional capital is derived from not only Australian superannuation funds but also from offshore pension and sovereign wealth funds, as well as private equity investment managers and hedge funds.