While Ben Wardley is new to the Top 10, the brokerage of which he is a director, Right Angle Group, has appeared in MPA before. Right Angle Group has previously featured in our Top 10 Independent Brokerages report, reflecting a trend of commercial brokerages diversifying back into residential lending.
Nevertheless, the property developers of Sydney and Brisbane are still important clients for Wardley and his team. “The bulk of what we do is helping the client with the development, whether that be site acquisition or rolling through to construction funding and refinancing the debt on completion.”
Changing bank appetites
Wardley’s experience of lending changes this year has been the extra work he’s had to put into those clients. “We’ve got a core group of residential developers, and they’ve continued to get funding for them, but gearing levels have really come down and presale requirements are going up, so they’re having to put a lot more equity into their deals and we’re having to work a lot harder to get the deal across the line.” As Wardley explains, part of being an experienced commercial broker is being selective in the deals you take on, turning away those that won’t fit the banks’ guidelines and focusing on “key clients and quality transactions”.
Looking elsewhere for finance
Non-banks and private lenders are able to provide funding for smaller sub-$10m projects, Wardley says. There are advantages and disadvantages to using these lenders. “We find non-banks and private lenders still do want some level of presales but a lot lower than the major lenders – but higher pricing and establishment fees come with using those types of funders,” he says. Furthermore, these lenders often don’t have loan books that are large enough to handle projects above the $10m mark. Wardley has so far not worked with any offshore funders.
Outlook for 2017/18
Although Wardley sees conditions getting tougher, he believes Right Angle Finance can weather the storm. “A couple of years ago we noticed [the market] was continuing to tighten, so we tried to focus more on developers looking at alternative asset classes,” Wardley explains. These asset classes include land subdivisions, childcare centres and industrial warehouses, where banks have not been so restrictive. “We rebalanced our focus and our client base,” Wardley concludes. “We still look after our large residential clients, but we certainly haven’t gone looking for any more of those clients.”