In Australia’s real estate market, private credit is emerging as a transformative force, offering flexibility and dependability in funding solutions that traditional banks can’t provide. For real estate developers and investors, private credit can enable projects to thrive and will continue to reshape the property finance landscape. However, with the influx of private credit lenders, it is essential to ensure you are partnering with one that not only offers capital but also strategic support that can drive your project’s success.
The Rise of Private Credit in Real Estate: Australia’s real estate sector is undergoing a significant shift as the need for private credit continues to grow. Traditional lenders often impose rigid terms and lengthy approval processes, which can hinder project timelines and create uncertainty. Private credit can provide a vital lifeline for developers. Unlike conventional bank loans, private credit offers bespoke solutions that cater to the unique demands of real estate projects.
With an Influx of New Private Credit Lenders, as a Developer, Are You Asking the Right Questions? Choosing the right private credit partner may be crucial to the success of your real estate project, particularly when things don’t go to plan, which has recently been occurring at an increasing rate. To ensure a successful collaboration with your lender, developers and investors should be asking several key questions:
- What is the provider’s reputation and track record? Embracing private credit in real estate is not merely about securing funds; it’s about forging a strategic partnership. Understanding a lenders previous successes and failures can provide insight into their expertise and reliability. A partner with deep industry knowledge, a strong reputation, and a proven track record of working with clients is invaluable, particularly during challenging times. An effective private credit partner should provide a level of support, engagement, and a willingness to be flexible and work to modify terms or address any changes throughout the project’s lifecycle. Look for a provider that has a history of commitment to the successful delivery of a project and that can adapt to market changes.
- What is the certainty of capital? Predictable and reliable financing solutions are paramount to ensuring confidence in investment decisions. It provides the assurance that the funds will be available when needed. An issued Term Sheet that falls through in the final hour because the lender fails to raise the capital required, can be disastrous for a developer. It can pushback project timelines, damage the credibility of the developer, or result in increased pressure to find a new funding solution at short notice, which often leads to higher funding costs. Research the lender, and ask them to prove the capital required for funding will be available when needed. This will allow you to focus on what you should be focusing on, the development.
- How transparent will they be and how accessible are the lines of communication with the key decisions makers? Clear and transparent communication is essential for a successful partnership. Ensuring that your private credit provider has open lines of communication, provides updates, and addresses any concerns promptly is crucial. Equally important is the accessibility to the actual decision makers. Having a direct line with those who hold the power to make critical decisions can significantly streamline the project workflow and allow for a swift resolution to any issues that may arise. Look for a relationship with a private lender where you are certain you have access to the key decision makers, at the time you need them.
Asking these questions will help ensure that you select a private credit partner who not only meets your financial needs but also adds strategic insight, adaptability, and reliability to your real estate ventures and will help you feel more confident that support will be there when needed.
What makes GCI different?
As a long-standing provider of real estate-backed loans, GCI offers more than just a financial solution. We bring a deep understanding of the sector, enabling us to support developers in ways that help them maintain momentum and adapt quickly to changing circumstances. Some recent examples of how we made an impact are as follows:
- GCI recently funded a $12.3 million refinancing facility to help a property developer in Sydney complete a residential land lot subdivision. Our adaptable loan structure and constant support provided through the project enabled the client to reach the final stages of the project without delays, despite multiple roadblocks throughout, ensuring the timely completion of all works plus the registration and settlement of all presold lots.
- When a client faced an urgent need to secure a property, GCI structured a $11.3 million equity release for the acquisition of a large asset in the Northern Territory, supporting the client’s business expansion into carbon credits and sustainable cattle farming. This complex and bespoke loan structure enabled the client to use an underutilised asset for immediate capital, meeting the urgent acquisition timeline and positioning them for growth.
- In a recent transaction, GCI provided 100% acquisition funding for a client purchasing a property. By securing multiple properties and offering tailored terms, we met the client’s urgent funding needs while reducing risk across the security package. GCI’s flexible, hands-on approach allowed the client to seize this opportunity without delay, thanks to direct communication with our team throughout the process.
As Australia’s real estate market continues to evolve, private credit is reshaping property finance. The combination of flexibility, industry expertise, and a collaborative approach makes private credit an attractive option for developers seeking lending solutions. With the real estate sector increasingly leaning towards alternative financing methods, private credit will continue to play a crucial role in shaping the future of real estate in Australia. However, make sure that you’ve asked all the right questions of your lender to enable a successful partnership.
If you would like to discuss with the GCI team our approach to partnering with businesses as a strategic capital partner, please get in touch.
To read more about how we have helped a variety of businesses transform over the years, visit www.gcifunds.com/case-studies/
Authored by Gavin Solsky (Co-Founder & Managing Director) and Robert Grajczyk (Investment Director)