High-rise funding deal plan revealed
A ROBINA-based funding 'matchmaker' which has done nearly $400 million worth of business since it was set up in 2006 is contemplating its first Gold Coast high-rise deal.
Credit Connect Group is an online peer-to-peer lender that arranges transactions between investors, some from offshore, and developers and other people seeking property funding.
Founder Peter Benson said Credit Connect's conservative approach had seen it facilitate deals across Australia.
"Yes, we've been the catalyst for lending involving Gold Coast properties but nothing in the apartment tower category," Mr Benson said. "That could be about to change because we're down the track with evaluating the merits of a waterfront tower that's already been unveiled in Surfers Paradise.
"The developer's seeking $18 million and the bottom-line for us is the degree of pre-sales.
"We only lend up to 65 per cent of the value of a property and usually a lot less."
Mr Benson was a lending manager for a Gold Coast law firm before establishing Credit Connect and securing an Australian financial services licence.
He said Credit Connect, which had a Sydney office, prided itself on the transparency of it business.
"We don't handle anyone's money - we're just the middleman," he said.
Mr Benson said Credit Connect was arranging deals for investors from Hong Kong and also was in the process of doing business with two New York hedge funds.
A Chinese industrialist had loaned $3.5 million on a Sydney property and was looking to invest up to another $50 million.
"By far the major part of our business has involved lending on properties in Sydney and, to a lesser part, Melbourne," Mr Benson said.
"Investors feel comfortable having exposure in those markets.
"The inquiry since the election has risen dramatically and there are signs that the Gold Coast might be growing in appeal."
Deals the company has facilitated outside of Sydney and Melbourne include a site at Lennox Head where an investor provided a first mortgage.
Mr Benson said Credit Connect had achieved average annual returns for investors during its 13 years of 11.2 per cent.
"All our investors hold first-mortgage security, get a monthly interest payment, and have their money out for 15 months on average.
"We supply them with all the information they need about a property, and the borrower's capacity to perform, before they either decide, or decline, to go ahead.
"We've had only two losses on loans during that time and the losses over both came in at less than $200,000.
"In those cases we've managed the exit strategy for the investors."
Mr Benson said Credit Connect had been dealing with investors with at least $500,000 but was planning to lower that amount to $50,000.
"People are almost desperate to achieve good yields - they can't get them from a bank - so they're prepared to look at other options such as Credit Connect," he said.
"In any deal the money of several investors can be pooled."