Active lending gives investors confidence through market uncertainty
November 25, 2022
November 25, 2022
November 25, 2022
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AltX’s proactive approach to construction loan management protects investor capital and asset quality. Here’s how we’re aligned with the NSW Building Commissioner to build confidence in construction.
In the face of economic headwinds, one construction financier says its active lending approach continues to deliver robust returns for its investors and quality outcomes for developers and homebuyers.
At a recent construction industry event hosted by leading real estate debt investment platform AltX and attended by NSW Building Commissioner David Chandler OAM, the message was clear. Lenders need to protect the quality of the property assets they finance and take more interest in an active lending role.
Addressing the audience of over 100 wholesale investors, Director George Khoury described the rigorous due diligence and project oversight that goes into AltX’s construction deals.
“Active lending means our project management team assesses the development at every stage,” he said. “We visit sites every fortnight, ensuring projects are built on budget, on schedule, and to strict compliance standards in line with the requirements of the NSW Building Commissioner’s Office.”
AltX’s dedicated construction team includes professional quantity surveyors, analysts, planners, engineers and architects. Their goal is to ensure the projects they fund achieve an occupation certificate – because that is when value is realised for investors, purchasers, and the developer.
Khoury explained how AltX’s stringent oversight saw the business through the challenges of construction during COVID-19.
“We’ve taken everything we learned from managing projects through lockdowns, and now apply the same approach to deal with the current inflation pressures,” he said.
Staying the course
AltX gives wholesale investors access to a wide range of private real estate debt investments secured by a first mortgage, including construction finance. Whether they choose to invest in a specific deal or via a managed fund, the same active lending approach applies.
“We can’t control the environment, but we can control our response to the environment,” said Nick Raphaely, AltX Co-Founder and Co-CEO in his keynote.
“It’s no secret that inflation is up, we’ve seen a sharp rise in interest rates, liquidity is tighter, building costs are up, property prices have softened. And I think people are concerned.”
As a business focused on creating wealth for investors, AltX is weathering this storm by building in insulation in the form of conservative LVRs (loan to value ratios) and contingencies for cost over-runs.
“Investors only see the deals we approve. They don’t see the many we turn down as part of our prudent risk management framework,” said Raphaely.
He has also been staffing up. “Of our team of over 45 professionals, a third are focused on credit and risk,” he added.
Real-world rate impacts
During the event’s panel discussions, AltX Head of Property and Risk, Giamol Pasin, described the impact of rate rises on borrowing capacity. “The costs of funding projects or homes has gone up, and I think over the past six months borrowing capacity on average has come back around $200,000 on an average loan.”
Pasin says he expects the RBA will “top out at 3.6% next year”, in line with industry predictions. Which, in his opinion, will cause more pain for first home buyers and house and land developers than the metro or luxury end of the market.The panel agreed the rental shortage and general housing undersupply, coupled with a return to migration, presents strong opportunities for investors. “The fact that superannuation is interested (in the Government’s plans to build 1 million new homes) shows that property is a good, safe investment,” noted Khoury. “Super funds don’t just speculatively park their money anywhere.”
But he also noted the real-world challenges of finding enough builders and materials to realise this strategy in a relatively short timeframe. “We’re on building sites every day as active lenders, and we know we have to lock in supply right now to get delivery in the coming months. It’s hard, but it’s what we have to do as an industry.”
An overdue shake-up
Khoury said he sees AltX’s role as more than giving someone a loan and returning capital to investors. “For the end purchaser, who could be spending millions of dollars, we want to be sure the product is high quality, something we can all proudly put our names to,” he said.
“Our due diligence is too stringent to get away with mediocre work. Because if developers are not building to the best quality they can, they won’t have an end customer – and they won’t get the capital.”
This approach aligns with the priorities of the Office of the NSW Building Commissioner, which has recently supported the introduction of NSW’s iCIRT ratings as an indicator of developer capabilities and track record. The independent, five-star assessment system also provides financial due diligence insights.
As an active lender, AltX works closely with developers to identify opportunities to improve the end product, reduce costs, and mitigate the risk of rework and non-compliance – from day one. And for AltX investors, this robust risk management framework appears to be paying off.
“Our average capital return was actually higher from May through September in 2022 than in the previous six months,” Raphaely noted. “Even in an environment where sales take longer, we’ve been able to maintain the cadence of returning capital to investors.”
Raphaely describes this period as one where “you need to go slow in order to speed up. We’re known for being slow and steady, and we’re well positioned to take advantage of market opportunities,” he said.
In the face of economic headwinds, one construction financier says its active lending approach continues to deliver robust returns for its investors and quality outcomes for developers and homebuyers.
At a recent construction industry event hosted by leading real estate debt investment platform AltX and attended by NSW Building Commissioner David Chandler OAM, the message was clear. Lenders need to protect the quality of the property assets they finance and take more interest in an active lending role.
Addressing the audience of over 100 wholesale investors, Director George Khoury described the rigorous due diligence and project oversight that goes into AltX’s construction deals.
“Active lending means our project management team assesses the development at every stage,” he said. “We visit sites every fortnight, ensuring projects are built on budget, on schedule, and to strict compliance standards in line with the requirements of the NSW Building Commissioner’s Office.”
AltX’s dedicated construction team includes professional quantity surveyors, analysts, planners, engineers and architects. Their goal is to ensure the projects they fund achieve an occupation certificate – because that is when value is realised for investors, purchasers, and the developer.
Khoury explained how AltX’s stringent oversight saw the business through the challenges of construction during COVID-19.
“We’ve taken everything we learned from managing projects through lockdowns, and now apply the same approach to deal with the current inflation pressures,” he said.
Staying the course
AltX gives wholesale investors access to a wide range of private real estate debt investments secured by a first mortgage, including construction finance. Whether they choose to invest in a specific deal or via a managed fund, the same active lending approach applies.
“We can’t control the environment, but we can control our response to the environment,” said Nick Raphaely, AltX Co-Founder and Co-CEO in his keynote.
“It’s no secret that inflation is up, we’ve seen a sharp rise in interest rates, liquidity is tighter, building costs are up, property prices have softened. And I think people are concerned.”
As a business focused on creating wealth for investors, AltX is weathering this storm by building in insulation in the form of conservative LVRs (loan to value ratios) and contingencies for cost over-runs.
“Investors only see the deals we approve. They don’t see the many we turn down as part of our prudent risk management framework,” said Raphaely.
He has also been staffing up. “Of our team of over 45 professionals, a third are focused on credit and risk,” he added.
Real-world rate impacts
During the event’s panel discussions, AltX Head of Property and Risk, Giamol Pasin, described the impact of rate rises on borrowing capacity. “The costs of funding projects or homes has gone up, and I think over the past six months borrowing capacity on average has come back around $200,000 on an average loan.”
Pasin says he expects the RBA will “top out at 3.6% next year”, in line with industry predictions. Which, in his opinion, will cause more pain for first home buyers and house and land developers than the metro or luxury end of the market.The panel agreed the rental shortage and general housing undersupply, coupled with a return to migration, presents strong opportunities for investors. “The fact that superannuation is interested (in the Government’s plans to build 1 million new homes) shows that property is a good, safe investment,” noted Khoury. “Super funds don’t just speculatively park their money anywhere.”
But he also noted the real-world challenges of finding enough builders and materials to realise this strategy in a relatively short timeframe. “We’re on building sites every day as active lenders, and we know we have to lock in supply right now to get delivery in the coming months. It’s hard, but it’s what we have to do as an industry.”
An overdue shake-up
Khoury said he sees AltX’s role as more than giving someone a loan and returning capital to investors. “For the end purchaser, who could be spending millions of dollars, we want to be sure the product is high quality, something we can all proudly put our names to,” he said.
“Our due diligence is too stringent to get away with mediocre work. Because if developers are not building to the best quality they can, they won’t have an end customer – and they won’t get the capital.”
This approach aligns with the priorities of the Office of the NSW Building Commissioner, which has recently supported the introduction of NSW’s iCIRT ratings as an indicator of developer capabilities and track record. The independent, five-star assessment system also provides financial due diligence insights.
As an active lender, AltX works closely with developers to identify opportunities to improve the end product, reduce costs, and mitigate the risk of rework and non-compliance – from day one. And for AltX investors, this robust risk management framework appears to be paying off.
“Our average capital return was actually higher from May through September in 2022 than in the previous six months,” Raphaely noted. “Even in an environment where sales take longer, we’ve been able to maintain the cadence of returning capital to investors.”
Raphaely describes this period as one where “you need to go slow in order to speed up. We’re known for being slow and steady, and we’re well positioned to take advantage of market opportunities,” he said.
In the face of economic headwinds, one construction financier says its active lending approach continues to deliver robust returns for its investors and quality outcomes for developers and homebuyers.
At a recent construction industry event hosted by leading real estate debt investment platform AltX and attended by NSW Building Commissioner David Chandler OAM, the message was clear. Lenders need to protect the quality of the property assets they finance and take more interest in an active lending role.
Addressing the audience of over 100 wholesale investors, Director George Khoury described the rigorous due diligence and project oversight that goes into AltX’s construction deals.
“Active lending means our project management team assesses the development at every stage,” he said. “We visit sites every fortnight, ensuring projects are built on budget, on schedule, and to strict compliance standards in line with the requirements of the NSW Building Commissioner’s Office.”
AltX’s dedicated construction team includes professional quantity surveyors, analysts, planners, engineers and architects. Their goal is to ensure the projects they fund achieve an occupation certificate – because that is when value is realised for investors, purchasers, and the developer.
Khoury explained how AltX’s stringent oversight saw the business through the challenges of construction during COVID-19.
“We’ve taken everything we learned from managing projects through lockdowns, and now apply the same approach to deal with the current inflation pressures,” he said.
Staying the course
AltX gives wholesale investors access to a wide range of private real estate debt investments secured by a first mortgage, including construction finance. Whether they choose to invest in a specific deal or via a managed fund, the same active lending approach applies.
“We can’t control the environment, but we can control our response to the environment,” said Nick Raphaely, AltX Co-Founder and Co-CEO in his keynote.
“It’s no secret that inflation is up, we’ve seen a sharp rise in interest rates, liquidity is tighter, building costs are up, property prices have softened. And I think people are concerned.”
As a business focused on creating wealth for investors, AltX is weathering this storm by building in insulation in the form of conservative LVRs (loan to value ratios) and contingencies for cost over-runs.
“Investors only see the deals we approve. They don’t see the many we turn down as part of our prudent risk management framework,” said Raphaely.
He has also been staffing up. “Of our team of over 45 professionals, a third are focused on credit and risk,” he added.
Real-world rate impacts
During the event’s panel discussions, AltX Head of Property and Risk, Giamol Pasin, described the impact of rate rises on borrowing capacity. “The costs of funding projects or homes has gone up, and I think over the past six months borrowing capacity on average has come back around $200,000 on an average loan.”
Pasin says he expects the RBA will “top out at 3.6% next year”, in line with industry predictions. Which, in his opinion, will cause more pain for first home buyers and house and land developers than the metro or luxury end of the market.The panel agreed the rental shortage and general housing undersupply, coupled with a return to migration, presents strong opportunities for investors. “The fact that superannuation is interested (in the Government’s plans to build 1 million new homes) shows that property is a good, safe investment,” noted Khoury. “Super funds don’t just speculatively park their money anywhere.”
But he also noted the real-world challenges of finding enough builders and materials to realise this strategy in a relatively short timeframe. “We’re on building sites every day as active lenders, and we know we have to lock in supply right now to get delivery in the coming months. It’s hard, but it’s what we have to do as an industry.”
An overdue shake-up
Khoury said he sees AltX’s role as more than giving someone a loan and returning capital to investors. “For the end purchaser, who could be spending millions of dollars, we want to be sure the product is high quality, something we can all proudly put our names to,” he said.
“Our due diligence is too stringent to get away with mediocre work. Because if developers are not building to the best quality they can, they won’t have an end customer – and they won’t get the capital.”
This approach aligns with the priorities of the Office of the NSW Building Commissioner, which has recently supported the introduction of NSW’s iCIRT ratings as an indicator of developer capabilities and track record. The independent, five-star assessment system also provides financial due diligence insights.
As an active lender, AltX works closely with developers to identify opportunities to improve the end product, reduce costs, and mitigate the risk of rework and non-compliance – from day one. And for AltX investors, this robust risk management framework appears to be paying off.
“Our average capital return was actually higher from May through September in 2022 than in the previous six months,” Raphaely noted. “Even in an environment where sales take longer, we’ve been able to maintain the cadence of returning capital to investors.”
Raphaely describes this period as one where “you need to go slow in order to speed up. We’re known for being slow and steady, and we’re well positioned to take advantage of market opportunities,” he said.
In the face of economic headwinds, one construction financier says its active lending approach continues to deliver robust returns for its investors and quality outcomes for developers and homebuyers.
At a recent construction industry event hosted by leading real estate debt investment platform AltX and attended by NSW Building Commissioner David Chandler OAM, the message was clear. Lenders need to protect the quality of the property assets they finance and take more interest in an active lending role.
Addressing the audience of over 100 wholesale investors, Director George Khoury described the rigorous due diligence and project oversight that goes into AltX’s construction deals.
“Active lending means our project management team assesses the development at every stage,” he said. “We visit sites every fortnight, ensuring projects are built on budget, on schedule, and to strict compliance standards in line with the requirements of the NSW Building Commissioner’s Office.”
AltX’s dedicated construction team includes professional quantity surveyors, analysts, planners, engineers and architects. Their goal is to ensure the projects they fund achieve an occupation certificate – because that is when value is realised for investors, purchasers, and the developer.
Khoury explained how AltX’s stringent oversight saw the business through the challenges of construction during COVID-19.
“We’ve taken everything we learned from managing projects through lockdowns, and now apply the same approach to deal with the current inflation pressures,” he said.
Staying the course
AltX gives wholesale investors access to a wide range of private real estate debt investments secured by a first mortgage, including construction finance. Whether they choose to invest in a specific deal or via a managed fund, the same active lending approach applies.
“We can’t control the environment, but we can control our response to the environment,” said Nick Raphaely, AltX Co-Founder and Co-CEO in his keynote.
“It’s no secret that inflation is up, we’ve seen a sharp rise in interest rates, liquidity is tighter, building costs are up, property prices have softened. And I think people are concerned.”
As a business focused on creating wealth for investors, AltX is weathering this storm by building in insulation in the form of conservative LVRs (loan to value ratios) and contingencies for cost over-runs.
“Investors only see the deals we approve. They don’t see the many we turn down as part of our prudent risk management framework,” said Raphaely.
He has also been staffing up. “Of our team of over 45 professionals, a third are focused on credit and risk,” he added.
Real-world rate impacts
During the event’s panel discussions, AltX Head of Property and Risk, Giamol Pasin, described the impact of rate rises on borrowing capacity. “The costs of funding projects or homes has gone up, and I think over the past six months borrowing capacity on average has come back around $200,000 on an average loan.”
Pasin says he expects the RBA will “top out at 3.6% next year”, in line with industry predictions. Which, in his opinion, will cause more pain for first home buyers and house and land developers than the metro or luxury end of the market.The panel agreed the rental shortage and general housing undersupply, coupled with a return to migration, presents strong opportunities for investors. “The fact that superannuation is interested (in the Government’s plans to build 1 million new homes) shows that property is a good, safe investment,” noted Khoury. “Super funds don’t just speculatively park their money anywhere.”
But he also noted the real-world challenges of finding enough builders and materials to realise this strategy in a relatively short timeframe. “We’re on building sites every day as active lenders, and we know we have to lock in supply right now to get delivery in the coming months. It’s hard, but it’s what we have to do as an industry.”
An overdue shake-up
Khoury said he sees AltX’s role as more than giving someone a loan and returning capital to investors. “For the end purchaser, who could be spending millions of dollars, we want to be sure the product is high quality, something we can all proudly put our names to,” he said.
“Our due diligence is too stringent to get away with mediocre work. Because if developers are not building to the best quality they can, they won’t have an end customer – and they won’t get the capital.”
This approach aligns with the priorities of the Office of the NSW Building Commissioner, which has recently supported the introduction of NSW’s iCIRT ratings as an indicator of developer capabilities and track record. The independent, five-star assessment system also provides financial due diligence insights.
As an active lender, AltX works closely with developers to identify opportunities to improve the end product, reduce costs, and mitigate the risk of rework and non-compliance – from day one. And for AltX investors, this robust risk management framework appears to be paying off.
“Our average capital return was actually higher from May through September in 2022 than in the previous six months,” Raphaely noted. “Even in an environment where sales take longer, we’ve been able to maintain the cadence of returning capital to investors.”
Raphaely describes this period as one where “you need to go slow in order to speed up. We’re known for being slow and steady, and we’re well positioned to take advantage of market opportunities,” he said.
