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WHERE DO you go when the banks say no? According to Dominic Lambrinos, you go to Chifley Securities. The Sydney-based non-bank is not your typical commercial lender, and that is precisely the idea. A private lending marketplace, Chifley’s portfolio is made up of large investments from a handful of high net worth individuals, and the lending solutions it offers are rapidly becoming the go-to for commercial developers. In the past 12 months, Chifley Securities has lent $638m in commercial loans – impressive for a lender that is less than two years old. “The philosophy behind Chifley is to use our background in private lending and to develop a place in the financial marketplace … which brings private lending more into the norm … where we could provide brokers with an alternative source of finance when banks said no,” Lambrinos tells Australian Broker. “… The banks have struggled with APRA or the international Basel rules and they’re not lending as much. So … people aren’t going from bank to bank with commercial loans like they used to, and current clients of banks aren’t being serviced or acknowledged for their tenure…” Lambrinos adds that the banks that won’t lend to particular commercial clientele are also happy to send them in Chifley’s direction. As they see it, Lambrinos says, better they lose a client to a private lender than to a direct bank competitor. “We created this marketplace shortly after the time when the banks were restricting the number of loans they were doing for people,” says Lambrinos. “So that brings us into mainstream lending, and more than we’ve ever been in the past. “These people were going to banks; they’ve come and experienced the way we do business, and we’re different … we’re easier to deal with than banks,” he explains. The ease of use Lambrinos is referring to is Chifley’s borrower assessment criteria. “We are strictly an asset lender,” Lambrinos says, meaning that Chifley assesses borrowers based on their assets alone, not their serviceability. This naturally means Chifley is not as ‘strict’ as the banks and will lend based on the company’s asset wealth. “Being an asset-only lender we don’t look at the serviceability, and if we do it’s very rare. We look at the assets that the person owns and [ask,] does that make sense with the loan they’re taking out and the asset we’re lending against?” Show me the money In the 12 months to date, Chifley Securities has experienced a 35% increase in lending volume compared to the prior nine months. Clearly, there’s no denying there is demand for untraditional non-bank lenders like Chifley Securities in the commercial market, and that demand appears to be on the up. Lambrinos believes that once new commercial clients get a taste of Chifley Securities, their repeat business is pretty much a given. “People who come to us and experience us,
“You get a lot of business acumen [at Chifley]. You get people who understand numbers, so we can do a deal very quickly and work out how to make it work, or say no pretty quickly, so the experience is really important” they’ve come back to us for more business and more quotes,” he says. The fact that these borrowers can expect to pay a steep 10–12% in prepaid interest compared to the average 5–6% offered by the banks is by no means a deterrent. “The reason for that is because when you’re a home loan buyer, your interest rate is the most important factor,” Lambrinos says. “[But] people in business have got a [commercial] transaction, so for them it’s important to do that transaction because they’ll make X million dollars out of it … You’re better off paying more interest and making the money.” The wealthy eight Chif ley Securities has only eight investors, and three of these are billionaires. The lender’s minimum investment amount is $50m, and its total pool of funds is valued at around $1.375bn.
“These high-net individuals want to have a good return on their money; they don’t want 1%,” says Lambrinos. At Chifley, he explains, they can get a return of 10–12% instead. Needless to say, they’re laughing all the way to the … non-bank. “So, with getting all these investors in place and offering a good return, we’re providing the investors with access to transactions or investments they would never find themselves,” Lambrinos says. “Investors are seeing this as a fairly conservative investment and a good return.” A unique approach While most non-banks and private lenders pool their investors’ funds, for Chif ley this only occurs on the rare occasion that a loan exceeds $50m. In general, Lambrinos says, the rule is “One loan, one investor”. “That allows us to provide a more personalised service … to be able to put into