Non-Bank Lending as an Asset Class

TierONE Capital is an active participant in the non-bank lending sector which has experienced significant growth in the past 5 years. Increasingly, non-bank lenders continue to attract funds from the superannuation industry, as this asset class grows and warrants attention as an investment grade product. Commercial borrowers, such as developers and landowners, have been beneficiaries of this additional liquidity in the lending market.

Non-bank lending, along with private equity and foreign exchange, tends to be classified under the broad category of ‘alternative asset classes”, predominantly because it doesn’t fit neatly into other asset classes like direct property, cash, fixed income, listed equities or managed funds for example.

Non-bank lending offers investors similar characteristics to fixed income assets like government and corporate bonds. These features include fixed interest and a fixed term however the asset manager for non-bank lending is a little different. Non-bank lenders are typically mortgage managers that originate, assess and manage loans to commercial borrowers with real estate properties as security.

Sophisticated investors are increasingly looking at private (non-bank) lending as these loans offer an annualised interest rate often in the high single digit to low double digit percentage range with a first mortgage held over property assets. A relatively conservative loan to value ratio on the loans offered, coupled with typical loan terms of less than 15 months, helps to give investors comfort about the repayment at the end of the loan term.

If you are a sophisticated investor and would like to find out more about the TierONE Capital offering, please contact us here.

Share this story, choose your platform!

Comments are closed.