CBRE Group is expanding its Asian debt origination and loan servicing business to Australia, enabling the property services giant to facilitate private lending in one of the region’s most mature real estate markets.
This comes as major global funds are taking a closer look into investing in debt in Asia, including Australia, says Nick Crockett, executive director of CBRE’s capital advisers business in Asia Pacific.
The firm's debt origination business services global clients – including pensions, sovereign wealth funds, insurance firms, private equity funds and credit companies – that seek to provide commercial real estate debt.
“The clients we work with in the US and Europe want to access the Asia-Pacific market," says Crockett. "So we are providing that service to them, in both origination of deal flow and then also servicing of those loans.
Real estate debt provides exposure to core property and yield, he adds. For investors looking for deals specifically in Australia, it also enables them to match local-currency liabilities, he adds.
Crockett launched the Asia-Pacific unit of the business 12 months ago. It complements existing operations in the US and Europe set up in the early 2000s, in the aftermath of the global financial crisis.
The US and European units handled $26.9 billion in debt origination and managed $134 billion of loans on behalf of institutional and fund clients. Crockett declined to comment on the amount handled by the Asia unit.
The new Australia operations are being launched by Sydney-based Martin Priestley, who joined CBRE's capital advisers team this week. He joins from Australian property fund manager Moss Capital, where he served as managing director.
Real estate lending in Australia is 80% dominated by domestic banks, says Crockett. He sees an opportunity to provide commerical property buyers with an alternative to bank financing, offering longer-term debt for a period of up to 10 years. This compares to tenures of between three and five years typically offered by banks.
“Non-bank lenders have far more friendly covenants,” says Crockett. Given its mature and stable property sector, Australia could be a major market for the capital advisers business in Asia, he adds.
Japan is currently the unit's biggest market, “and possibly in the future we’ll see more demand for non-bank lending in Korea and Singapore”.
Private lending is providing a growing source of capital in Asia, with a rising number of funds seeking to offer financing with more flexible deal terms than banks.