Goldman Sachs is the latest US investment bank to enter the Australian non-bank commercial real estate debt market, and has plans to ramp up its lending in the sector over the next few months, IPE Real Estate understands.
Industry sources told IPE Real Estate that Goldman Sachs was one of two North American institutions to place a total of AUD280m (€187.8m) early this month through MaxCap to finance a large mixed-use project in Melbourne known as Swanston Central.
At the time of the announcement, MaxCap declined to reveal the identity of its investors, but industry sources have since confirmed that Goldman Sachs contributed 50%, or AUD140m, of the facility.
A leading commercial real estate debt provider said: “We believe Goldman Sachs is also behind the financing of a project in Brisbane, but we do not have the details.”
Another provider said: “Goldman Sachs has not indicated a quantum of what it hopes to lend to the Australian real estate sector, but one would imagine it has a vast balance sheet.”
The source said the US investment bank could lend $1bn but had the scale to go beyond that. “Undoubtedly, it is convinced of the investment thesis in the Australian debt market, which still offers investors outsized returns for those who pick the right opportunities,” the source said.
“We think Goldman Sachs is targeting opportunistic segments of the market, and looking for large deals,” a debt fund manager told IPE Real Estate. However, he said his firm would probably consider that this type of financing carried “more risk”.
Goldman Sachs is understood to be compensated for risk with a higher interest rate.
“The Goldman Sachs money was more expensive than our rate for loans of this type,” one industry player said.
Dislocations in the Australian market are throwing up pockets of lending opportunities, industry sources said, in particular within residential development projects, as well as opportunistic investments.
In recent months, leading asset manager Blackstone as well as one of the world’s largest sovereign wealth funds have been among those entering the Australian market.
The placement with MaxCap was offered on a “senior-stretch loan on a peak debt basis”.
Wayne Lasky, MaxCap’s managing director, said earlier this month that the parameters of the transaction were outside those on which Australia’s major banks are currently able to fund.
Lasky today declined once more to confirm the identity of his clients.
The Melbourne project, with 1,093 apartments, is being developed by an Australian Chinese group known as Hengyi, which is affiliated with mainland Chinese group, Shangdong HYI.