Ares Management Corporation has backed Australian specialist property lender Pallas Capital with a A$450m (€270m) investment in its new lending vehicle.
Unnamed funds managed by the global investment firm’s alternative credit strategy have committed the capital to Pallas Funding Trust No 2 (PFT) alongside a A$50m co-investment capital from Pallas.
Sydney-based Pallas said it intended to lend this money via a range of pre-development loans, residual stock loans and investment property loans.
Dan Gallen, CIO of Pallas Capital, said the newly established lending vehicle would target medium-sized commercial real estate (CRE) loan types and borrowers and expected that most of its loans would be between A$2m and A$25m in total.
Gallen said: “This market segment remains underserviced as it falls between the very narrow lending focus of the major banks whilst many non-bank lenders prefer to focus on either very small CRE loans or conversely much larger loan exposures of over A$50m.
“We expect to increase lending volumes substantially given the majority of commercial properties have values up to about A$35m which is precisely where PFT will focus its lending business.”
He said the firm had successfully managed similar institutional facilities since 2021. With the funding from Ares, the firm could now take a wider lending mandate to market as it allowed it to target larger loan sizes and a wider range of loan solutions to better meet demand from borrowers and broker partners.
Pallas Capital has operated institutional lending facilities since 2021 and has loaned about A$850m in more than 170 loans through such facilities.
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