The race to plug the lending hole to foreigners vacated by the major banks is on.
Street Talk can reveal Ausin Group and Blackstone, the world’s largest real estate and private equity manager, has partnered to assess a direct lending facility.
The idea would see the shadow-lending venture align with developers who then can directly service customers that can’t obtain mortgages from the banks, including offshore buyers.
There are already questions in the industry being asked about who will fund these facilities and how credit risks will be adequately assessed. The other overlay is the National Consumer Credit Protection code.
But New-York-based Blackstone is no stranger to commercial and residential property markets and would unlikely jump head first into a risk-heavy venture.
This column last week flagged that KKR & Co and Oaktree Capital Management were also quietly progressing their shadow lending plans.
The duo canvassed a handful of global investment banks for billions of dollars to fund an Australia-focused venture.
The private equity and distressed debt giants have already met with banks to gauge views on multi-faceted funding packages, including securitisation.
Sources said some banks had baulked at providing funding due to the venture’s greater appetite for riskier or in some instances more concentrated property exposures.
The other party looking to get more involved in lending to foreigners is said to be Sydney-based Balmain. The company’s website claims it is the largest source of commercial mortgage finance outside the major Australian banks.
It is unclear where all these deliberations will lead and whether lenders will step up on funding packages, but interest is certainly growing.
Blackstone which is a force in private equity and real estate investing globally looks to have turned to Ausin for its linkages into China and its relationships with local developers.
Ausin acts as a one-stop shop for Chinese buyers – selling, arranging financing, renting out apartments and even arranging migration visas.
Developers Ausin has sold apartments for include local giants Lendlease, Stockland and Mirvac and Asian heavyweights like Fragrance Group and UEM Sunrise.
The company has offices across Australia, New Zealand, China, UK and the US.
Last month, Blackstone reported a more than doubling of March-quarter profit boosted by asset sales timed to benefit from soaring valuations.
Article first appeared in the Australian Financial Review.