It's the Quality of the Transactions!
15th March, 2007
The Success of the Mortgage Trust
When asked how the City Pacific Mortgage Trust consistently pays higher returns than some other mortgage funds you can rest assured the lending team at City Pacific has the answers.
Steve McCormick, Group Executive Property Development Finance, made the point that set the benchmark, "It's the quality of the transactions we do."
"Our lending is short term interest-only and mixed in with high end lifestyle developments. This leads to the higher returns that we pass on to investors," said Mr. McCormick.
Lending Managers Matt Gillam and Alastair McCosh made mention of the strict loan policy and how the lending process was reinforced by City Pacific's property management arm.
"It strengthens our loan approval process from a property perspective and not just a banking finance point of view," said Mr. Gillam.
"We're not just funders", said Mr. McCosh, "we're able to assist with developments and work with the borrowers whenever needed."
Mr. McCormick explained how City Pacific has developed longstanding and repeat relationships with professional developers instead of negotiating loans through mortgage brokers.
"We're not taking transactions from intermediaries. Our loans are hands-on and first mortgage only, relatively short, with approximately 80% of our loan book turned over each year. The outcome is zero default losses in the nine year history of City Pacific."
"We know our borrowers and we generally will not lend to first-time developers. We do a lot of repeat business with the same experienced developers, and in the lifestyle market which is not as sensitive to interest rate movements."
"Security is very important," said Mr. McCormick. "We stick to areas and projects we know well. Right now the majority of our lending is in South East Queensland which has been heavily researched as a region of strong growth. However with the high loan turnover rate we can quickly shift our exposure if market changes dictate."
