Goldman Sachs refinances Pallas Capital’s AUS$500m facility
Goldman Sachs has closed a deal to refinance Sydney-headquartered Pallas Capital’s AUS$500m (£254.5m) Pallas Funding Trust No.2.
It comes as the Australian non-bank lender approaches AUS$2bn worth of commercial real estate deals this financial year.
As part of the deal, Pallas has drawn down AUS$280m from Goldman Sachs to pay Ares Management, which signed up as a funder to PFT2 in February, and will retain a AUS$180m position. The remaining AUS$40m is from a handful of other investors.
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PFT2 is Pallas’ flagship facility, which has funded 175 loans worth AUS$918m since its launch in December 2021.
It targets small borrowers in New South Wales and Victoria, with recent deals including a AUS$17.85m two-year loan at 70 per cent loan-to-value ratio to reposition a shopping centre.
The facility has also helped Pallas bankroll residual stock and pre-development loans. The typical borrower is a medium-sized entity seeking between AUS$2m and AUS$20m at a stage where big banks won’t lend to them.
It is writing around AUS$60m-worth of loans per month, and bringing in Goldman was a step towards diversifying funding sources, according to the company.
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“The financing facility to Pallas Capital represents continued innovation and growth of our structured credit financing business in Australia and across the Asia Pacific region,” said Goldman Sachs Asia Pacific head of mortgages and structured products Nicola Dondi.
In July, Pallas lured Westpac NZ to refinance a NZ£400m (£184.3m) facility focused on Kiwi small-to-medium enterprise borrowers in the vein of the PFT2.
“While some other non-bank lenders offer similar CRE loan products, many of these lenders are primarily funded by retail or ‘high net worth’ investors, whose investment flows can be volatile,” Pallas chief investment officer Dan Gallen (pictured) said. “This volatility can make it challenging for them to consistently compete with lenders like Pallas Capital, which is backed by available institutional capital.”
Pallas has funded about AUS$5.1bn in total lending to date.
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