Tim Alpe’s Post

18 months isn't that long, is it? But in that short time period we have seen a reshaped real estate landscape. It's a consequence of rising interest rates impacting asset values and triggering a surge in financing costs and so the debt market is seeing a structural, and likely permanent, change for non-bank lending in our region. In response to these market changes banks have become more cautious, creating a unique opportunity for private debt to step up to fill the vacuum. We've seen increased returns for private debt lending, ranging from 10-20% or more, depending on a variety of factors. The scale of the APAC market isn’t mapped but we know that it has a long way to go to match up to the crucial role it plays in both the US, at 40%, or 10% in Europe. Asset owners are facing a financing gap that private credit is helping to bridge. Capital Markets at JLL #CapitalMarketsatJLL #commercialrealestate #investors #cre #capitalmarkets #realestateinvestment #debt #debtadvisory #nonbanklender

Japan's Financing Environment Remains Generally Accommodative In 2024 Contrary to the conditions in Europe, the U.S., and many other Asian countries, the real estate financing environment in Japan remains favorable. Data from the Bank of Japan (BoJ) indicates that outstanding loans to the real estate sector by Japanese financial institutions, including domestic banks and Shinkin banks, reached JPY 129 trillion at the end of March 2024. This represents a 6% increase from the previous year.

At the New Zealand Securitisation Forum, industry leaders acknowledged the market's growth in collateral diversity despite lower issuance volume due to regulatory and economic uncertainties. Paulina Ting, CFA, noted the increasing interest in whole loan sales amid current capital market conditions. “We historically focused on RMBS loans, and on a risk-adjusted basis, residential loans in New Zealand present a really good return profile given the capital treatment we can provide." Read the full article here: https://lnkd.in/gQXYeHB8

𝗣𝗿𝗲𝗽𝗮𝗿𝗶𝗻𝗴 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁𝘀 𝗳𝗼𝗿 𝗕𝗼𝗿𝗿𝗼𝘄𝗶𝗻𝗴 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗶𝗻 𝗡𝗲𝘄 𝗭𝗲𝗮𝗹𝗮𝗻𝗱 💼💰🤝 - Lenders in New Zealand often require specific financial documents to evaluate your creditworthiness and ability to repay loans. Here are the documents typically needed: 𝟭. 𝗜𝗻𝗰𝗼𝗺𝗲 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 (𝗣𝗿𝗼𝗳𝗶𝘁 𝗮𝗻𝗱 𝗟𝗼𝘀𝘀 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁) Why Lenders Need It: This document shows the profitability of your business over a specific period, helping lenders assess whether your business generates enough revenue to cover loan repayments. Key Insights: Demonstrates profitability trends and overall financial performance. - 𝟮. 𝗕𝗮𝗹𝗮𝗻𝗰𝗲 𝗦𝗵𝗲𝗲𝘁 Why Lenders Need It: Provides a snapshot of your business's financial position, detailing what you own (assets) and owe (liabilities), and showing the equity held in the business. Key Insights: Indicates financial stability and the ability to meet obligations. - 𝟯. 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗦𝘁𝗮𝘁𝗲𝗺𝗲𝗻𝘁 Why Lenders Need It: Highlights the inflows and outflows of cash, enabling lenders to see whether your business can manage cash effectively and maintain liquidity. Key Insights: Reveals liquidity trends and cash availability for debt servicing. - 𝟰. 𝗔𝗰𝗰𝗼𝘂𝗻𝘁𝘀 𝗥𝗲𝗰𝗲𝗶𝘃𝗮𝗯𝗹𝗲 𝗮𝗻𝗱 𝗣𝗮𝘆𝗮𝗯𝗹𝗲 𝗥𝗲𝗽𝗼𝗿𝘁𝘀 Why Lenders Need It: These reports show how effectively your business manages short-term obligations and cash collection, which can impact liquidity. Key Insights: Reflect cash flow management efficiency and potential risks. - 𝟱. 𝗧𝗮𝘅 𝗥𝗲𝘁𝘂𝗿𝗻𝘀 Why Lenders Need It: Verified tax records demonstrate your business's historical financial performance and compliance with tax regulations. Key Insights: Confirms accuracy of reported income and business legitimacy. - 𝟲. 𝗕𝘂𝘀𝗶𝗻𝗲𝘀𝘀 𝗣𝗹𝗮𝗻 𝘄𝗶𝘁𝗵 𝗙𝗶𝗻𝗮𝗻𝗰𝗶𝗮𝗹 𝗣𝗿𝗼𝗷𝗲𝗰𝘁𝗶𝗼𝗻𝘀 Why Lenders Need It: A well-drafted plan provides lenders with an understanding of your business strategy, growth potential, and how you intend to use the loan. Key Insights: Assesses growth viability and repayment capacity. - Are you curious about what lenders typically look for during the loan application process and how to prepare effectively to increase your chances of approval? Visit our website for comprehensive insights and practical tips to guide you through every step of the process! https://lnkd.in/gzkVcBNB #lending #newzealand #financial #business #capital #blackarrownz

Private credit in Asia, including Japan and Australia, is ready for growth, with only 20% of the region's credit market taken up by non-bank lenders, according to Vijay Padmanabhan from Cambridge Associates. In a report by The Edge Singapore, Goola Warden explores how private lenders could fill the gap left by traditional banks, especially for small and medium-sized enterprises (SMEs) that are not investment-grade. https://lnkd.in/gmwzPt93 #PrivateDebt #PrivateCredit

Hong Kong Mortgage Corporation (HKMC) issues $3 billion of social bonds (HKD 23.8 billion) in 3 currencies HKD, CNH & USD, with the bonds priced on 9th October 2024.  The 3 bonds are HKD 7 billion 2-year social bonds, CNH 2 billion 7-year social bonds & $850 million 3-year social bonds.   The bonds issued will be used to finance loans under Hong Kong special 100% loan guarantee of the SME Financing Guarantee Scheme. Read - https://lnkd.in/gnafZcng follow Caproasia | Driving the future of Asia The Hong Kong Mortgage Corporation (HKMC) has issued $3 billion of social bonds (HKD 23.8 billion) in 3 currencies HKD, CNH & USD, with the bonds priced on 9th October 2024.  The 3 bonds are HKD 7 billion 2-year social bonds, CNH 2 billion 7-year social bonds & $850 million 3-year social bonds.   The bonds issued will be used to finance loans under Hong Kong special 100% loan guarantee of the SME Financing Guarantee Scheme.  HKMC (17/10/24): “The Hong Kong Mortgage Corporation Limited (HKMC) announced today (17 October) that it has successfully concluded its third social bond issuance of around HK$23.8 billion equivalent (or US$3 billion equivalent) (Issuance). Following a series of effective investor roadshows and improvement in overall market atmosphere, the Issuance was book-built and priced in Hong Kong on 9 October 2024. The Issuance marked the largest social bond issuance in Asia Pacific, breaking the record set by the HKMC in September 2023 when it launched its second social bonds of close to HK$20 billion equivalent.  The triple-currency social bond issuance with four tranches comprises HK$7 billion 2-year, HK$8 billion 5-year, CNH 2 billion 7-year and US$850 million 3-year social bonds. Amid the favourable market conditions, the Issuance was well received by a diverse group of high-quality local and overseas institutional investors including banks, investment funds, government-related funds, wealth management and private banks, with a combined peak orderbook of around HK$55 billion equivalent and final allocation to over 200 accounts. Moreover, the two Hong Kong dollar (HKD) tranches totalling HK$15 billion was the largest-ever institutional bond denominated in HKD, while the Renminbi (CNH) tranche was the first ever 7-year institutional bond denominated in CNH. The Issuance has helped to establish new benchmarks across the yield curve for the market and has further facilitated the bond market development in Hong Kong. Major terms of the Issuance are highlighted in the Annex.  The net proceeds from the Issuance will mainly be used to finance or refinance the loans under the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme ... ...

Promising investment opportunities exist in the UK and other European markets, despite challenges and declining lending volumes. Brad Greenway, Co-Head of Debt and Structured Finance at JLL, shared insights on investment prospects in a recent interview with PERE. “While the UK is projected to be the market that corrects the quickest, the reality is that Europe has a lower base rate, which allows alternative lenders to provide higher leverage without putting too much stress on interest cover ratio (ICR) and cash flow metrics. Spain has been the second most active market in Europe, behind the UK. However, we see a lot of upcoming opportunities in Germany and France, which is where a significant amount of loan maturities are going to be occurring, with the biggest focus being on the office and residential sectors.” Read the full article here: https://lnkd.in/ed6jZgtg #capitalmarkets #debtadvisory

An extensive survey by CBRE among 130 companies shows that the lending environment is on a solid footing for when investment activity starts to pick up in the second half of 2024 ► https://lnkd.in/de-TaJkc "Willing lenders and a well-functioning lending market will be instrumental to market recovery,” comments Jakub Stepan, Head of Valuation Czech Republic & CEE at CBRE Czech Republic. #commercialrealestate #propertyinvestment #realestateinvesting #realestatetrends

*Capital value decline drives funding gap in Asia Pacific* Since the beginning of 2021, the Asia Pacific retail and industrial sectors have witnessed limited capital value declines. Expectations are for both sectors to experience modest capital value growth in 2024. However, some office markets in the region, particularly Australia, mainland China and Hong Kong SAR, are expected to see some capital value decline in 2024. *Limited opportunities for non-performing loans (NPLs) and debt strategies* With the size of the funding gap in Asia Pacific smaller compared to other regions, opportunities for distressed assets distressed assets and non-performing loans (NPLs) for investors to target are limited. Therefore, we expect traditional fundraising sectors, particularly value-add and core strategies, to remain the favoured options within Asia Pacific.   Office sector to see greatest funding gap, however distress will be limited Most of this gap is expected to arise in mainland China and Australia, where flight to quality and price correction has been more prominent than other sectors. While core assets will be affected, value-added assets in secondary locations will be most at risk. *Banks’ attitude will be a significant factor effecting distress* Given that most loans in Asia Pacific are recourse, banks’ attitude will have a large impact on where the funding gap occurs. While this means that there will be less pressure on interest expenses/ICRs overall, if banks become more aggressive in pursuing assets within underperforming investor portfolios, then the risk of distress within certain markets/sectors will be higher. *Accommodative lending environment in Asia Pacific will see future funding distress limited* Loan-to-Value ratios have been much more stable in Asia Pacific compared to Europe and the U.S. as a result. Moving forward, this is expected to be the case, which will mean that funding gap pressures in future market downturns will be much less pronounced in Asia Pacific compared to the other regions. Insights from CBRE https://lnkd.in/gaTHXCuh

Private debt is growing as an asset class in Asia Pacific (APAC). APAC private credit assets under management grew from $15.4 billion in 2014 to $92.9 billion as of September 2023, according to the latest data from Preqin. Asset owners familiar with private credit and its risk profile see APAC private credit as a reliable form of diversification in their income allocation. “The heterogeneity of Asia Pacific markets provides a constant source of deal flow across different countries,” Eddie Ong, our Deputy CIO and Managing Director of Private Investments told Hans Loegstrup Poulsen of AsianInvestor. As Harsha Narayan, CAIA of Preqin noted, unlike in Europe or North America where private debt is largely focused on solutions very similar to bank loans, Asia Pacific’s markets require innovative and customised credit solutions. As such, asset managers with deep knowledge of local markets can help originate high-quality deals. Eddie shared that discerning LPs considering investments in private credit typically focus on the downside risks of their investments, and a key concern of LPs is the complexity of enforcing loan protections and securing collateral when things go sour in a region as diverse as APAC. SeaTown’s private credit team’s experience of being in the APAC credit markets for almost three decades, living through numerous credit crises – such as 1997, 2008, and 2020, provides comfort to investors. We believe that our ability to customize deal structures with comprehensive downside protection mechanisms enables our LPs to capitalise on the wider credit spreads in Asia, while ensuring that collateral and documentation quality is comparable to developed markets. #SeaTown #privatemarkets #alternativeinvestments #AsiaPacific