Non-bank financing for construction is in high demand and prompted a new development business by Chifley Securities. Photo: Fiona MorrisEXCLUSIVE

Demand for construction finance is on a fast trajectory as private investors seek out developments in high yielding bricks and mortar.

Such is the growth that non-bank finance group, Chifley Securities, has established a property development group to provide construction finance and acquire equity in projects as part of its operations.

Chifley Securities has allocated $300 million of its total $1.1 billion worth of funding lines to finance property developments, without the major banks’ requirements of pre-sales and added security.

The group formed about two years steered by long term financiers including Dominic Lambrinos​ and the principals of Nationwide Capital – Domenic and Joe Morello – established Chifley as a viable commercial lending alternative to the major banks.

The new non-bank finance group in the commercial property market was launched with an initial lending pool of $480 million, but that has grown and now the partners have ventured into construction financing.

Chifley Securities is now funding property-backed projects ranging from $1 million to $50 million in Sydney and Melbourne, with lending rates from 11 per cent.

Its first major deal, when it launched, was worth $25 million, through a re-financing arrangement put together by receiver Jamieson Louttit of Jamieson Louttit & Associates.

Chifley principal Mr Lambrinos said the group also have strict guidelines on the quality of the projects and clients, of which about half are Chinese-based investors who don’t like to use the big four, public banks for lending.

He said the non-bank is filling a niche in the market by basing its lending decisions on the existing asset values, risk profile and prospects of the commercial property projects.

Chifley Securities’ director Joe Morello said the tightening of major lenders’ criteria for development lending has opened up an opportunity for us to provide first mortgages, mezzanine finance and loan to value ratio (LVR’s) of up to 90 per cent.

“We also have the ability to provide an expert development team to help projects come to fruition through the entire process from gaining development approvals to hand-over to buyers”, Mr Morello said.

The new Chifley division, Chifley Property Development, has already commenced four projects – the first of which where the group will lend $29 million on a residential project in Sydney’s Hills District that the traditional lender rejected as there was, in its opinion,  inadequate equity.

The second project entails the development of a factory outlet in Campbelltown for $8 million where the bank withdrew its finance one week before settlement.

Other projects include a mixed-use development at Docklands in Melbourne and a consolidation of several properties in Granville where 90 per cent of the development cost will be borne by Chifley Property Development using its Structured Equity vehicle.

“Despite the historic low interest rates and demand from buyers, the banks are becoming much more difficult to deal with for developments and we see a strong gap in the market for a more pragmatic finance solution,” Mr Morello said.

The group will focus on an array of commercial and residential projects across the country.

Mr Lambrinos said there was an enourmous appetite for construction financing which is evidenced by the amount of cranes on capital city skylines, not just on big multi-million projects biut smaller suburban sites.

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