US Lending giant Goldman Sachs has taken its boldest step into Australia’s property sector yet, with a $120 million loan to Kokoda Property.
The cash will allow to the Newstead Chester & Ella to go ahead, following difficulties securing a local bank to finance the project because of restrictions on lending in Brisbane’s troubled apartment market.
Kokoda’s founder and managing director Mark Stevens said it was a landmark deal.
“A decision of this level would have to be signed off in New York. The case was fairly compelling for them,” he said. “Goldman Sachs really looked at the product and looked at the marketplace and asked: ‘Would this product stand the test of time?’ and ‘Will the product settle?’ and ultimately the answer was yes.”
The loan is the largest Goldman Sachs has made in Brisbane yet. “This would be the first deal that Goldman that has done in Brisbane above $100 million, Mr Stevens said. “And they haven’t done much of this size in Australia so it’s in the [top 1 per cent].”
Kokoda sought out international lenders, because of APRA regulation-imposed apprehension shown by Australia’s big banks toward Brisbane’s apartment market. Although he conceded it was difficult to get an Australian loan, Mr Stevens said attracting a huge lender like Goldman Sachs was a big win for his company.
“We’re very proud and it vindicates our belief in what we do,” he said. “We haven’t been doing this for 12 months, we’ve been doing this for 20 years.”
The deal isn’t looking like it will be a one-off, either. Mr Stevens said Kokoda was hoping to expand its relationship with Goldman Sachs after the investment banker expressed interest in increasing activity in Australia.
“I think the relationship will go from strength to strength with Goldmans. I think they’re looking at Melbourne next,” he said. “I think it’s a strategic decision for Goldmans.”
Domain Group chief economist Andrew Wilson said the $120 million loan should have Australia’s big banks worried.
“I think this is a clear message to the big banks that they have been apart of the policy issue with APRA to restrict lending,” he said. “At their risk they are leaving the field open to other lenders and shareholders won’t be happy if this leads to a restriction in market share.
“There are buyers who are prepared to buy and can’t get finance. They should just let the market do what the market does.”
Dr Wilson agreed the loan was a vote of confidence in the Brisbane market. “Nature hates a vacuum. Obviously if you can’t get your finance from the usual place you look elsewhere and that’s what happening,” he said. “I think the big picture is that there are others that are prepared to lend in this market.”
Original article found here – https://www.domain.com.au/news/brisbane-apartments-goldman-sachs-makes-120-million-loan-to-kokoda-property-20171026-gz85dk/