Challenger Financial Services is gearing up to launch a real estate debt business that will lend against high quality commercial properties.
According to a report in The Australian Financial Review, Challenger’s move into real estate debt follows its decision to sell down some direct properties in Australia including the George Street Cinemas in Sydney and Melbourne’s jam factory complex.
Challenger’s head of real estate Trent Alston said the company would capitalise on conditions that are favourable to property lenders.
Attracted by the relatively high margins on offer, Challenger would allocate about $300 million to pursuing senior debt opportunities, targeting assets with strong cash flows.
The business will be run by Challenger’s real estate and fixed interest teams and will lend against high quality shopping centres, office buildings and industrial parks.
“Within the pipeline, we have loans from $50 million to in excess of $400 million...we’d have to work with a syndicate [for that size],” he said.