Non-bank lending is making its way into regional developments after the Liberman family-backed Monark Property Partners provided construction funding for a $55 million hotel apartment development in Geelong.
The Ritz Geelong Apartment Hotel features 127 short-stay apartments rising above the 166-year-old Ritz Hotel on Bellerine Street in the Geelong CBD.
The project is being developed by Melbourne-based Phillip Petch’s Integrated Development Solutions and is 90 per cent sold.
With senior debt construction funding in place from Monark, construction has kicked off with the project due to be completed next year.
Mr Petch said buyers would get returns of between 6-8 per cent on their apartment investments, which will tap into Geelong’s booming visitor market where demand for short-stay accommodation has soared amid the city’s transformation into a corporate and leisure destination.
“My first Geelong project Vue Apartments, completed in 2012, is getting occupancy rates of 90 per cent,” Mr Petch said.
Monark co-founder Adam Slade-Jacobson said the “entrepreneurial capital” it provided, (funnelled from the deep pockets of the Liberman family and other ultra-wealthy investors) meant quality projects like The Ritz in thriving regional locations like Geelong could commence construction.
“We’re able to craft bespoke funding solutions for projects that don’t meet the criteria of traditional banks,” he told The Australian Financial Review.
Mr Slade-Jacobson said Monark was “agnostic” about where it provided funding, with the focus on quality projects in good locations being undertaken by developers with strong track records.
Monark decision to fund The Ritz follows the non-bank lender raising $60 million this month for its Secured Debt Co-Investment Fund and growing funds under management to $200 million.
“We’re a senior debt provider, that’s a big story in itself,” said Mr Slade-Jacobson.
“We’re a niche player providing significant amount of capital to a developer,” he added.
Alongside the Monark funding, Mr Petch has also sold the management rights to The Ritz to Michael Tozer’s Collective Hotel Management for more than $5 million in a deal brokered by Tim Crooks and Jim Chapman of Resort Brokers.
“This rare off-the-plan apartment hotel opportunity entered the market at a time when Geelong continues to show marked growth in its visitor economy and is attracting significant investment and renewal,” Mr Crooks said.