Views

Maximize your financing journey: 5 reasons to hire a debt broker

Gain an edge in Australia’s shifting debt market

May 15, 2024

Australia's debt market is experiencing a seismic shift, with foreign capital flowing into the country's private debt sector. It’s being driven by Australia's strong economic outlook - projections show GDP growth of around 2.75% annually, coupled with a population growth rate of 1.2% per year.

One key factor contributing to this trend is the change in regulations, which has reduced the appetite for risk of traditional banks. As a result, non-bank financial institutions have stepped in to fill the gap, increasing their market share. Developers, in particular, are turning to these alternative sources for construction finance.

It's worth noting private debt accounts for about 10-20% of total CRE debt exposure in Australia. Australia's transparency, high transaction liquidity, and strong growth prospects make it the top investment destination in APAC. For private investors, this translates into opportunities for asset investments that generate enough capital to repay their own debt as well as ample liquidity for established assets. Australia-focused debt strategy funds have shown successful fundraising in recent years, reflecting investor confidence in the market's potential.

So if liquidity is increasing—or at least diversifying—you’re probably asking why you would ever need to hire a debt and structured finance specialist for your next commercial real estate (CRE) transaction?

Here’s why:

1. You will actually save money:

A reputable debt broker will have access to a wide range of lenders and the expertise to negotiate the most favorable terms and pricing, which ultimately reduces your overall financing costs.

2. You’ll drive competition:

Sometimes, your long-term lender can become complacent, not fighting to give you the best terms or pricing. A debt expert who is solely dedicated to you and not beholden to any one institution can create a competitive environment that will have both existing and new lenders vying for your business. This gives you the opportunity to evaluate multiple proposals, compare offerings and choose the financing package that works best for you.

3. You’ll ensure the funding is secured and the loan delivered:

Not every lender is right for every project. What works for a land acquisition may not work for the purchase of an office building. Each debt financing has specific needs and requirements. With their deep understanding of the lending landscape, a debt specialist can identify the most suitable lenders for your specific project. They can also analyze various funding scenarios and capital structures to provide a comprehensive analysis of all of your options.

4. You’ll get a specialist:

If you already work with a debt broker, are they a generalist or a specialist? If your debt broker can also arrange financing for a residential house, business or car then they probably aren’t a CRE debt specialist., Commercial real estate is different, often involving complex transactions with many nuances. A CRE debt financing expert understands diverse property types, market dynamics and cash flow considerations. They’re well-versed in assessing a property’s value, underwriting risks, and structuring terms that align with your goals.

5. You'll gain access to industry connections and relationships:

A debt expert in commercial real estate doesn’t just have relationships with lenders. Their network also includes appraisers, lawyers and consultants. You can use those relationships to your advantage, opening doors and leading the way to smoother and more favorable financing transactions.

In a rapidly evolving debt market, having a trusted debt and structured finance specialist by your side is invaluable. They offer more than just numbers; they provide guidance, expertise and access to a network of professionals who can support and enhance your path to a successful debt financing. Don't miss out on the advantages they bring to the table.

Contact a JLL Debt & Structured Finance specialist today.