Loan pipeline continues to track as predicted. The banks appear to have further pulled back. As an example, we have a loan coming through the system which was originally set with a bank. The Borrower started work but became increasingly concerned that, despite having an accepted offer from the bank, the loan documentation was not forthcoming. When it came time for the first progress draw the bank said “no”. There was then a “Richard, old friend and buddy” phone call.
Site inspection runs show a slowdown in new construction starts. Many more development sites are looking stressed.
This is all good for GPS and our investors. We can now pick and choose the loans we want. This is the first time in my career that I have too many good quality deals in loan pipeline and at least three months of forward work booked in advance. Bookings are now being taken for later in 2017.
Loans that are coming through the loan pipeline are more of the same for GPS. The more boring the better, as this is what the GPS investors like.
The slowdown of new project starts should soften apartment oversupply in Brisbane. While we have seen presales slow down, the clearance rate of completed product is still strong for the right product. Some projects will be strong, while another in the near vicinity will be a dud. The skill of GPS is in identifying the strong projects through our due diligence process.