There has been a lot happening in the financial world over the last couple of weeks!
While it is easy to assume that all financial institutions are linked and there is a domino effect imminent, it is important to look deeper.
GPS has always been firm on not using any institutional money. Our ability to fund projects comes from you, our investors, not oversees banks who may cut their losses in the Australian market if times get tough. There are private lenders in the market who are currently waiting to see if their money will dry up.
Rest assured that GPS is not in this position.
While we aren’t directly affected by these funding lines under threat, we aren’t silly enough to predict that everything will pan out perfectly.
GPS as always is going to be smart about it. We will take a conservative approach over the next couple of months and see where all the chips fall.
The shakeup of the market will result in smaller, less experienced private lenders either falling out of the market, or locking down until the uncertainty passes. This joined with the Bank’s interest rates soaring and lending being curbed, we suspect that this will leave lenders like us, with some great funding opportunities later in the year. Developers still need to build and they still need funding from somewhere.
Our conservative, relationship focused, investor-based lending over the last 30 years makes us uniquely capable of weathering this storm. Richard Woodhead and GPS made it out the other side of GFC, when many did not. This period of uncertainty is not new to Richard, or the team. The previous strategy to remain conservative when others jumped on the influx of cheap money has proven to be correct. We have a clean loan book and preserved our reputation!
What does this mean for you exactly? The conservative approach from GPS means that we aren’t actively raising to increase funds.
We are going to focus on making sure that your money with us already is working to the best of its ability. That, joined with the new projects that we suspect will be coming our way over the next couple of months, is setting up the diversity of the portfolio for future GPS Invest Select Fund opportunities.
GPS also has confidence in the property market in 2023. All the changes thanks to COVID, lack of appetite by the banks and the institutional money leaving, has slowed projects but resulted in an under supply that will apply positive pressure to the market.
So while the media talks about the trouble for small private lenders and the money injected into investment funds from overseas banks under threat, you can take comfort in knowing that GPS is not included in these conversations. The name of the game is to come through the uncertain times without any baggage so we can focus on good lending on the other side. Richard remains quietly confident about the next few years at GPS.
Most people choose to invest with GPS because we don’t take unnecessary risks, we have the history to prove we know what we are doing and our relationships with our borrowers and investors means we work as a team to keep the projects moving, and produce outcomes that benefit us all.
If at any stage you have questions or concerns, you can always call us here in the office and we are happy to chat to you about it.