I am very proud of the next generation team we are developing at GPS. It appears that our investors share my view. This is an important aspect of the job for both Bruce and me, and will ensure that we will both be hanging around for quite some time.
In 2017 it will be more of the same from GPS. While there is currently little competition for lending, we will not get a rush of blood to the head and seek to expand our lending to any great degree. We have targeted a modest $15 million increase in funds under management for our core, long-term funds. This will cover inflation and achieve efficiencies.
As we are a referral based business, please let your friends, families and colleagues know that we are open for business.
The Next Generation Program at GPS will move into the next phase by looking at ways to establish our next generation of investors. While none of us really like discussing our mortality, we would greatly appreciate your input on this subject.
The focus at GPS will be on continuing to increase the quality of our product and service.
A new product we are looking at launching in 2017 is a wholesale fund (minimum investment of $500,000) to take up part of the co-lending for medium rise developments and some residual stock facilities.
Diversity and exposure levels are very important to us at GPS. While there are presently some exceptional medium rise developments available for funding, we will not overexpose our current funds to facilitate such lending.
As presales become a thing of the past (see blog post “The Day the Presales Died”), there will be an increased pressure on loan terms during 2017. An ability to internally source funding for residual stock facilities will add another tool to our already extensive toolbox of mechanisms to maintain the traditional GPS product.
The new wholesale fund is designed to make the most of the current favourable market. If the banks return to the market, this fund will most likely cease lending and we will return monies to investors.
GPS is getting very close to what we believe is a long term sustainable level of funds under management. We will not get greedy. We will not increase volume of lending, or sacrifice the quality of our loans.
Our loan pipeline is at its highest ever level. GPS traditionally settles around 24 loans each year (two per month). The loan pipeline currently has in excess of 24 potential loans. This will enable us to pick the eyes out of the applications and continue to improve quality.
Projected settlements for February and March are all very traditional loans (sub $5 million), they are a variety of good, inner Brisbane suburbs and repeat Borrowers. Overall, it is really quite boring, entry level product, which is what we all like.