Track record and experience key criteria for Nedbank Corporate Property Finance

Posted On Wednesday, 28 January 2015 16:41 Published by
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Managing executive of Nedbank Corporate Property Finance, Robin Lockhart-Ross, says his credo is only to lend to 'serious' people with proven financial track records.

Robin Lockhart-Ross

Mr Lockhart-Ross, who has headed Nedbank's Property Finance division for more than 15 years, has lent a lot over the years. "Having been in credit for over 15 years, having lent and lost money to every kind of borrower on every category of property, on every type of deal in nearly every major town in SA, I have paid the school fees, learnt the lessons and stored the memories," he says.

With banks feeling the pressure of weak economic growth, fighting for lending market share and having learnt the hard lessons of the 2008 recession, it has become imperative for them to make sure they partner with developers and investors that have a proven track record.

The saying, "It's the jockey and not the horse that matters", holds true in property. To stand a chance of getting finance from the banks, a developer or investor will have to demonstrate a clear understanding of market fundamentals and cycles, and insight into the risks and opportunities these present.

Nedbank's lending book in July last year topped R100bn and was expected to end the year at more than R107bn. The bank's affordable housing book stands at R2bn, from nil four years ago. NCPF has financed some of the most notable recent retail developments across SA, including the Mall of Africa in Midrand, Forest Hill Mall in Centurion, Baywest Mall in Port Elizabeth, BT Ngebs Mall in Mthatha, and KwaMnyandu Shopping Centre in Umlazi, KwaZulu-Natal.

Mr Lockhart-Ross's experience in Nedbank's credit division will come in handy as the property market is expected to face tough times due to weak economic growth locally and internationally. He says the main challenges in the market are the shortage of zoned and serviced land; backlogs in infrastructural services; lack of operational capacity at municipal level; and rising administered costs (such as rates and electricity) for developers.

"For financiers, there are rising costs of long-term lending under Basel 3 capital and liquidity regulations, and increasing costs of compliance in the lending arena (eg the Financial Intelligence Centre Act, money-laundering regulations). There is also competition among banks and with nonbank funders, and lastly the disintermediation of banks by the listed property sector."

But it is not all gloom and doom, as Mr Lockhart-Ross says there are still opportunities for developers and investors. There are areas where backlogs in supply exist and demand outstrips supply. With SA's housing shortage estimated at 2.2-million units, there are lots of opportunities for affordable housing, rental accommodation, student accommodation and high-end flats in nodes like Sandton and Umhlanga.

In the commercial sector, most rural areas and some townships are still in dire need of formalised shopping centres. The government is planning to spend more than R1-trillion within five years, presenting opportunities for investors in public-private partnerships with central, provincial and municipal government for infrastructure projects.

Mr Lockhart-Ross says financiers with specialised knowledge, dedicated deal-origination and client service teams, flexible products and tailored solutions have an advantage over the competition. NCPF now holds about 33% market share and Nedbank in aggregate (including Business Banking and Private Wealth) about 42% of the commercial property finance market in SA.

Mr Lockhart-Ross says this compares to the next two competitors, Standard Bank and Investec, at about 18% each. He says NCPF strives to keep a "thought leadership" role. "Our strategic differentiator is the consistency in and sustainability of our approach to lending throughout the property cycle."

Last modified on Monday, 12 October 2015 12:39

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