AMP looking to fund more commercial property investments
AMP Capital Investors is in the process of growing its commercial lending arm following the withdrawal of major lenders and offshore lenders from this arena.
The investment manager has an investment mandate of $190 million from AXA Life following the merger of AXA and AMP in 2010, but it is looking to expand the cash pool to $400 million by bringing other superannuation funds on board.
AMP’s entry into commercial lending follows a growing trend of other non-bank lenders offering commercial loans.
Major lenders have pulled back from commercial finance due to the stricter liquidity requirements under new global Basel II banking rules.
Linda Cunningham, chief manager of commercial lending at AMP Capital, has told the Australian Financial Review that any lending done by the fund will be of a conservative nature, with a strong focus on the “quality of the property”.
AMP will lend at loan-to-value ratios of around 54% with interest rates of 2.5% to 3% – slightly higher than the rates of the big four banks.
The fund will consider lending across all commercial sectors except for residential and land development but will not write any loans that mature past March 2018, when the fund reaches its investment horizon.
To date the fund has provided mortgages at an average size of $10 million, but has the capacity to extend loans of up to $35 million on a single property.
