Key Takeaways
- • La Trobe Financial sold a senior loan facility tied to the collapsed Bathla Group's Marsden Park development to a fund managed by 360 Capital for about $31.2 million, according to the ABC, recovering all outstanding principal, interest and late-payment charges on its development loan.
- • The purchase gives entities associated with 360 Capital control of both the first and second mortgages over the 72-apartment project at 137 South Street, Marsden Park, in Sydney's north-west.
- • 360 Capital's ASX-listed Mortgage REIT already held an $8.9 million subordinated loan and invested a further $5.2 million in the deal; 360 Capital executive chairman Tony Pitt said the group expects to recover the full amount owed.
- • Half of the apartments are pre-sold under contracts worth $25.8 million (excluding GST), and advisory firm Wexted has been appointed receiver to speed up occupancy certificates and settlements.
- • Lenders including Centuria Bass, CVS Lane, MA Financial and Metrics Credit Partners have suspended or limited withdrawals from some funds, and ASIC has warned the private credit sector should prepare for enforcement action.
Summary
The fallout from the collapse of property developer Bathla Group continues to reverberate through Australia's private credit market, with lenders moving to recover funds tied up in the failed construction group. In one of the latest transactions, property investment and funds management group 360 Capital disclosed that it acquired a senior loan facility for about $31.2 million through its private credit fund, funded by private investors and entities within the 360 Capital group. The ABC understands the debt was acquired from major private lender La Trobe Financial, which had disclosed $38.1 million in loans to Bathla in August. The facility relates to a Bathla development at 137 South Street, Marsden Park, a 72-apartment project nearing completion according to two sources close to construction. Half of the apartments have been pre-sold under contracts worth $25.8 million (excluding GST), according to 360 Capital.
360 Capital's ASX-listed mortgage investment trust, the 360 Capital Mortgage REIT, already held an $8.9 million loan secured against the development, ranking behind La Trobe. The trust has invested a further $5.2 million in the deal, with the company stating the step was taken to protect the value of the trust's subordinated position. Entities associated with 360 Capital now control both the first and second mortgages, giving them greater influence over project completion and debt recovery. Wexted has been appointed receiver, focusing on obtaining occupancy certificates and settling the 36 remaining pre-sold apartments. Mr Pitt said the group expects to recover the full amount owed under the loan.
Morningstar equity analyst Winky Tan said first-mortgage lenders are in a much stronger position, while mezzanine lenders risk losing most or all of their investment. She cautioned that outcomes depend on whether remaining apartments sell and at what price, given the property market downturn. Broader stress is visible across the sector: Centuria Bass and CVS Lane suspended withdrawals from some funds in August over Bathla exposure, MA Financial introduced withdrawal limits despite saying it has no Bathla exposure, and Metrics Credit Partners suspended withdrawals from some unlisted funds amid scrutiny of asset valuations. ASIC has previously flagged questionable valuations, opaque fees and inadequate disclosure in private credit, and commissioner Simone Constant said the industry is now "beyond warnings" and should prepare for enforcement. Ms Tan described a "perfect storm" of higher interest rates and falling property prices, and Morningstar expects private credit fund growth to slow substantially, potentially making development financing harder to obtain.
360 Capital's ASX-listed mortgage investment trust, the 360 Capital Mortgage REIT, already held an $8.9 million loan secured against the development, ranking behind La Trobe. The trust has invested a further $5.2 million in the deal, with the company stating the step was taken to protect the value of the trust's subordinated position. Entities associated with 360 Capital now control both the first and second mortgages, giving them greater influence over project completion and debt recovery. Wexted has been appointed receiver, focusing on obtaining occupancy certificates and settling the 36 remaining pre-sold apartments. Mr Pitt said the group expects to recover the full amount owed under the loan.
Morningstar equity analyst Winky Tan said first-mortgage lenders are in a much stronger position, while mezzanine lenders risk losing most or all of their investment. She cautioned that outcomes depend on whether remaining apartments sell and at what price, given the property market downturn. Broader stress is visible across the sector: Centuria Bass and CVS Lane suspended withdrawals from some funds in August over Bathla exposure, MA Financial introduced withdrawal limits despite saying it has no Bathla exposure, and Metrics Credit Partners suspended withdrawals from some unlisted funds amid scrutiny of asset valuations. ASIC has previously flagged questionable valuations, opaque fees and inadequate disclosure in private credit, and commissioner Simone Constant said the industry is now "beyond warnings" and should prepare for enforcement. Ms Tan described a "perfect storm" of higher interest rates and falling property prices, and Morningstar expects private credit fund growth to slow substantially, potentially making development financing harder to obtain.
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