In October 2023, Mark Harrison, Joint Managing Director of Wingate Property, sat down with distinguished borrower Jamie McClurg, Executive Chairman of Commercial & General, during the annual Wingate Investor Forum. Their conversation centered around the increasing appeal of non-bank lenders for borrowers in today's financial environment.
Jamie McClurg left university in 1991, at the peak of then Federal Treasurer Paul Keating’s “recession we had to have.”
“You couldn't borrow, you couldn't do all sorts of things. So I came out with a very, very conservative mindset,” he told Mark.
Raised by Irish immigrant parents, Jamie secured a construction degree before creating Commercial & General from nothing with former university classmate at the time.
Influenced by his father’s real estate business, Jamie has grown Commercial & General to be the largest developer in South Australia, building more of the city’s CBD than any other firm in history.
Until recently, he never dreamed of getting a loan from a non-bank lender.
“Traditionally, I would never go outside the banking sector. Whether it be NAB, Westpac or CBA as an institutional grade client – I was always wary of loan marketeers doing loan to own, I've never done mezzanine, I haven't done any of those sorts of these things. Because I've always been very conservative,” he says.
In 2018 The City of Adelaide purchased the former Le Cornu site at 88 O’Connell Street, North Adelaide and selected Commercial & General to transform the landmark are into a high quality, mixed-use development. Tenders were put to the market.
“We were very simple. We wanted to run a reasonable Loan to Value Ratio (LVR) and we knew we had a good credit position. The style of purchasers in the residential are owner occupiers and it is a high-quality mixed use development and the largest of its kind ever done in that market,” Jamie said.
He had known Farrell Meltzer for many years and admired his class and conservatism. When Wingate tendered for the project, its bid wasn’t the cheapest. But it won the day for a landmark $207m senior debt construction facility with a 70 percent LVR.
“I have not encountered a group that is a better underwriter than Wingate. It takes a lot for me to give credit. I have to say that Wingate team does understand an underwrite, their team deeply knows what they are talking about.
Smart people just want to deal with smart people,” he said. “Having to educate new people within the banks and people that change roles is frustrating. They change too much and they don't have enough authority is becoming a more regular experience.”
Looking forward Jamie said he believed that despite the cost of construction soaring over 50 per cent over the past five years, the Adelaide market would remain a safe and attractive bet.
Especially given the number of new international arrivals and expats returning home for a better, affordable and connected lifestyle.
“We have a buyer in the O’Connell Street development, he is a senior counsel that works in an international court, and essentially dials in to meetings. So we have seen more internationals come back home amid the rise of the remote workforce,” he said.
“The majority people that are buying here are typically downsizers, owner occupiers with no mortgage. One of the penthouses here is worth over $10 million. It would be $25 million-$30 million if it was in Victoria. It costs the same to deliver as interstate but the land is a bit cheaper.
So I think we are going to see a big drive for residential in Adelaide, simply because of the affordability and speed to market.”