
Will the borrowing rate offered achieve the COI Capital Management/our objective to Investors?
We take a variety of external inputs to determine our macro strategic view. Access to specific general and tailored research via our network of bankers, economists, valuers and brokers is utilised in this part of the process. COI has access to multiple macro data sources, including:
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NAB Financial Institutions Solutions and Advisory;
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UBS Solutions and Advisory;
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Commonwealth Bank Economics;
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Westpac/Bank of Melbourne Economics;
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Westpac Credit Trading Department (ABS Weekly);
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WBP, Core Logic & RP Data property/market outlooks & seminars;
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SQM Research;
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HWLE updates & seminars;
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Financial Standard, Money Management, Investor Daily.
In addition to these sources the process is enhanced by the input from our Senior Management and Credit Committee. The constituents of the Credit Committee have been intentionally chosen for their broad experience and expertise in the Australian property and credit market. This forum is used to not only approve opportunities but also provides invaluable discussion around banking trends, valuation sentiment and property markets throughout Australia. Time is allocated at each Credit Committee meeting to discuss the macro- economic environment and any implications for COI. More specifically the Credit Committee sets the wholesale funding rates offered by COI and determines the risk adjusted weightings applicable to the range of securities permitted to be securitised.
Furthermore, the Indicative Terms are also subject to Credit Committee approval.
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The assessment of any opportunity begins at the point that an enquiry is made or opportunity is presented.
Once we are in receipt of the loan enquiry, including the loan purpose, amount required and security information an application form & privacy consent can be completed. Any applicant (individual or corporate) is required to provide initial information regarding their assets, liabilities, income and loan requirements. An initial assessment is completed using the information provided to ascertain the purpose of the loan and whether it fits within the credit guidelines of COI‘s mandate and constitution. This is a broad test and includes the following questions we ask ourselves on a deal-by-deal basis:
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Is the property’s location within the regions and locations covered by our investment guidelines?
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Is the loan purpose within our guidelines?
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The type of underlying property e.g. is it non- specialised or, does it fit within the targeted industry exposures?
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Is the LVR/LTV within the COI Capital Management mandate for location and property type?
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Is the credit term requested within the allowable investor time ranges?
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Will the borrowing rate offered achieve the COI Capital Management objective to Investors?
Once this assessment has been completed and the applicant has passed all tests, Indicative Terms are issued. This is not an offer of finance at this stage. The Indicative Terms are subject to comprehensive financial (including valuation) and character assessment for the applicant. Furthermore, the Indicative Terms are also subject to Credit Committee approval.
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RESULT
FACTOR
DESCRIPTION
Company, bankruptcy and property searches
Comprehensive searches are undertaken of all transaction parties and related entities.
Searches must not identify any significant credit issued and confirm ownership of proposed security.
Loan purpose
Further due-diligence is conducted on the security and background on the loan purpose.
Loan purpose should be as stated in the application and security property verified.
Exit Strategy
Clear and secure exit strategy must be displayed by the borrower. Due diligence on the exit strategy performed by COI.
COI must be satisfied with exit strategy prior to funds drawn.
Valuation
Subject to the above criteria being met, COI will instruct a panel valuer to conduct a full property valuation.
The value must fall within an agreed value noting intended LVR and loan purpose.
On receipt of the requested information the credit and risk assessment process can begin. COI Capital Managements' credit team undertakes a comprehensive credit and risk analysis at this stage of the investment process. The credit team implements a strict process in assessing each and every application.
Upon approval of a loan submission (inclusive of the COI Capital Management instructed valuation report) a formal Letter of Offer (LOO) is issued to the applicant. The Offer sets out details regarding interest rates, fees, other terms and approval conditions. Once received and accepted by the Applicant, a copy of the signed Offer is to be returned to COI Capital Management together with any conditional approval documents required (e.g. updated insurance policies, etc.)
Upon confirmation that the Indicative Terms are palatable a Formal Letter of Offer (LOO) can be issued for signing & return by the Applicant which sets out details of interest rates, fees, terms & settlement conditions (e.g. minimum building replacement insurance requirements based on the independent valuation report and any other outstanding document requirements).
However, before this step can be commenced the Credit Committee must approve each opportunity. The Credit Committee meets weekly or as required depending on the flow of loans seeking approval. Prior to a formal loan offer being made but after all credit and risk assessments have been passed the Credit Committee receives an analysis and associated documentation for the loan.
Faris Dedic, Executive Chairman of COI Capital Management chairs the investment committee and is joined by two (2) other members of senior management. The Committee’s combined credit and lending experience exceeds 50 years, and each participant brings a unique perspective to the process of approving or rejecting investment opportunities. The Committee’s role and purpose is that they must agree by unanimous decision the approval of all loans. In addition to its role in approving loans the Committee monitors all existing loans and advises management on its recommendations on any lending issues arising.
Upon approval by the credit committee a formal Letter of Offer (LOO) can be issued. As stated above the formal LOO sets out details of interest rates, fees, terms & settlement conditions (e.g. minimum building replacement insurance requirements based on the independent valuation report and any other outstanding document requirements).
The applicant is required to accept the terms of the formal LOO by way of execution. The execution grants permission for COI Capital Management to instruct the Funds' lawyers to prepare the loan offer documents and issue them to the applicant’s solicitor/lawyer.
The applicant is required to sign the Loan Offer documents. The borrower’s lawyer will also complete ID certification and where required will arrange for a certificate to be completed by the client’s Financial Advisor/CPA/Chartered Accountant to verify that the loan purpose is for investment/ business purposes only.
COI Capital Management runs all aspects of the settlement process, the Funds lawyers act only on instruction. This process allows us to have full control regarding client funds, shortfalls, fees and charges. COI Capital Management also ensures that insurance is in place and investors can witness the certificate of currency (if required).
COI Capital Management employs a strict risk controlled assessment process based on exhaustive analysis.
Our process includes multiple layers of accountability and stringent review of each opportunity. From Senior Management to the Credit Committee, fund manager and credit analysts — any potential opportunity must pass this combination of qualitative and quantitative analysis.
Investment Strategy
Our Assessment Process
Investment Strategy
Our Target Borrowers and Asset Classes
Our investments are chosen selectively and securely based upon a strict criteria that centres around deal size, location, borrower experience and well-defined assets classes.
$1,000,000 - $75,000,000
Melbourne, Sydney, Brisbane, Adelaide as well as major core regional towns such as Bendigo, Ballarat, Wollongong & Newcastle.
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Experience 5+ years
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Must have undertaken their own development previously
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No adverse credit is accepted
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Core business is property
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Australian citizens or permanent residents
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Australia must be their nation of domicile
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Owner Builders are accepted only if certified.
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Land Sub-Divisions (non-speculative)
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Luxury Dwellings
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Industrial and developments
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‘Build-to-sell’ Models
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Commercial Office Real Estate in Fringe Locations
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Low Risk Residential Suburban Developments, or;
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Any other asset classes COI deems credible based on prevailing market conditions.
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Adult services; brothels, escort agencies, strip clubs, night clubs etc.
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Religious/places of worship; Churches, temples, mosques, synagogues etc.
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Defence; weapons.
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Gaming; synthetic gambling.
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Manufacturing; manufacture, transport, storage and processing of nuclear materials. Nuclear fuel waste management. Nuclear weapons. Nuclear fuels.
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Resources: New coal mines. Oil/tar sands extraction projects. Oil & gas projects within or impacting the Arctic National Wildlife Refuge area and any similar Antarctic Refuge. Ultra-deep water oil & gas extraction projects.
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MITIGATING RISK TO MAXIMISE RETURNS