Thinktank Commercial Property Finance (Thinktank) is an independent nonbank financial institution specialising in SME finance secured by first-registered mortgages over commercial and residential properties.

La Trobe Financial currently generates asset origination exceeding A$8.7 billion per year and growing. Group net equity exceeded A$149 million at 30 June 2018.

La Trobe Financial offers Australia’s broadest mortgage product suite, with a focus on specialist lending. Loan products cater for a wide range of borrower and credit situations with a group maximum LVR of 80 per cent.

Established in 2006, Thinktank is wholly Australian-owned and was built by a group of finance professionals with extensive backgrounds in financial services and, specifically, commercial-property finance. With a keen focus on maintaining the highest standards of corporate governance and compliance, the Thinktank board comprises a mix of the founders of the business and independent professional directors who contribute further diversity of experience and multisector disciplines to the ongoing growth and direction of the business.

Thinktank’s funding model has been predicated from commencement on the principles of traditional wholesale warehouse funding and term securitisation. The company completed an inaugural privately placed securitised transaction in 2014 which has since been followed by successive public deals in 2016, 2017 and 2018. Having become recognised as the most prominent programmatic issuer in domestic small-ticket CMBS, Thinktank has continued to expand the nature and sources of its origination and term-funding arrangements.

Through 11 years of operation, the performance of Thinktank’s portfolio has been consistent with near-prime RMBS with low arrears and minor losses. With an average loan size of around A$600,000, a weighted loan-to-value ratio (LVR) of around 63% and fully amortising loans out to 30 years, the characteristics of the book report a close correlation with prime and near-prime residential lending. The principal divergence lies with the underlying securities, which comprise a mix of standard office, small-industrial, retail and residential properties all located in metropolitan and major urban areas across Australia.

Having now originated more than A$1.5 billion in these small-ticket commercial loans, Thinktank has established an enviable track record of performance with very low arrears and negligible losses. Current 30-day-plus arrears sit at approximately 1%.

The background for such performance can be traced directly to the deep and varied experience of the founders of the business. Sound risk-based disciplines and industry best practice, combined with constructively managing credit and risk through numerous property and economic cycles, has coalesced into a highly professional team that is closely attuned to the state of the market at all times.

Although Thinktank offers a range of full-doc and alternate-verification loan products, the portfolio is heavily skewed towards the former, at around 80%. Growth in the portfolio has been measured and strongly supported by long-term institutional and internal stakeholders.

Growth has not been at the expense of credit quality. Weighted-average LVR has trended lower over the past five years. With its portfolio surpassing A$900 million, Thinktank has in its sights further controlled growth by capitalising on the quality nature of its relationships at both origination and funding levels, amplified by a strategic partnership with Australia’s largest aggregation group signed in 2018.