There is little doubt the commercial-property market has felt some of the most acute impacts of COVID-19. Thus far, though, we have observed a price decline of no more than about 10 per cent while the majority of sales have achieved their previous valuation or higher – noting gross volume of transactions is noticeably lower at present.

We continue to assess owner-occupied and investment properties for location, associated industry, and the status and outlook for the businesses. We calibrate our views with where the economy is placed and the role of fiscal and monetary stimulus.

We expect the commercial market to be on the softer side, and to be cautious on credit-risk appetite, for 12-24 months before conditions trend up again on the back of economic recovery and ongoing low interest rates.

Credit demand has been somewhat weaker over the past six months as businesses and investors work through the prevailing uncertainties. We have seen ongoing strong demand for property purchases, though, split between direct and self-managed super funds (SMSF). The latter has performed particularly well through the cycle.

We expect the most profound structural changes over the coming years to emerge toward the larger end of the market: in office towers, shopping centres and major industrial. We anticipate less change in the nature and performance of the market at the smaller end of the scale, where Thinktank is positioned.

With the prospect of more decentralised working, suburban industrial, retail and strata offices may see some benefits flow from a shift in economic activity away from inner-city and CBD locations. Much will only reveal itself over time, however.

Our lending strategies remain focused on credit quality and understanding the property location, industry, business, cash flow, and the people and their objectives – all in the context of the market. We have seen considerable sectoral and structural change over our 40-plus years in the industry and we are well placed to contend with what may now lie ahead.

Entering COVID-19, Thinktank’s 30-plus day arrears were very low, at less than 1 per cent. Currently, arrears excluding hardship sit at less than 0.5 per cent. With around 90 per cent of our borrowers in the SME and self-employed segment, we naturally experienced a high degree of enquiry for assistance. This peaked in April at just more than 20 per cent but has since declined consistently to less than half that rate now.

In line with Australian Prudential Regulation Authority reporting on authorised deposit-taking institutions, we have observed slightly higher levels of hardship among commercial borrowers compared with residential. Interestingly, SMSF borrowers have required significantly less in the way of support to date.

Overall, the loan book has performed exceptionally well over the course of this period. It has demonstrated a high degree of resilience and its borrowers’ ability to respond constructively to conditions.

Having become a programmatic issuer from 2014 onwards, we plan to be in the market again this year and follow our trend of an increase in transaction size year-on-year. In support of our ongoing growth profile, we are otherwise continuing to add to our warehouse relationships and overall capacity – all of which remain based on repeat issuance in term markets.

Thinktank’s growth strategy has centred around building strong relationships in the third-party distribution channel and this has underpinned the success we have managed to achieve to date.

These relationships continue to expand and have been further supported by the broadening of our product range into the self-employed and SME sectors over recent years, to encompass commercial, residential and SMSF loan product alternatives. This positioning affords us a large market and we are seeing further high-quality opportunities present themselves.