FY25 loan volumes surge across 316 transactions
Pallas Capital, a real estate financier and investment manager under Pallas Group which also owns property development manager Fortis, has reported $2.9 billion in new loans and other investments for FY25, marking a 54% increase year-on-year across 316 transactions. The average loan size reached $9.3 million.
“I am pleased to say that in FY25 overall we achieved $2.9 billion of new loans and other investments (including fully underwritten extensions) across 316 transactions,” said Alexis Holloway (pictured), group executive – head of credit. “This represents an increase of 54% over the prior FY.”
The result caps off a year of strategic expansion, with the firm nearly doubling its origination team, launching new broker tools, and accelerating its presence across key markets including Christchurch and Adelaide.
NZ growth accelerates amid subdued Australian lending
While Q2 2025 settlement activity slowed in Australia, totalling $273 million, momentum continued to build in New Zealand. The Sydney-based Pallas settled $98.5 million in NZ during the quarter, alongside the launch of its full suite of construction lending products.
“We continue to see rapid growth in our market share in New Zealand,” Holloway said. “Pallas is well positioned to be a market leader in the NZ non-bank sector.”
Construction loans made up 44.9% of new loans in the quarter, with a total of 66 first mortgage loans and 21 second mortgage loans settled.
Liquidity and caution shape current conditions
“Loan settlement activity in Q2 2025 was relatively subdued… reflecting a relatively quiet market in Commercial Real Estate lending,” Holloway said.
While buyer and developer sentiment in Australia remains cautious, Holloway expects conditions to improve as interest rate relief arrives.
“With the major bank economists all predicting multiple interest cuts over the remainder of 2025 and early next year, we should see gradual improvement… as previously shelved projects are reactivated and developers recommence looking for new sites.”
Residual stock and investment loans drive demand
Investor and pre-development loan products remain in demand, driven by tighter bank lending criteria.
“At present… investment loans (stabilised assets) and pre-development loans (development sites) are attracting the most demand,” Holloway said. “The demand… reflects the very conservative LVRs being offered by the banks.”
Approximately 15% of settlements in Q2 were for residual stock loans, with Holloway noting developers are becoming more optimistic about selling unsold stock over the next year.
Cautious optimism for construction lending
“Whilst our appetite for construction lending remains strong… there is significant liquidity in the market looking to deploy capital to construction loans,” Holloway said.
“Lending terms appear to be aggressive, so our deployment remains at moderate levels.”
Challenging outlook in NZ commercial markets
In New Zealand, commercial property headwinds persist, with distressed asset sales continuing in major cities. However, Christchurch has shown resilience, contributing to a strong quarter for Pallas’ new office there.
“Christchurch is somewhat outperforming the larger markets of Auckland and Wellington,” Holloway said.
No capital or interest losses since inception
Despite the shifting market, Pallas reports no capital or interest losses on the $5.3 billion of loans repaid across 750 transactions since inception.
“For the quarter we had about $27.7 million of loans repaid,” Holloway said. “This takes our total… to $5.3 billion… without loss of capital or interest.”
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