In our series of fund manager profiles, we speak to Jonathan Street, CEO of Thinktank Commercial Finance. Thinktank is a leading specialist commercial property lender in Australia, with a loan book now approaching $1.5 billion in first mortgage funding. Thinktank offers flexible and competitive loans to small business owners and investors across Australia. In addition, Thinktank offers investors an alternate solution to their fixed-income needs whereby investors can take comfort that their funds are secured by the commercial property.
Jonathan has more than 30 years’ experience in the finance industry with major institutions in Australia and the UK including National Australia Bank, Rothchilds Asset Management, Cargill Financial Markets and Accenture. As one of the founders of Thinktank, Jonathan has been instrumental in the development and evolution of the business to where it is today.
YR: Welcome Jonathan. For those readers out there who are not yet familiar with Thinktank, can you give us the 30-second elevator pitch?
JS: Thinktank is a commercial property lender specialising in small-ticket commercial property lending under $3 million. We offer small and medium enterprises (SME), as well as individual borrowers, personalised financing in order to purchase, refinance or release equity from commercial property. Many of our borrowers are owner-occupiers who are looking to purchase a commercial property from which to run their business. Most of our funding is provided by major banks. In addition, we have two private investment trusts in which sophisticated individual investors have access to a fixed-income solution.
YR: Thinktank’s involvement in the SMSF space is of great interest as many of our subscribers are SMSFs. Focusing on the lending side of the business for a moment, what percentage of your loan book are SMSF borrowers?
JS: The SMSF sector is definitely a topic of discussion at present, predominantly from the point of view of a limited recourse borrowing arrangement (LRBA). Now to your question. Around 20% of our current originations are to borrowers purchasing a commercial property using LRBA loans through their SMSF. As the current loan book stands, 14% of our borrowers are SMSFs.
YR: You alluded to the fact that LRBA lending is a hot topic at present. Commentators appear to be torn on the subject. From Thinktank’s point of view, how have SMSF borrowers performed compared to non-SMSF borrowers?
JS: Thinktank has explained the benefits of LRBA loans for suitable borrowers on numerous occasions, with suitable being the operative word. Thinktank has originated 265 LRBA loans since 2013; to date, we have had 100% success rate with nil arrears and nil losses. We have had one loan default that was due to a cyclone in north Queensland and we were able to recoup the balance of the loan from the sale of the property in the same manner as would be the case for any commercial or residential property. 89.7% of our LRBA borrowers are self-employed and 78.5% of them are repaying principal and interest from the outset with 37 loans repaying ahead of schedule.