Five basement levels down. $50m of equity spent. 150 apartments pre-sold. Then catastrophic news. Two months before first drawdown, my client was told their superannuation-backed non-bank had 𝘄𝗶𝘁𝗵𝗱𝗿𝗮𝘄𝗻 𝘁𝗵𝗲 $𝟭𝟱𝟬𝗺 𝗰𝗼𝗻𝘀𝘁𝗿𝘂𝗰𝘁𝗶𝗼𝗻 𝗳𝗮𝗰𝗶𝗹𝗶𝘁𝘆.

It was April 2020, shortly after early superannuation withdrawals were allowed. Liquidity mattered more than term sheets. Committed facilities were pulled as funding bases tightened.

The private credit market can look healthiest right before sentiment turns.

A few recent reported “cockroach moments” are refocusing investors on risks that matter just as much to borrowers:

 • US: Blue Owl gated redemptions
 • US: BlackRock TCP cut a fund's NAV by 19% in 3mths
 • UK: Market Financial Solutions placed into administration amid fraud allegations
 • AUS: MarketLend / iPartners investors warned of loan book ‘discrepancies’

This isn’t about one manager. It’s about what happens when confidence breaks and investors remember illiquid loans cannot be redeemed like cash.

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𝗪𝗵𝘆 𝘁𝗵𝗶𝘀 𝗺𝗮𝘁𝘁𝗲𝗿𝘀 𝗳𝗼𝗿 𝗱𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿𝘀
When investors lose confidence, the first-order problem is fund liquidity. The second-order problem is borrower liquidity.

If redemptions are gated or liquidity terms change abruptly, the 𝗳𝗹𝗼𝘄-𝘁𝗵𝗿𝗼𝘂𝗴𝗵 𝗰𝗮𝗻 𝗯𝗲 𝗶𝗺𝗺𝗲𝗱𝗶𝗮𝘁𝗲 to borrowers:

 • lower LVRs
 • more presales
 • higher pricing and fees
 • slower approvals
 • and in the worst cases, delayed or withdrawn funding, including construction drawdowns

Developers should assume the current borrower-friendly window can shut quickly.

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𝗗𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿 𝗰𝗼𝗻𝘀𝗶𝗱𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝘀
 • Lock terms early while competition remains intense.
 • Choose lenders based on funding certainty, not just price. Institutional mandates, strong balance sheets, family office underwritten offers, and demonstrated drawdown capacity matter.
 • Consider an equity JV partnership. Deep-pocketed equity can be the difference between completing and collapsing if credit tightens mid-project.

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𝗞𝗲𝘆 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀
 1. “Cockroach moments” are often operational or valuation issues that hit redemptions and then fund liquidity.
 2. If investor sentiment turns, borrower terms can reprice quickly, particularly for construction lending.
 3. A loan offer is only as good as the lender’s ability to fund drawdowns under stress.
 4. Developers should lock terms earlier and prioritise lenders with robust funding capacity.
 5. A well-capitalised equity JV partnership is an insurance policy against a sudden credit freeze.

𝗗𝗲𝘃𝗲𝗹𝗼𝗽𝗲𝗿𝘀: are you seeing terms tighten this year, or is it still business as usual?

Developers wanting confidential benchmarking of current terms, or introductions to lenders and equity JV partners with reliable drawdown capacity, are welcome to reach out. No exclusivity required.

#privatecredit #developmentfunding #constructionfinance

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