HCP.Fund Passes $600m in SEQ Construction Finance

In construction finance, milestones normally look like slab pours, handovers and settlement days. Occasionally, the real milestone is what didn’t happen.

Holden Capital Partners (HCP.Fund) has now passed $600 million in loans advanced to Australian property developers, primarily across South-East Queensland, HCP principal Dan Holden says (pictured far right of main image with head of investments Gary Connolly and Callum Short, head of brokerage). 

The more meaningful number sits beside it—since inception, HCP’s first mortgage investors have preserved 100 per cent of their capital while receiving consistent risk-adjusted returns.

In a lending environment that moves with sentiment, policy and market cycles, that result has less to do with optimism and more to do with how the loans are chosen and structured in the first place. 

Built around decisions, not deals

Private construction lending often promotes speed and flexibility. Both matter, but neither replaces careful credit judgement and appropriate deal structuring.

Most projects don’t fail because the suburb was wrong or demand disappeared overnight. Problems usually start when the capital structure, timing and the developer’s experience don’t line up. HCP has a heavy focus on structuring loans around that idea.

The focus has always been mid-sized experienced developers delivering shorter-form projects where risk can be identified early and monitored closely.

Today the loan book is largely residential and industrial construction facilities rather than large multi-year developments. Last year, HCP funded 19 projects across SEQ, lending $124 million to developers, and through active management none of the loans are in default or bad conduct, something that is quite rare in the current private credit market.

▲ Rivera Norman Park was recently funded by HCP.

The goal isn’t pretending risk doesn’t exist. Development always carries risk. The goal is keeping it visible and manageable.

The importance of keeping projects short

The longer a project runs, the more variables enter the room. Contractor cashflow, presales management, interest rates, equity fatigue and market sentiment all increase over time.

So, the framework deliberately limits exposure. Most HCP facilities run around 9 to 15 months with appropriate loan extensions pre-agreed to adapt as needed.

Practically, the portfolio behaves less like a bet on the future property market and more like a business loan to help the developer improve the property and sell down upon completion or refinance to lower cost funding for a long-term hold.

Borrowers, investors speak same language

One unusual aspect of the business is the overlap between both sides of the transaction.

Many investors in HCP loans are developers, large property owners, or retired developers themselves. They allocate surplus capital into projects that HCP funds with a solid knowledge of how projects function operationally, which is particularly handy when timelines inevitably shift or issues arise.

That changes conversations. Assumptions get challenged early because everyone knows what can go wrong on site. Feasibilities are reviewed by people who have delivered similar projects rather than just modelled them.

Facilities are also structured individually rather than pooled. Investors participate in specific projects instead of an opaque portfolio. This also benefits the investor as they get to watch the project come to life through regular updates.

▲ KFC Goodna was recently funded by HCP.

The outcome has been strong repeat engagement from both borrowers and investors. One developer/borrower with HCP has completed more than 22 projects with HCP funding and another more than 18, with investors frequently electing to reinvest alongside developers they’ve already experienced through a full project cycle.

Communication part of risk control

Construction risk doesn’t stay still. It moves weekly through variations, sequencing and site conditions. Because of that, reporting is treated as credit management rather than administration. Investors receive regular updates and visibility as progress occurs.

Transparency doesn’t eliminate issues. What it does is shorten reaction time.

Handled early, problems stay minor variations.

Handled late, they become restructures and can become dramatic conflicts.

Across hundreds of projects HCP have funded, that timing difference matters.

What $600m actually represents

The milestone isn’t about becoming a large institution—HCP prides itself on being a local project lender to SEQ.

▲ Fernvale was recently funded by HCP.

With $130 million in current loans, HCP is not a major lender. It is a highly experienced boutique specialist that focuses solely on the development sector.

There is no call centre, and they don’t make you fill out tedious forms, rather, they sit down with you, get the important facts and provide a quick and honest assessment of what can be delivered.

The team of local, experienced construction finance experts—80 per cent of whom have been with HCP for more than eight years—have an intimate understanding of what it takes to undertake a project from start to finish.

This includes an extensive range of project finance, site acquisition and residual stock funding solutions for approved developers.

For developers, predictable funding means projects proceed without last-minute changes. For investors, reliable repayment matters more than squeezing out an extra percent of return for a heightened risk, with competitive returns achieved along the way.

Current investor returns range between 9.8 per cent and 10.4 per cent IRR per annum, with no capital losses over nine years, a strong outcome across any investment context.

The next phase

Australia’s development funding landscape continues to evolve. Bank appetite shifts with regulation and developers must adapt accordingly.

Specialist construction lenders aren’t replacing banks. They’re filling the part of the market that values certainty of execution over lowest cost of capital.

▲ Heathwood was recently funded by HCP.

For HCP, the next stage isn’t a new strategy. It’s continuing the same one carefully. Same project profile, same constraints, same emphasis on structure over speed.

Six hundred million dollars sounds large. In practice it’s the outcome of many small credit decisions made consistently over time.

In construction finance, process eventually shows up as performance.

For borrowers interested in HCP’s lending options, you can find out more here.

For investors interested in joining HCP’s investor group, you can register here.

 
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