La Trobe Financial sells Bathla-linked loan as private credit firms seek recovery

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La Trobe Bathla loan sale

Highlights

La Trobe Financial sold its senior loan for the Bathla Group's Marsden Park project to 360 Capital-backed investors for about $31.2 million, fully recovering its exposure.
360 Capital now controls both first and second mortgages over the 72-apartment project, with half pre-sold worth $25.8 million, increasing their influence on debt recovery.
The Bathla collapse and wider developer distress have pressured Australia's private credit sector, with ASIC highlighting sector risks and Metrics Credit Partners suspending fund withdrawals.

Marsden Park loan sale reshapes creditor position

As first reported by ABC News, La Trobe Financial has sold its senior loan facility tied to Bathla Group's development at 137 South Street, Marsden Park, to investors through a fund managed by 360 Capital for about $31.2 million.

The acquisition gives 360 Capital-backed entities control of both the first and second mortgages over the Sydney north-west project, strengthening their influence over how the development is completed and how outstanding debt is recovered. A senior loan facility ranks highest in repayment priority in a commercial investment structure.

The Marsden Park project comprises 72 apartments and is nearing completion, according to two sources close to the construction. 360 Capital said half of the apartments have already been pre-sold under contracts worth $25.8 million, excluding GST.

In August, La Trobe disclosed it had $38.1 million in loans to Bathla across four residential loans and one development loan. The transaction allows the lender to recover all outstanding principal, interest and late-payment charges, significantly reducing its exposure to the failed developer.

Following the purchase, advisory firm Wexted was appointed as receiver, with a focus on securing occupancy certificates and settling the pre-sold apartments. 360 Capital executive chairman Tony Pitt said he is confident of recovering the full loan amount.

Bathla fallout pressures wider private credit market

Morningstar equity analyst Winky Tan said lenders holding first mortgages are in a much stronger position to recover their money, while others risk losing most, if not all, of their investment. She cautioned that the financial result for any lender still depends on whether the remaining apartments can be sold and at what price, especially as the property market remains weaker.

Other lenders, including Centuria Bass and CVS Lane, faced challenges in August as concerns grew over their exposure to Bathla. Major private credit manager Metrics Credit Partners also suspended withdrawals from some unlisted funds amid scrutiny of asset valuations, adding to pressure across Australia's less transparent private credit sector.

The Australian Securities and Investments Commission has said the Bathla collapse highlights poor practices in private credit, including questionable asset valuations and inadequate disclosures. Tan said the sector is facing a perfect storm of higher interest rates and falling property prices, with developers struggling to refinance as investors pull money from the market.

Our earlier article on private capital consolidation examined how tougher fundraising and slower exits are pushing large managers to broaden their platforms through acquisitions. We highlighted EQT’s agreement to buy U.S. real estate firm Stockbridge after its Coller Capital deal, and explained how the challenging market backdrop is accelerating mergers, listings, and strategy diversification across the sector.

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