Morgan Stanley has provided funding lines to support a new $500 million Australian lending facility, Pallas Funding Trust No. 5 (PFT5), marking a significant expansion of its involvement in non-bank commercial real estate (CRE) finance across the region.
The facility has been established by Pallas Capital, a leading Asia-Pacific non-bank lender, and will provide tailored loan products to small and medium-sized enterprise (SME) borrowers in Australia’s mid-market commercial property sector.
The partnership has underpinned the rapid growth of Pallas Capital’s lending platform, which has completed almost $3 billion in transactions in FY2024–25 alone.
Pallas Capital chief investment officer Dan Gallen said the new facility would continue its targeted approach of “providing flexible, well-priced CRE debt products to the less well-serviced mid-market segment”.
Head of origination at Pallas Capital, Jason Arnold, added that the new facility will strengthen the company’s ability to “offer more choice, more control and faster outcomes for commercial borrowers”.
“It reflects our continued growth trajectory into 2026 and beyond and further empowers our broker network who account for the majority of our deal flow to deliver highly competitive, tailored finance solutions for their clients.
“In a complex lending environment, we’re proud to provide the certainty and flexibility the market needs,” Arnold said.
PFT5 will focus on pre-development loans, residual stock loans and investment property loans, mostly in the $15 to $35 million range, though it has the capacity to fund larger loans where credit criteria are met.
Construction loans will not be funded by PFT5 but remain available through other Pallas Capital vehicles.
The move highlights Morgan Stanley’s continued support for alternative credit providers and its strategic interest in Australia’s CRE debt market, particularly in segments underserved by traditional banks.
Pallas Capital now manages multiple institutionally and high-net-worth funded warehouses, supporting a diverse pipeline of CRE lending solutions either directly or via mortgage brokers.
Its lending operations have also expanded into New Zealand, where it has provided over NZ$950 million in loans to SME borrowers through offices in Auckland and Christchurch.
The firm offers five core loan types – acquisition, pre-development, construction, residual stock and vacant land – and actively negotiates loan-to-value ratios and pre-sale requirements with borrowers.
Pallas Capital’s investment offerings are supported by detailed due diligence, diversified exit strategies and ongoing loan management.
Its funds are secured against property assets valued between $1 and $50 million, primarily in major metropolitan areas, and are structured to provide wholesale investors with fixed or variable rate returns.
