Industry titans Patrick Keenan and Dan Gallen build on the gap the banks left behind

When Patrick Keenan and Dan Gallen set up Pallas Capital in Sydney in 2016, the pitch was simple. Australia's banks were pulling back from lending to the middle of the property market, the developers building the apartment blocks, townhouses and mixed-use projects that sit between the corner shop and the skyscraper. Somebody reputable, and careful, needed to step in.

A decade on, the numbers suggest the bet paid off. Pallas Capital says it has managed A$11.1 billion of investments since inception across 1,400 debt and equity transactions, with A$6.4 billion of that already fully repaid across more than 950 completed deals. Its loan book passed A$4.7 billion on 10 August. More than A$750 million has been paid out to investors as interest and distributions. And the figure the firm is proudest of is a zero: by its own account, no Pallas investor has lost capital or income.

Four founders, one thesis

The founding team reads like a cross-section of the Australian finance industry. Keenan, now executive chairman, began as a lawyer at Freehill, Hollingdale and Page, became a director of the investment bank Dominguez Barry Samuel Montagu, and later ran the Prebon Yamane broking group with 1,650 staff across 24 offices. Gallen, the chief investment officer, has personally completed more than A$4 billion of structured real estate transactions over a 20-year career as lender, developer, investor and adviser, and chairs the credit decisions that go through the firm.

They were joined by Charles Mellick, a developer with three decades of inner-city projects in Sydney, Melbourne and Brisbane behind him, and Mark Spring, a capital markets veteran who took charge of introducing family offices, asset managers and high-net-worth investors to the firm's products.

That combination, credit discipline on one side and a developer's understanding of what actually gets a building finished on the other, is the thing borrowers and brokers keep coming back to. Pallas lends against assets typically worth between A$2 million and A$50 million, the range too large for a private lender and too fiddly for a bank, and it competes on speed and certainty of execution rather than on being the cheapest money in the room.

Riding the private credit wave

The timing was fortunate, but the firm has also made its own luck. As Australian banks tightened their exposure to construction and development finance, the country's commercial real estate debt market grew to an estimated A$447 billion by mid-2024, and non-bank lenders took an ever larger slice of it.

Pallas passed A$5 billion in cumulative transactions in October 2024, having grown 47 per cent in just 18 months. Construction lending did much of the work: 130 construction loans worth A$2.18 billion in limits, helping deliver projects valued at more than A$3 billion across Australian and New Zealand cities.

"The private credit sector has seen remarkable expansion as traditional banks restrict their exposure to construction and development lending, prompting developers to turn to non-bank lenders for more flexible funding solutions," Gallen said at the time. "Pallas Capital has capitalised on this shift by offering speed, certainty of execution and bespoke loan products tailored to the various funding needs of different brokers and developers."

The investor side of the business has broadened in step. What began with wealthy individuals and family offices now includes institutional money, and the wider Pallas Group, which also houses the boutique development manager Fortis, has reported funding lines from names including Goldman Sachs, Morgan Stanley, National Australia Bank and Westpac.

A bigger map

This year has been about geography. In January the group launched Pallas Capital in the United Kingdom, taking an Australian-honed playbook into the London mid-market with bridging, refurbishment, development exit and development finance products. Ben Keenan relocated from Sydney to lead it as executive director, alongside chief credit officer Uliana Kuzmis, formerly deputy managing director of development finance at Hampshire Trust Bank.

"The UK mid-market may be crowded, but too many developers and brokers still face slow processes, shifting credit appetite and inconsistent service," Ben Keenan said at the launch. "Pallas is built to change that."

At home, the firm now has offices in Sydney, Melbourne, Brisbane, Adelaide and Auckland, and on 24 July it opened a new Melbourne headquarters at 122 Moray Street in South Melbourne, a marker of what it calls a long-term commitment to the Victorian market.

Fixing the boring bits

The most recent announcement, made on Monday, is less glamorous and arguably more telling. Pallas has partnered with property data provider Cotality so that brokers can order and track residential valuations through Cotality's PropertyHub platform in a single workflow, with desktop reports for properties up to A$2 million, short-form valuations up to A$5 million and long-form reports above that.

"Valuation delays can create uncertainty for both brokers and borrowers," said Jason Arnold, the firm's group executive for origination. "This is another example of how we're investing in solutions that make it easier for brokers to do business with us while continuing to deliver the responsiveness and service they expect from Pallas Capital."

It is the kind of unshowy plumbing that separates lenders who grow for a decade from lenders who grow for a cycle. Pallas Capital's products remain restricted to wholesale investors, and property lending carries risks that no track record can abolish. But for a firm built on the premise that the middle of the market deserved a serious, well-capitalised lender, ten years, A$11 billion and a clean loss record make a persuasive case that the premise was right.