Conversation with Lee Centra – CEO, CVS Lane Capital Partners

Partner Harry New chats with Lee Centra, CEO of CVS Lane Capital Partners (CVS Lane), about the CVS Lane story, the residential housing crisis, the award-winning Cabana Palm Beach project, credit and risk management, and lessons to be learnt from sport.

HN: What is the CVS Lane story?

LC: CVS Lane was established in 2012 by five founders – myself and two of my business partners from the National Australia Bank, along with Josh Liberman’s family office.

A combination of the entrepreneurial culture of Josh’s family office and the training and experience we received at NAB helped us develop a strong and successful business model over the past 12 years.

We’ve now grown to a team of 60 people, $2 billion in funds under management, and a very strong track record of delivering attractive risk-adjusted returns to our investors across more than 200 transactions.

There is significant opportunity in the market. With strong growth in the non-bank financial sector and the risk appetite of the banks changing over time, CVS Lane sees a strong pipeline for immediate transactional opportunity and growth potential over the next three to five years. We can provide flexible capital faster than the banks and build relationships with clients over multiple projects across many years. For investors, commercial real estate debt is becoming an important part of their investment portfolio as it provides portfolio diversification and strong risk adjusted returns due to attractive yields and lower risk supported by real property security.

HN: What was CVS Lane’s role in the award-winning Cabana Palm Beach project?

LC: We became involved with the Cabana Palm Beach development at the Gold Coast in 2020. We supported the project at a challenging time in the market, including COVID disruptions and border closures, but it was clear the developer had a strong capability and a sound business case for the site. Josh Foote and the team at Ignite Projects partnered with Hutchinson Builders, who we already had a long relationship with, so we were happy to finance the project.

We have subsequently backed Josh on another project at Main Beach on the Gold Coast. When we find good people and good partners we like to continue working with them.

Cabana is a beautiful project and a well-deserved winner of the UDIA Queensland Mid-Rise Apartment Development of the Year award.

HN: How did CVS Lane fare in the first independent review of your investment products?

LC: This is the first time CVS Lane has engaged with an independent research house and we are really pleased and proud that renowned rating house SQM Research has chosen to rate both our First Mortgage Fund and Property Finance Fund as ‘Superior’ High Investment Grade with a Four-Star outcome.

It was a very rigorous process that assessed not just the performance of our funds over the past eight or so years but also CVS Lane’s capabilities, the experience of the manager, our governance, standards, systems, and the quality of our team.

The rating enables us to speak to a broader range of investors that require an independent investor rating as a prerequisite. We’re looking forward to engaging with those investors to share the CVS Lane story.

HN: How would you describe your credit and risk management processes?

LC: CVS Lane has rigorous credit and risk management processes. At the core of our business is protecting our investors’ capital with a focus on preserving their money, while at the same time supporting strong developers with good projects and generating good risk-adjusted returns on investments.

HN: What is your outlook for the residential housing crisis?

LC: The challenges facing the Australian residential housing market in terms of creating new supply to meet the demand for housing are very tough to solve in the short to medium-term. There are no silver bullets.

It requires a whole of government approach at all levels of government to effectively address the impediments to increasing the supply of new housing including planning, the provision of infrastructure, regulation, government investment crowding our private sector investment, tax policy, the cost of labour, and the lack of productivity in the labour sector.

HN: Which AFL teams would you back to make the 2024 grand final?

LC: As a Collingwood supporter and sports fan, I’m very happy they won the premiership last year, for only the third time in my lifetime. It will be tough for us to get back in the grand final again this year, so my tip is Carlton and GWS Giants to make the grand final. For my Carlton friends, including Harry New, I’m happy if Carlton were to win, but also equally happy if they were to lose!

We use a lot of sporting analogies in our business, such as having the right people in the right positions. There are a lot of lessons to be learnt from sport, including that you need to aim to be elite in as many areas as you possibly can, while managing risk along the way.