Private Debt/Structured Equity
Senior Construction Loan
INVESTMENT CHARACTERISTICS
Term: 1.5yrs
Asset Value: $14.4m
Yield: Capitalising coupon, repaid on exit
LVR: 53% p.a.
INVESTMENT THESIS
- Approved childcare centre project with an agreement for lease and business acquisition agreement with an ASX listed operator.
- Construction to be partly funded by the future lessee on a subordinated basis providing strong alignment for take-out.
- Predictable contracted income and low LVR supported a refinance by big-4 bank post-completion.
- Registered 1st mortgage with clearly defined controls and step-in rights to complete construction and fulfill lease.
Mezzanine Loan
INVESTMENT CHARACTERISTICS
Term: 1.5yrs
Asset Value: $92m
Yield: Capitalising coupon, repaid on exit
LVR: 70%
Security: Registered 2nd Mortgage
INVESTMENT THESIS
- Value-priced 244 unit development in a mature suburb of the ACT with access to new transport hub.
- ~130% presale cover from ACT-based buyers and no competing stock.
- Registered 2nd mortgage with subordination rights behind big-4 bank.
- Clear controls and step-in rights to sell units and deal with senior lender.
- Material cash equity invested from a strong sponsor with long track record
Residual Stock Loan
INVESTMENT CHARACTERISTICS
Term: 2yrs
Asset Value: $24m
Yield: Capitalising coupon, repaid on exit
LVR: 62%
Security: Registered 2nd Mortgage
INVESTMENT THESIS
- Completed retirement village purchased at circa 40% discount to valuation.
- Sponsor acquiring the asset was managing it on behalf of a receiver, building a strong pipeline of sales prior to acquisition.
- Ability to quantify the risk of selling the units below list price and recoup capital and earn, meaning the downside risk significantly mitigated.
- Clear controls and step-in rights to sell units and deal with senior lender.
Listed Equity Trade
INVESTMENT CHARACTERISTICS
Term: 2.5yrs
Asset Value: $35m (implied)
Yield: 10% p.a. (on cost)
Exit Price: $51.75m
LVR: 33%
INVESTMENT THESIS
- Two A-grade office assets remaining in a thinly traded NSX listed fund.
- Access to the growing Newcastle CBD.
- Strong tenant mix of Government and large corporates.
- Counter-cyclical purchase at an 8.6% cap rate (NTA).
- Purchased 19% stake via block trade at 15% discount to NTA.
- Clear path to exit communicated by manager.
Asset Finance
INVESTMENT CHARACTERISTICS
Term: 3yrs
Asset Value: $30m
Forecast Yield: Quarterly coupon, CPI adjusted
LVR: 67%
INVESTMENT THESIS
- Senior secured all assets charge over privately owned consumer goods retailer and finance provider.
- Volume based business spreading risk across >17,000 asset-backed loans with 18-24 months durations.
- Track record of strong debtor management and internally built credit assessment software supporting sustainable arrears metrics.
- Material surplus cash flow if loan book was put into wind-down.
Agriculture and Water
Rights Equity Strategy
INVESTMENT CHARACTERISTICS
Term: 10yrs
Asset Value: $25m
Forecast Yield: 5%p.a
LVR: Unlevered
INVESTMENT THESIS
- Purchasing dairy farmland and water rights during a structural downturn, converting to organic cropping land for long-term capital growth.
- Target Portfolio: 6,000ha Land & 160,000ML Water.
- Strategy to redevelop farmland to generate yield from high-value cropping rotations and water trading, proven through the manager’s existing fund.
- Financial feasibility supported by in place seasonal crop off-take agreements.
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