Supply demand imbalance coming for new premium Sydney CBD office, and it’s not what you’d expect! For the first time in 50 years, no new office developments are expected to be completed in the Sydney…
We recently hosted two developer networking dinners in Melbourne and Sydney. The 50+ developers discussed the state of the industry with the Merricks Capital team and our Commercial Real Estate (CRE) Advisory Board. The fascinating…
In our view, Government bond yields (and central bank cash rates) may be reaching their peak. However, high sovereign debt levels and fiscal budget deficits combined with inflationary pressure have reduced the government’s capability for…
The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.9%* in October and 10.0%* on an annualised basis since inception. The Fund was fully deployed during the month with cash <5% of FUM. One new…
The Merricks Capital Partners Fund (the Fund) returned 0.9%* in October and 10.2%* on an annualised basis since inception. The Fund was fully deployed during the month with cash <5% of FUM. One new loan…
Our partnership with NAIF & the Queensland Government is adding an inflationary hedge and sector diversification to our private credit portfolio. In partnership with NAIF (Northern Australia Infrastructure Facility) and the Queensland Government’s Invested in…
Banks at capacity limits, flat asset growth and less income certainty in Australian agriculture is driving a new wave of private credit opportunities Bank activity over the past two years has seen the largest ever…
Senior members of Merricks Capital’s Private Credit and Investment Management teams were in Auckland this week for 35 meetings with borrowers, potential borrowers, capital allocators, real estate agents, banks and alternative capital providers. They gathered…
The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.9%* in September and 10.0%* on an annualised basis since inception. One loan repaid during the month, an 8.4% allocation to the Fund secured against a…
The Merricks Capital Partners Fund returned 0.7%* in September and 10.2%* on an annualised basis since inception. The global macro-outlook remains uncertain, with bond and equity markets falling during the month and credit spreads tightening…
Taking shelter: Chinese real estate capital returning to Australia and New Zealand The current concern for China’s local property market does not appear to be impacting the Chinese appetite for Australian and New Zealand real…
The Merricks Capital Agriculture Credit Fund returned 0.9%* in August and 9.9%* on an annualised basis since inception. The FY23 final distribution of 4.0% was paid during the month, bringing the total distribution for FY23…
The Merricks Capital Partners Fund (the Fund) returned 0.8%* in August and 10.2%* on an annualised basis since inception. The FY23 final distribution of 4.0% was paid during the month to bring the total FY23…
A tale of two milk prices: Australia and New Zealand Australia’s dairy farmers are experiencing record-high opening milk prices this season. However at a 25-30% premium to New Zealand’s farmgate milk price (FMP), this dislocation…
Managing systematic portfolio risk amid China’s evolving economic landscape With approximately 60 loans in the Merricks Capital Partners Fund, no single loan presents a material risk to capital preservation and annual return outcomes. Systematic risk…
Our view as the largest non-bank lender in the Australian and New Zealand agricultural sector We’ve deployed over $1.3bn in senior secured loans into Australian and New Zealand agriculture over the past 5 years, making…
The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.9%* in July and 9.9%* on an annualised basis since inception. The FY23 final distribution of 4.0% will be paid in the third week of August…
The Merricks Capital Partners Fund (the Fund) returned 0.7%* in July and 10.2%* on an annualised basis since inception. The FY23 final distribution of 4.0% will be paid in the third week of August 2023….
We’re seeing construction cost growth start to ease for the first time in three years and developers showing renewed interest in residential apartment projects which is creating senior lending opportunities. Our discussions with developers, builders…
In Q1 2023, we saw the lowest volume of commercial real estate transactions since the COVID pandemic (Q1 2020) and the lowest level of office transactions since the GFC (Cushman & Wakefield). With less than…
The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.9%* in June and 10.8%* for the financial year (FY23). The Fund has returned 9.8%* on an annualised basis since inception. The Fund declared a FY23…
The Merricks Capital Partners Fund (the Fund) returned 0.7%* in June and 9.0%* annualised for the financial year (FY23). The Fund has returned 10.2%* on an annualised basis since inception. The Fund declared a FY23…
The Merricks Capital Partners Fund returned 9.0% for FY23 and a distribution of 8.0% for FY23. Since its inception in 2017, the fund has returned 10.2% on an annualised basis. Underlying fund performance finished +1%…
This week two prominent listed real estate investment trusts (REITS) Dexus and Charter Hall, released indicative 30 June valuations for their office portfolios showing 3-8% declines from December 2022 peaks (Dexus down 7.7% and Charter…
This week, New Zealand (NZ) tipped into technical recession with two quarters of negative GDP growth (0.1% & 0.7% respective contractions). Contrary to some negative news regarding this event, we’re seeing high quality opportunities for…
The Merricks Capital Partners Fund (the Fund) returned 0.7% in May and 10.2% on an annualised basis since inception. Underlying loan performance returned 91bps for the month, with floating rate loans benefiting from cash rate…
The Merricks Capital Agriculture Credit Fund (the Fund) returned 1.0% in May and 9.8% on an annualised basis since inception. The underlying loan performance lifted during the month as floating rate loans benefited from cash…
Senior secured, asset-backed lending in Australia and New Zealand is supported by a supply shortage across many real estate sectors, including housing, prime office spaces, lifestyle and retirement living. During the first five months of…
In the first four months of 2023, demand from Chinese investors for completed apartments in Sydney and Melbourne has been greater than demand over the entire 12 month period of 2022. Foreign investment is…
The Merricks Capital Agriculture Credit Fund returned 0.9% in April and 9.7% on an annualised basis since inception. Underlying loan performance for the month was lifted with the Fund increasing its investment allocation to one…
The Merricks Capital Partners Fund (the Fund) returned 0.8% in April and 10.3% on an annualised basis since inception. Underlying loan performance returned 89bps for the month and the Fund’s credit and FX hedging detracted…
We recently settled a $31m residual stock facility in a fast-growing suburb of Melbourne. What was unique about this loan was that it was the first time in almost 18 months we’d used fixed-rate pricing…
The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.9% in March and 9.6% on an annualised basis since inception. Underlying loan performance for the month was lifted with the Fund increasing its investment allocation…
The Merricks Capital Partners Fund (the Fund) returned 0.7% in March and 10.3% on an annualised basis since inception. Underlying loan portfolio performance returned 91bps for the month and the Fund’s credit and FX hedging…
At the beginning of 2022, Credit Suisse Credit Default Swaps (CDS) were trading at 42bps, a similar level to major Australian banks. In the weeks prior to Credit Suisse’s collapse, its senior CDS spiked to…
The collapse of Silicon Valley Bank (SVB) last week sent a wake-up call to global markets about the compounding risk of aggressive rate hikes. The US government bailed out depositors to prevent a deeper banking…
The Merricks Capital Partners Fund (the Fund) returned 0.7% in February and 10.3% on an annualised basis since inception. Fund performance was reflective of February being the shortest month of the year and one loan…
The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.8% in February and 9.5% on an annualised basis since inception. Underlying loan performance was lifted by the Fund increasing its investment allocation to three existing…
In recent years, between 3-5% of the Merricks Capital Partners Fund has been invested in Western Australia. Between 2017-2019 Merricks Capital financed more than $400m of residential development in the Perth market. At the time…
On 12 February 2023, Tropical Cyclone Gabrielle hit the North Island of New Zealand causing widespread damage estimated to be at least NZD$13.5bn (AUD$12.3bn) (NZ Finance Minister). New Zealand declared a national state of emergency…
Over the past 18 months, our exposure to commercial office loans has decreased from 33% to 16% in the Merricks Capital Partners Fund as borrowers successfully refinanced new office projects with banks. In a post…
The Merricks Capital Partners Fund (the Fund) returned 0.6% in January and 10.3% on an annualised basis since inception. Global markets started the year with a positive tone driven by the expectation that central banks…
The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.8% in January and 9.4% on an annualised basis since inception. There were no new loans settled in January. A focus for portfolio management during January…
An impending influx of international students is expected to put pressure on rental vacancy rates over the next two years. Forecast higher rental yield growth in inner city locations provides upside for residual apartment stock…
Three years of above average farm income and growing land values have driven a generational wave of acquisition activity in the agricultural sector. Approximately 50% of agriculture loans funded by Merricks Capital are used for…
A year in review – 2022 Geopolitics and Covid-19 pandemic pressures in 2022 led to supply chain disruption, inflation, and a global credit squeeze. This led to the opportunity to use our dry powder and…
The Merricks Capital Agriculture Credit Fund returned 0.9% in December and 9.3% for the 2022 calendar year. The Fund declared a 4.0% distribution for the six months to 31 December 2022. 2022 was another strong…
The Merricks Capital Partners Fund returned 0.9% in December and 9.7% for the 2022 calendar year. Underlying loan income performed strongly for the month, 1.0%, with floating rate loans continuing to pass through rising interest…
A key insight from the past 6 months has been the appetite of the major banks to refinance agricultural loans within our portfolio that now meet their credit requirements of income and interest servicing despite…
The Merricks Capital Partners Fund returned 0.5% in November and 10.3% on an annualised basis since inception. Underlying loan income performed strongly for the month, 0.9% with floating rate loans passing through rising interest rates…
The Merricks Capital Agriculture Credit Fund returned 0.9% in November and 9.3% on an annualised basis since inception. Production from the Australian agriculture sector has risen in latest forecasts from ABARES, despite major flooding events…
Over the past two years our funds only had a small exposure to completed apartment finance or as they are known in the industry, ‘Residual Stock Facilities (RSF)’. We are now seeing increased RSF opportunities…
This week, Merricks Capital placed the Melbourne Place project into Voluntary Administration following payment defaults by the borrower. It is important to note, the borrower default is not related to rising construction costs or supply…
At Merricks Capital’s Investor Briefing, ‘The Surge of Private Credit’, held in Sydney last week, Accor Pacific’s CEO, Sarah Derry said Accor has seen a clear rebound across its 400 hotels in 2022, with domestic…
The Merricks Capital Agriculture Credit Fund returned 0.8% in October and 9.2% on an annualised basis since inception. Underlying loan income performed strongly for the month (0.9% before fund costs) with floating rate loans (representing…
The Merricks Capital Partners Fund returned 1.0% in October and 10.4% on an annualised basis since inception. Underlying loan income performed strongly for the month (0.9%) with floating rate loans (representing 62% of FUM) benefiting…
Record rainfall for October in Southern New South Wales and Northern Victoria continues to cause flooding in tributaries to the Murray River and the river itself. Of the 28 agriculture credit loans in the Merricks…
It was a truly wild night in markets with the higher than expected CPI numbers in the USA initially sending equity markets, bonds and the AUD into a tailspin. It’s difficult to remember a day…
The Merricks Capital Partners Fund returned 0.8% in September and 10.4% on an annualised basis since inception. As central banks focus on taming inflation with interest rate hikes, our capital deployment is across target sub-sectors…
The Merricks Capital Agriculture Credit Fund returned 0.8% in September and 9.1% on an annualised basis since inception. The seasonal outlook for Australian agriculture remains positive with the value of agricultural exports forecast to reach…
The Reserve Bank of Australia’s 25 bps interest rate rise on Tuesday was the sixth consecutive rate rise since May and took the cash rate above 2.5% for the first time since July 2013. The…
Many investment market participants were punished this week for believing Central Banks would behave in a similar fashion to the last 20 years and ease the trend of tightening monetary policy in the hope inflation…
The Merricks Capital Partners Fund returned 0.7% in August and 10.4% on an annualised basis since inception. There were no new loan investments settled in August. Underlying loan income benefited from floating rate loans passing…
The Merricks Capital Agriculture Credit Fund returned 0.8% in August and 9.1% on an annualised basis since inception. The seasonal outlook for the agricultural sector in Australia and New Zealand is encouraging with the Bureau…
Overall, we maintain low weighting and a cautious approach to residential land subdivision as we have had some concerns about delayed delivery and rising costs to meet the record pre-sales book achieved across Australia in…
With less than 10% exposure to existing and new residential real estate in the Merricks Capital Partners Fund we intentionally avoided the stress in the sector in 2021/2022. Last year it appeared loan covenants were…
The Merricks Capital Partners Fund returned 0.62% in July and 10.40% on an annualised basis since inception. For July, the private credit component contributed 0.82% and CDS contributed -0.14%. This month the RBA increased the…
The Merricks Capital Agriculture Credit Fund returned 0.86% in July and 9.00% on an annualised basis since inception. Merricks Capital’s Agriculture Credit Fund is a diversified portfolio of 20 agricultural investments across seven major agricultural…
This week’s market insight expands on three topics at the forefront of Investors’ minds. How sensitive are portfolios to inflationary pressures and what changes have been made in response to rising inflation and interest rates?…
A Melbourne-based property developer entered liquidation on Monday, citing interest rate hikes, lack of labour, elevated materials costs and Covid-19 lockdowns as the reasons for its collapse. Merricks Capital does not have any exposure to…
Our base case macro assumption is that Australian 10-year bond yields have normalised back to a pre-covid level of 3% – 4% p.a. This may result in real estate valuations coming under pressure over the…
The Merricks Capital Partners Fund returned 1.2% in June and 9.0% annualised for financial year 2022 (FY22). The Fund also declared a FY22 final distribution of 4% and a full annual distribution of 8.0%. The…
The Merricks Capital Agriculture Credit Fund returned 0.7% in June and 8.7% annualised for financial year 2022 (FY22). The Fund also declared a final full year distribution of 8.0%. The Fund delivered these returns secured…
• In June 2022, the Merricks Capital Partners Fund generated a net of fees return of 1.18%. This resulted in an annualised one-year return for the fund of 8.95% and an annualised return since inception…
As we start a new financial year, Merricks Capital would like to thank its investors, capital and industry partners and staff for their ongoing support through FY22. The Merricks Capital Partners Fund paid a distribution…
The current investment environment has radically shifted to a commodity driven inflationary super cycle. Historically during these periods, we have observed: Income from agricultural assets rise as inflationary pressures increase consumer prices, with revenue linked…
For many years we have been waiting for Central Banks and Governments to be forced to increase rates and remove bond buying. Politically, it has been easy for all arms of Government globally to keep…
The Merricks Capital Agriculture Credit Fund returned 0.7% in May and 8.9% on an annualised basis since inception. One new investment settled in May, a $21m loan to fund land acquisitions in Berrima, NSW with…
Over the last decade, we have searched for subsectors cyclically out of favour with traditional lenders. Lending at modest loan to valuation ratios generally means our facility balance is well below replacement cost, however, the…
The Merricks Capital Partners Fund returned 0.9% in April and 10.4% on an annualised basis since inception. April marked a clear shift in monetary policy around the world as many central banks wrong-footed economics with…
It was an eventful week with the RBA increasing the cash rate target by 25 basis points to 35bps the first increase since 2010. Followed by 50 basis point rise by the US Federal Reserve,…
COVID-19 lockdowns in Shanghai are causing a fresh wave of disruptions to the global supply chain. The recent lockdown has crippled the world’s busiest container port and compounded the supply chain challenges lingering from 2020…
The Merricks Capital Partners Fund returned 0.6% in March and 10.4% on an annualised basis since inception. Underlying loan portfolio income was up for the month (0.7% from 0.6%) due to new investments settled in…
Western Australia’s open border is fuelling property development momentum in a market short of housing supply. Strong economic performance and property market fundamentals are providing an attractive landscape for investment in the State and the…
Over the past 15 years, Russia and Ukraine have become an agricultural exporting powerhouse, accounting for 30% of annual global wheat exports. Recent events have resulted in a significant spike in commodity markets with European…
The Merricks Capital Agriculture Credit Fund returned 0.6% in February and 9.1% on an annualised basis since inception. One new loan was added to the portfolio during the month, a $6m drawdown to an existing…
The Merricks Capital Partners Fund returned 0.8% in February and 10.4% on an annualised basis since inception. Three new loans settled during the month, deploying $63m of cash and reducing cash on hand for the…
Australian retail household electricity prices in the National Electricity Market (NEM) – Australia’s largest grid – are the lowest they have been for eight years, according to Australian Competition and Consumer Commission (ACCC) data (refer…
Merricks Capital appoints David Hackett as Chief Executive Officer and key additions to the board and executive management team. Adrian Redlich, founder and Chief Investment Officer will retain the Executive Chair. Following a strong year…
Household quarterly net savings are well above the 10 year average. While the Household savings ratio peaked at 23.6% in June 2020, the ratio remains elevated at 19.8% in the 2021 September quarter. The rise…
Immigration and tourism are critical driving forces behind Australia’s economy. For the past 15 years’ Australia has relied on net overseas migration to contribute more each year to population growth than natural increase. Further, the…
The Merricks Capital Partners Fund returned 0.6% in January and 10.4% on an annualised basis since inception. Borrowers in the Merricks Capital Partners Fund across logistics, construction, hospitality, agriculture supply chain are keenly focused on…
As part of the ongoing management of our loan portfolios, we engage with borrowers to understand their expected financial position over the coming twelve months. In general, our observations suggest that their business activities are…
The Partners Fund returned 8.2% (net of fees and costs) to investors over 2021 calendar year. Considering international and state border closures, along with industry closures, this is a strong, risk adjusted result for investors….
Agricultural land values remain very strong, driven by transactions across the spring selling season and underpinned by the weight of capital that continues to flow into the sector. Institutional funds and family farmers continue to…
Over the last 20 years, housing price growth has substantially outpaced wage price growth across Australia and New Zealand. This gap has been further exacerbated by a 21.6% and 23.4% growth over the last 12-months…
Private Credit has experienced sustained growth over the last 10 years and increasingly plays a significant part in global asset allocation as returns are perceived to be higher on a risk-adjusted basis. Since 2010, the…
Feedlot infrastructure has become a fundamental part of the beef supply chain with more grainfed beef than grassfed on supermarket shelves. According to Meat & Livestock Australia, in the March 2021 quarter, feedlot cattle made…
Australian and New Zealand farmers are continuing to benefit from the unusual occurrence of good growing conditions and higher commodity prices, supported by poor production in other parts of the world. The Agriculture Credit Fund…
Prior to the recent virus outbreak, the Australian economy had achieved considerable recovery across several data points, including a strong rebound in consumer spending and a stronger than anticipated economic growth rate. Both housing and…
Bond markets have been fluctuating over the last two weeks due to expectations and actual central bank announcements of increasing interest rates, tapering of quantitative easing and interpretation of inflation. The Partners Fund portfolio has…
With much of the record 2021 wine vintage being prepared for delivery to the export market over the next six months, we dive into viticulture. 16.3 million glasses of Australian wine are enjoyed overseas each…
Back-to-back above-average winter crops are underpinning optimistic sentiment in the broadacre cropping sector. Having started mid-September in Queensland, harvest continues its way down south with the harvest of the canola crop starting to pick up….
Sydney Residential Property price growth has outpaced the national weighted average price growth by 2.5%, leading all other capitals across Australia. According to CoreLogic, the median house value is $1.3m, whilst units have increased to…
The Merricks Capital Agriculture Credit Fund investment strategy focuses on investments where land is the primary security. There is currently a mix of high commodity prices, low supply levels and increased demand for land which…
The Merricks Capital investment team are assessing the deep pipeline of commercial real estate investment opportunities in New South Wales, Queensland, and New Zealand. Sydney’s CBD and fringe suburbs remain the focus for the commercial…
The implementation of a New Public Domain Strategy by North Sydney council late last year has rejuvenated the private sectors endeavour for investment in the region. Aimed at prioritising urban life, pedestrian plazas and upgrading…
Over the past six months, Merricks Capital has been assessing investment opportunities in residential development across South-East Queensland. Yields on units in Brisbane and the Gold Coast have been progressively increasing, whilst yields in Melbourne…
Commercial office development contributes to a significant portion of the Partners Fund portfolio, with current exposure sitting at ̴ 36% across Melbourne, Sydney and Auckland. Over the past 18 months, the fund has financed two…
At Merricks Capital, we are constantly in discussion with rural sales agents and are seeing strong demand for properties valued at more than $10m. The agriculture investment strategy is focused on $25-$50m loans where we…
At Merricks Capital, we are constantly in discussion with leading office sales and leasing agents. Despite current lockdowns in Melbourne and Sydney, agents continue to see strong demand from local buyers for prime office buildings….
Forecast cost inflation for construction of 6-8%, is expected to peak in the first half of 2022. This is a temporary spike due to supply chain and logistic challenges across all industries, coupled with a…
COVID-19 travel restrictions have drawn a spotlight to a problem in the Australian agricultural sector – labour shortages. Although it may prove to be the catalyst the sector needs to come up with a solution,…
Changing shopping and food consumption patterns have occurred as a result of the COVID pandemic and the resulting lockdowns. Some of these trends have normalised but there is likely to be a more permanent shift…
The Agriculture Credit Fund invests in loans which are secured against agricultural assets across a range of market subsectors. Recent highlights in some of our investment markets include: Grain – Wheat markets are being supported by…
The Partners Fund has flexibility to invest in loans secured by assets across an increasingly diverse range of market sub-sectors. Some of these markets have been undergoing significant structural shifts, resulting in an increasing level…
As arguably the best performing economy in a post-COVID world, New Zealand is currently at a crossroads. Rising asset prices have created a policy dilemma for New Zealand authorities, and the resulting tightening in lending…
It has been a stellar year to date for most asset classes around the world, except for Chinese equity and real estate. Merricks Capital noted several months ago that China was the only place in…
Merricks Capital are closely analysing the COVID-19 related shutdown of the construction industry in key areas of New South Wales. The effective closure of the building sector until the end of July is different in…
With LD5 (Lock Down 5) hitting Melbourne the diary has been cleared of a site visit to a significant Tasmanian agricultural borrower and we have found ourselves with many hours to contemplate the glaring dislocation…
The Agriculture Credit Fund invests in Senior Secured First Mortgages across a diverse range of agricultural assets, including cropping, poultry, livestock, horticulture, and viticulture assets. The markets for these assets and the commodities they produce…
The Partners Fund continues to benefit from recovering conditions in the office market, particularly the Melbourne fringe office market, following the impact on sentiment from the COVID-19 pandemic. In its Q2 2021 report on the…
Over the last month Merricks Capital discovered very low levels of regional home vacancies whilst undertaking due diligence on several loans to fund coastal residential developments. Merricks Capital bottom-up engagement with agents and developers is…
The 2021/22 milk season opens next week, and milk processors have been announcing milk prices in the lead up to the new season. Milk prices are key to profitability of the dairy farms in our…
The Reserve Bank of New Zealand announced this week that it will introduce debt-to-income ratios to support financial stability and house price sustainability This move will lead to an additional focus on income servicing by…
Market conditions continue to support the future performance of the Partners Fund. The ABARES Australian crop report was released this week and it contained further good news for the agriculture sector, forecasting winter crop production…
Over the last week we have seen key supporting data points for national housing prices and indications investors are re-joining owner occupiers as new purchasers. The ongoing positive momentum in value for our loan collateral…
As a business with active commodity trading and lending strategies in agriculture and energy we are constantly monitoring Chinese liquidity measures as this function is highly correlated with prices. China stands out as the sole…
Tourism related debt makes up 3.4% of all ADI (APRA-regulated bank) lending exposure, equating to about $11.7bn in loans. JLL estimates that, based on typical bank gearing levels and tenor, $2 billion of hotel investment…
Material inflation and tight labor markets suggest construction costs should be rising. However, the anecdotal evidence of our borrowers is that construction tenders in the apartment sector are coming in below expectations It appears the…
The Partners Fund benefits from improving asset valuations and investment opportunity growth Rural Bank’s recently released “Australian Farmland Values” report has shown the resilience of valuations in the sector, with the median price of Australian…
Australian inflation numbers were released this week. The RBA’s preferred measure (the trimmed mean) rose just 0.3% over the quarter or 1.1y% over the year, well below the target range or 2-3%, on average, over…
There has been significant growth in agribusiness funding over the last decade. The number of food and agriculture funds with headquarters in Australia and New Zealand has grown from 2 in 2000 to 52 in…
Last week we had some investors question if we were being too optimistic about the potential supply deficit of new apartments in Australia in the coming 2-3 years. There were questions regarding our exposure to…
Surge in Asset Valuations Economic conditions have continued to improve during March, and the combined impact of continued monetary and fiscal stimulus with strong household and business balance sheets has resulted in upgrades to future…
Heavy rains this week throughout NSW have confirmed what many already knew – the drought in many parts of the state is over. This most recent deluge follows the Australian east coast’s wettest summer since…
The world economy and in particular the Australian economy are now unquestionably enjoying the benefits of the various arms of Government’s “pedal to the metal” strategy of record monetary and fiscal stimulus. The very strong…
Last week, the government sponsored AgriFutures released a report titled ‘Investing for the Future: Why Capital investments are key to the growth of Australian agriculture’. The National Farmers’ Federation has outlined a roadmap to grow…
Last week we highlighted that fund managers around the world were at record low cash holdings and were fully invested. As such, the current wobbles in markets are not surprising. Our strategy is based on…
The Partners Fund continues to benefit from improving conditions. The Australian economy has rebounded strongly, growing 3.1% in the December quarter, resulting in strong commercial real estate asset price performance and healthy market activity. Several…
Last week we began the discussion about investor return expectations in the current macro environment. We have since seen the results of two key global surveys that shed further light into market expectations and trends…
Emerging New Zealand senior lending environment offering exciting opportunities. The Partners Fund has benefited from the diversity provided by its exposure to New Zealand, which is currently just under 7%. This exposure has, until now,…
Over the summer period we have been amazed at the ongoing performance of the economy/ markets in the face of geopolitics wrangling and waves of “hard” COVID-19 induced lock downs. Our simple conclusion is that…
Commercial Real Estate and Agriculture lending conditions positioned for further positive growth. The Partners Fund continued to benefit from improving investment market conditions during December, as the Australian economy moved out of recession and expectations…
Merricks Capital would like to take this opportunity to thank all our clients, capital partners and staff for their amazing effort and resilience during one of the more challenging years in modern history. 2021 is…
The Partners Fund currently has 31% of the portfolio invested across Agriculture. The improving outlook for agricultural prices, favourable weather and production expectations, and non-correlated nature of agricultural markets is providing continued support for asset…
Over the last year our loan book has continued to perform extremely well. As with most investors, we were concerned about the potential for the pandemic to cause severe problems in our markets that would…
We continue to experience a remarkably stable loan book performance when considered in the context of the first Australian economic recession in 30yrs. In fact, the price at which various asset classes are trading suggests…
The Partners Fund currently has 4% exposure to senior mortgages backed by Hotels in NSW and Tasmania. The average LVR of these loans is 53% and are performing with both interest and principal amortisation being…
Valuable insight about the commercial real estate market has been provided by the recent quarterly reporting cycle and ongoing AGM season for the listed real estate sector. Much of this information about the environment within…
Most apartment developments nearing completion were 50-75% presold prior to construction. Settlements of these presold apartments have been very strong, with very low levels of default allowing for most senior debt to be repaid. However,…
The drought has broken and agricultural land values are growing strongly which further underpins our growing agriculture credit book Key farming regions across eastern Australia are enjoying their best season in decades as rainfall drives…
Asset prices remain strong across our lending markets, particularly in the land subdivision and agricultural sectors. We have experienced minimal evidence of settlement risk within the Partners Fund loans, and a number of loans have…
A core tenant of our lending strategy is ensuring there is a healthy buffer between our loan levels and the sworn independent values of assets securing this financing. Valuations reflect what the market is prepared…
Lending against real estate below replacement cost remains our most important line of defence Unlike banks, who have highly leveraged balance sheets which force them to focus on income serviceability to meet their own cashflow…
The national residential vacancy rate fell to 2.0% in August 2020 All capital cities recorded an improvement in vacancy rates during the month, with the exception of Melbourne A key trend has been the continued…
We wrote about our view on financing office developments below replacement costs last month but that was prior to the perceived impact of stage 4 restrictions in Melbourne. Changes in work practices due to the…
The most significant structural change underlying the success of the Merricks Capital investment strategy has been the material change in bank lending practices. The changes over the last 4 years have created a vacuum of…
The stark contrast of gold hitting all-time highs and the lowest Australian inflation numbers in a century highlights extreme dispersion between measured deflation and the markets fear of stagflation. In other words data is suggesting…
Over the last few months we have reported increased opportunity to finance retail backed property. These comments have led to a number of questions about the viability of retail real estate and our confidence in…
Net overseas migration has been a significant contributor to housing demand in Australia in recent times, making up around 60% of Australia’s total population growth (which was 1.4% as at December 2019). A recent study…
Improving sentiment, ongoing fiscal and monetary stimulus, and bank lending constraints are providing the backdrop for the continued flow of attractive senior lending opportunities. Housing prices experienced a second monthly decline, falling 0.7% in June…
Improving sentiment, ongoing fiscal and monetary stimulus, and bank lending constraints are providing the backdrop for the continued flow of attractive senior lending opportunities. The Australian economy contracted during the first quarter of 2020, giving…
Here at Merricks Capital, we have a diverse team who strive to make our workplace an engaging and successful one. We spoke to Harry Moffitt, a former member of the SAS regiment and founder of Stotan….
The Fund’s loan portfolio remains in a healthy shape after several weeks of communication with borrowers by portfolio managers who were specifically examining for signs of stress. Pleasing, the trend from last week continues with…
We have seen some pleasing activity in the settlement of completed apartments and land lots this week, suggesting home buyers and investors are being supported by the banks. One of the larger loans in our…
Almost all economists we track are suggesting Australia and the world will see the most significant economic slowdown since the Great Depression of the 1930s. In contrast, almost all capital markets are now seeing buyers…
In these unprecedented times, Merricks Capital’s CEO Adrian Redlich shares his insights on the current macro environment, real estate lending and the impact of COVID-19. In the below video, Adrian discusses Merricks Capital’s positive performance…
The first rule of economics is that markets work on the law of supply and demand. When demand outstrips supply prices rise, when supply outstrips demand they fall. So what happens when both supply and…
As Covid-19 spreads through the world – and cities and countries go into lockdown – global markets are reacting with extreme volatility. But some investors are looking to real estate as a safe haven or…
The world is currently gripped by fear of COVID-19. No one can say for sure how far or how quickly the virus will spread or what the economic consequences will be. Nonetheless we are confident…
Australia’s property market kicked off 2020 strongly. But will fears over COVID-19 end that? It was full speed ahead for Australian property prices in the first two months of 2020. But will panic over COVID-19…
Well before the Coronavirus (COVID-19) started to impact economic sentiment, the Australian CRE sector was already factoring in a slow-down, notably in high density residential development. Foreign Investment Review Board (FIRB) statistics indicated a 58%…
Australia’s property market begins 2020 in a strong position after Australia’s property market registered its fastest quarter of growth in a decade at the end of 2019. When it comes to price growth, few periods…
First homeowners are becoming an increasingly important factor in the residential property market. That’s good news for developers and good news for the property market generally. Property prices in Sydney and Melbourne rose sharply again…
A return to growth for Australian real estate may have been foreseeable, given three interest rate cuts, greater federal political stability and the easing of lending restrictions. However, the sheer pace of the current recovery,…
It’s official: the housing market is in a state of recovery The September Quarter saw the median dwelling prices lift 0.9% across Australia, including a healthy 3.5% in Sydney and 3.4% Melbourne, according to CoreLogic…
With Sydney and Melbourne’s property markets registering their first quarterly price gains since 2017, current conditions look sound for investors in CRE lending. Financial Year 2020 has started positively for Australia’s residential property market and,…
We believe protected cropping presents an opportunity for Australian farmers and investors that is almost certainly set to become more important both here and internationally. We explore why and what it means for private debt…
African swine fever and the implications for China. African Swine Fever (ASF) is an extremely infectious viral disease which is highly fatal to infected pigs. It is estimated that 30-35% of China’s hogs have already…
While much has been written about changes to Australia’s residential lending practices, a more dramatic shift to the commercial real estate (CRE) lending space has received much less publicity. APRA’s new capital requirements for CRE…
At Merricks Capital, we provide an innovative approach to the global investment market. With over 20 years of experience, we’re experts in seeking opportunities that arise from market dislocation across four key areas. Merricks Capital…