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 (BBSW lending benchmark for the Fund) 12bps month-to-month. With the uncertainty in the macro environment, the Fund will continue to hold CDS as a cost-effective credit hedge.
A key investment thematic is residential across Residual Stock Facility, Apartment Construction and Retirement Living. One new loan was settled during the month, a 0.8% allocation to the Fund to finance the construction of a premium retirement living development in Silverdale, New Zealand, 30km north of Auckland on the eastern coastline. The residential retirement living is being completed in stages, and the project has seen strong market demand. The loan is with an experienced sponsor who has a track record of completed projects across residential, retirement living and retail assets, this loan LVR of 55% with an IRR 13.6%. The Fund’s total exposure to New Zealand remains at 35% of NAV with two partial repayments on New Zealand based loans during the month.
The fund received partial repayments for the month from two New Zealand loans. One mixed-use commercial development north of Auckland which had settlements totalling 0.8% of NAV. Additionally, 0.1% of NAV was received from another Auckland based residential project as a partial repayment. In Australia, a 0.5% allocation to the Fund was fully repaid during the month, the loan was secured against a large-scale dairy farm aggregation in northwest Tasmania. The loan was fully serviced for its duration and the investor return was 8.9%.
Across the Fund’s target asset sectors, the opportunity pipeline increased by $325m during September. We issued term sheets during the month to lend against Residual Stock assets , retirement living projects, mixed farming assets and large-scale rural property acquisitions that have accredited carbon offset units. We continue to be highly selective around capital deployment, with funding demand high.
*These returns are stated net of fees and costs
