Springing into Action: Agricultural Transactions Gain Momentum

• This week, our funds achieved the repayment of a $36m facility secured against a $55m portfolio of meat and livestock properties in New South Wales. The largest property in the borrower’s portfolio transacted to an institutional investor focused on the carbon and biodiversity potential of that asset.
• This investment achieved a net 16% IRR over several years for investors but did require several extensions to maximise the borrower’s outcome. This outcome exemplifies the liquidity premium achieved in private credit in return for more patient capital.
• The strength of the borrower’s property transaction highlights the rising role of environmental income streams for long-term owners. It also highlights the continued momentum we are seeing for agricultural land transactions, up $140m in the last six months compared to the prior six-month period.
• Asset liquidity plays a crucial role in the health of private credit portfolios, influencing the degree of active management needed to recycle investor capital efficiently from existing loans.
• With an average term to maturity of less than a year and an average weighted LVR of sub-60%, our continued focus on active loan management ensures borrowers have multiple loan facility repayment pathways (such as refinancing with other lenders, property sales or sale-and-leaseback options) which reduces their reliance on single-asset transactions, which typically take longer to match prospective buyers with sellers.

Merricks Capital’s hands-on investment management approach continues to ensure positive outcomes for investors. Liquidity is expected to continue accelerating through spring transactions in the agricultural space.