Investment Opportunity

Australian Secured Private Debt has the following characteristics:

  • Capital stability
  • An attractive net return over 90-day bank bills
  • A predetermined, low volatility income stream
  • An in-built inflation hedge
  • Favourable market dynamics
  • A large market with few competitors

…. and the underlying security is commercial property – an asset class well understood by investors.

The opportunity in Australian Secured Private Debt is particularly timely. The margin over 90-day bank bills is 2 to 3 times higher than pre-2008, whilst lending risk is substantially lower. The withdrawal of 2nd tier banks, foreign banks and retail mortgage trusts has left the Big 4 Banks with 95% of the market. In this low competition environment lenders enjoy improved risk-reward characteristics through improved loan to valuation ratios and more advantageous loan covenants. Furthermore the re-rating of commercial property values has reduced capital risk and improved debt servicing capacity on new loans. And with limited over-development, stable vacancy rates, lower interest rates and higher property yields, the economics for property borrowers remain attractive.

With its vertically integrated loan services platform – proprietary origination, internal loan administration, dedicated credit and asset recovery teams, and proven funds management – Balmain is uniquely positioned to take advantage of this investment opportunity.