Alceon Debt Income Fund Achieves a Rating Upgrade to ‘Superior’

Alceon’s Debt Income Fund (“the Fund “) has been upgraded to an SQM Research rating of ‘Superior – High Investment Grade’ for 2024, the research house’s second highest rating following its long period of consistently strong performance.

The Fund primarily lends to Australian mid-market real estate companies, focusing on financing real estate assets, particularly in residential markets. A smaller portion of the Fund’s loans are allocated to industrial, retail and other real estate sectors. Additionally, up to 20% of the Fund’s capital may be invested in New Zealand assets.

The Fund’s strategy is conservatively positioned, holding exposure to only senior first mortgages at relatively low loan-to-valuation ratios (LVRs), and supported by some of Australia’s leading financial advisers, wealth firms and family offices.

Superior – High Investment Grade Rating

SQM Research, one of Australia’s foremost investment research houses, awarded the Fund a 4.25-star rating, indicating its “substantial potential to outperform over the medium-to-long term” and making it a strong candidate for inclusion on most approved product lists (APLs).

SQM Research says “The investment/lending process is thorough and robust. Significant due diligence on investments is undertaken, with independent property and construction industry experts engaged along the investment pipeline. A series of monitoring protocols are in place to mitigate default risk.”

SQM further states “The Fund is fully allocated to senior debt (first mortgages) and at relatively low/modest LVRs (maximum allowed is 65%), which means that the Fund is lower risk than some other Funds that have a lower allocation to senior debt & asset-backed debt and at relatively higher LVRs.”

Consistent Return – 8.66% (annualised since inception in October 2019)

Alceon Head of Funds Management, Grant Atchison said: “The Alceon Debt Income Fund has enjoyed strong growth, growing from $106 million in May 2023 to $193 million in May 2024.

Since establishment in October 2019, the Fund has a net return of 8.66% a year with a 3-year return volatility of 0.38%. The Fund is diversified across 57 loan facilities, 43 separate borrowers with 100 percent of the portfolio invested in first mortgages/ senior debt and a current weighted average LVR of 62 percent.

Atchison added, “Alceon focuses on originating well-secured senior debt positions with conservative LVR’s enabling us to provide our borrowers and development partners with greater speed, flexibility, and certainty compared to traditional real estate lending sources. This approach also allows us to capitalise on current market dynamics and the reduced presence of traditional banks, ultimately delivering higher returns to our investors.”

Alceon’s total real estate private debt portfolio comprises approximately $2.8 billion managed across a series of open-ended funds, close-end syndicates and institutional SMAs. Since inception Alceon has originated $7.9 billion in senior real estate loans across 288 individual transactions in Australia and NZ.