Alceon Real Estate Credit Fund’s strong performance awarded ‘Superior’SQM Rating as it reaches A$600 million9 January 2024
Alceon’s flagship real estate debt fund, the Alceon Real Estate Credit Fund (“the Fund”) has been awarded an SQM Research rating of ‘Superior – High Investment Grade’ for 2023, the research house’s second highest rating following its long period of consistent performance.
The Fund lends to Australian mid-market real estate companies to finance real estate assets, primarily in residential markets with a small component of loans to industrial, retail, specialised office, and property backed corporate entities.
The Fund is conservatively structured with majority of loans comprising senior first mortgages at relatively low loan-to-valuation ratios (LVRs) and supported by some of Australia’s leading private wealth firms, family offices and offshore financial institutions.
Superior – High Investment Grade Rating
As part of its annual rating review of the Fund, SQM Research, one of Australia’s leading investment research houses, awarded the Superior 4.25 stars – High Investment Grade rating for 2023 as it considers the Fund to have “substantial potential to outperform over the medium-to-long term.”
SQM Research, says “The investment and 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 Research further states: “A large allocation to senior secured first mortgages at relatively low/modest LVRs means that the Fund is lower risk than other funds with a lower allocation to senior debt and at relatively higher LVRs. The Fund returns have been solid and have matched expectations.”
Consistent Return – 9.6% per annum (currently generating 11.4% annualised in the 6 months to 31 October 2023)
Damien Cronin, Head of Real Estate at Alceon, said: “The Fund’s investment strategy is centred around provision of conservative and well secured debt positions which offer our corporate borrowers and development partners greater speed, flexibility and certainty than many traditional lending sources, providing generally higher returns to investors.”
Since establishment in September 2018, the Fund has grown to funds under management of $600 million with a net return of 9.5 per cent a year at a return volatility of 0.15%. The Fund is diversified across 89 loan facilities, 49 separate borrowers with 88 per cent of the portfolio invested in first mortgages/senior debt and a weighted average LVR of 61 per cent.
Alceon’s total real estate private debt portfolio comprises approximately $3 billion managed across a series of open-ended funds, close-end syndicates and institutional SMAs. Since inception, Alceon has originated $7.1 billion in senior real estate loans across 264 individual transactions in Australia and NZ.