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Economic outlook 2023 Sept
Wealth Pi Fund: Find the Right Real Estate Debt Investment Opportunities
It has been a volatile last couple of years in private debt markets. Funds with stringent due diligence processes and lending policies have kept their strong track records. It is important to understand private-market real estate debt investments that are on offer and how to decipher between the different funds and their risk profiles.
Find the Right Real Estate Debt Investment Opportunities:
Risk Tolerance:
What is the
appropriate position in the capital stack (First Registered mortgage, Second Registered
Mortgage, Second Ranking Caveat Loan, Mezzanine with unregistered security, Preferred
Equity, etc.). The later in the capital stack you invest increases the risk of
return reflected in higher interest rates offered. Depending on your risk tolerance should
determine where you invest in the capital stack and the risks associated with
the individual deals in terms of Loan to Value Ratio’s (LVR), security terms
and interest rates being offered.
Liquidity and Time Horizon:
Are you nearing retirement, already retired, or earlier in their investing journey? Locking into illiquid private real estate debt investments requires understanding that the investment cannot be unwound until the borrower has repaid. In the event of a problem with the borrower to unwind the deal may take more time that initially stated, this is why where you invest in the capital stack and quality of the underlying borrower and project itself is very important when choosing where to invest, because it would materially impact the timeliness of repayment as well as security of your investment.
Due Diligence Process:
Wealth Pi Fund
undertakes a very intensive due diligence process to understand the borrower’s
financial position, their experience, the real estate project and specific risks
associated with each deal. This is all
taken to an investment committee with a group of experienced professional to be
discussed in detail before a decision to proceed is approved or not.
The Track Records and Focus of The Real Estate Projects Investing
for Wealth Pi Fund Is on The Investment Sponsor:
Investors
should ask questions to make sure they understand the risks, that the fund
manager would manage the risks and are comfortable with investment, sponsor and
also the fund manager.
Diversification of the Real Estate Debt Investing:
When building a personal portfolio, diversification is the key for real estate debt investing. Either investing in a pooled trust where this is managed for you or several individual deals where diversifying by location and sponsor. To choose the right pooled trust, an investment mandate that suits your risk appetite, fund manager’s experience, liquidity terms and transparency are the key terms for you to consider.
Disclaimer
Information contained herein has been prepared by Wealth Pi Fund Pty Ltd for the purpose of information only. It does not constitute an offer for sale, or solicitation for the purchase, of securities, units or other investments. It is intended as a general guide only. This information does not constitute personal advice and has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information. You need to consider the Information Memorandum (IM) for a product, which are only available for eligible investors, before making a decision whether to acquire or hold interests. All views expressed in this document are those of Wealth Pi Fund and should not be construed as an offer or recommendation at any time. Wealth Pi Fund recommends investors seek professional advice before making any investment. Past performance of any product described on this site is not a reliable indication of future performance. Wealth Pi Fund has taken care to ensure all content within this document is accurate, however Wealth Pi Fund (or any other company or associated entity) does not make any representation or warranty that such information is accurate or complete, nor do they accept any liability for harm, loss, costs, or damage arising from the use or reliance on the information. Any investor must satisfy itself by its own investigation and by undertaking all necessary searches and enquiries as to the accuracy and comprehensiveness of all information contained within this document or otherwise made available to it by any one of the entities.
