- Feeder Fund allows wholesale investors to invest into PFT via an open-ended fund with a minimum investment term of 12 months
- a diversified wholesale facility that only invest in registered first mortgages over premium real estate assets
- Investors wanted to reduce risk profile without significantly reducing yield
Australian specialist property lender Pallas Capital has today introduced its new product, the PFT Feeder Fund, after responding to investor interests in the Pallas Funding Trust (PFT).
The latter is a fast growing and diversified fund that has been established in collaboration with Credit Suisse AG.
The Feeder Fund allows wholesale investors to invest into PFT via an open-ended fund with a minimum investment term of 12 months. It is a diversified wholesale facility that only invest in registered first mortgages over premium real estate assets.
Each loan has a maximum LVR of 65% or 70% for investment loans. The fund must have a weighted average LVR of 66% or less.
Currently, it offers investors 6.8% per annum yield, which Is payable monthly in arrears. The fund initially plans to raise $150 million, with the ability to increase the fund size. The lender said is expecting strong interest from its established investor network.
“A number of our investors are looking to reduce their risk profile, without making a significant sacrifice in terms of investment yield,” explained Mark Spring, Executive Director of Pallas Capital.
“The PFT Feeder Fund gives a direct exposure to PFT, our most conservative first mortgage fund, at an attractive rate of return.
“For example, PFT cannot make construction loans or ‘related party loans’ and must operate within many other limitations negotiated with Credit Suisse as the largest investor in PFT.”
Mr Spring added that investors article that the PFT Feeder Fund pays a fixed margin (6.5% per annum) the Bank Bill Swap Rate (BBSW) – which a short-term money market benchmarkinterest rate.
“Accordingly, the total return has already increased from 6.52% p.a. earlier this year to 6.87% p.a. currently,” he said.
“The rate of return will reset monthly as market rates in Australia are expected to move up in coming months.”
Half a billion in funding in six months
The PFT was established in November 2021 and already has total funding of $588 million approved by its funding partners. The loans it lends for range from $1 million to $15 million. Specifically, it caters to medium-sized CRE borrowers under-serviced by the major banks.
Already, it has deployed over $140 million across 25 loans for a range of completed residential projects, future development sites and investment properties across Sydney, Melbourne, Brisbane and Adelaide.
Specifically, this includes an industrial property in Western Sydney and an apartment project in central Adelaide.