Mar 20 2018Add to Favorites
More private investors will have access to individual, first mortgage secured loans, which produce a monthly income, via an online platform launched by Balmain Private.
The loans are backed by commercial real estate that has already been credit approved and settled by Balmain, Australia’s largest non-bank commercial loan manager.
Balmain Discrete Mortgage Income Trusts will enable investment in the loans, which are fixed term, the Trust requires a minimum investment of $50,000 from which investments in individual mortgages can be made for $10,000. Terms range from a few months up to three years.
The Trust structure allows investors to create their own portfolio of discrete first mortgage commercial loans, either directly, or via their Self-Managed Super Fund (SMSF) or financial adviser, by selecting one or more loans that suit their individual needs, in terms of risk, returns and terms.
Individual loans are diverse in all aspects, offering returns ranging from 5.6 per cent p.a to 11.2 per cent p.a, with the average net return from loans settled and repaid so far sitting at 7.86 per cent p.a.
Of those loans, 46 per cent have exceeded their Target Rate of Return, while the remainder met theirs.
Making this offer unique is that it’s delivered online, allowing investors to choose their investments and terms, and manage their portfolio via an investor or advisor control console.
This means investors can transact at their convenience via the paperless system, which provides daily reporting, regular updates and complete details of capital movements, including income distributions.
The type of assets are all commercial loans and security has so far included commercial offices, industrial, retail, residential and land, located in Queensland, New South Wales, Victoria and the ACT, with new loans being added regularly.
The current investment landscape in Australia is driven by a range of factors, not least the 2019 federal election, and the view is that the result of the Wentworth by-election, a seat that has historically been monopolised by the Liberal Party, will be the foreshadowing of the federal outcome. The Australian equities market is experiencing volatility, with a 200 point drop last week in the S&P ASX index, the largest drop this year and potentially the result of sentiment surrounding geopolitical headwinds with the latest developments relating to the trade war between the USA and China. Global bond rates remain low, and despite incremental increases, interest rates are too low to be attractive from an investment perspective.
In an ongoing low-interest rate environment on savings and with banks withdrawing from property and construction financing, investment groups like Centennial Property Group are seeing value in providing first mortgage funding for property development, recently settling a $48m loan for a mixed-use retail/residential development in Sans Souci, NSW
With the combined influences of a cooling residential property market and heightened bank scrutiny on all aspects of real estate lending, traditional debt sources are, in many cases, closed to developers and commercial real estate investors, particularly where circumstances require a specific funding solution.
Creating an account with MP Report allows you to save articles and update your preferences to filter the content based on your interests and what content you would like to receive from us via our email alerts and newsletter.SIGN UP HERE >