Monark head of funds management Dani Peer says a smaller raising can be more quickly deployed into ‘bankable’ development projects.
Left to right: Michael Kark – CEO and Co-Founder, Adam Slade-Jacobson – CIO and Co-Founder, Dani Peer – Director of Funds Management. Kit Haselden
Wealthy investors and family offices seeking “equity-like” returns on property debt have piled into the latest raising by Liberman family backed non-bank lender Monark Property Partners.
The near $40 million raising for Monark’s high-yield debt fund is above the non-bank’s initial target of about $35 million and takes the total equity raised for this fund – which aims to achieve total annual returns of 15 per cent on loans to property developers – to more than $100 million.
Monark funds management director Dani Peer said there was plenty of appetite for debt products offering “equity-like” returns given the volatility in the share market.
“We targeted up to $35 million for our second raising, and cut it off in the high $30 millions,” he said.
Mr Peer said 90 per cent of the almost $40 million raised came from those who invested in the first raising. “We increased the raising [ceiling] to accommodate some new investors,” he said.
Mr Peer said Monark had set a target to raise just over the half the $65 million it achieved in its first raise last year because there were fewer “bankable developments” happening at the moment.
“One of the key requirements for our investors is to get funds deployed as fast as possible; otherwise they get frustrated,” Mr Peer told The Australian Financial Review.
A small raising, he said, reduced pressure on Monark management to deploy funds and meant it could cherry-pick the best opportunities for its investors.
“We are still seeing more capital than suitable opportunities,” he said.
Raising too much money, Mr Peer said, would require Monark to consider moving up the risk curve and backing projects it would otherwise have passed on, or potentially having to return funds to investors.
Such a conundrum was being faced by other non-bank lenders who had executed bigger raisings, he said.
“A lot of the bigger [non-bank] funds are struggling with deployment,” Mr Peer said.
“We’ve fully deployed the $65 million we initially raised and are happy with all transactions we are in.”
Monark had also already “warehoused” a number of projects in which to deploy the proceeds of its second raising, Mr Peer said.
These include a land subdivision in Deanside in Melbourne’s west, a luxury apartment development in Rainbow Bay just outside Coolangatta on the Gold Coast, and a townhouse project in Oakleigh in Melbourne’s south-east.
“The Rainbow Bay development is an example of a de-risked investment offering a strong return,” Mr Peer said.
“Construction has commenced and pre-sales (67 per cent by value) have been strong.”
Investors in the second raising for Monark’s high-yield debt fund included the Liberman family’s Jagen office as well as Monark shareholders and management.
“We back mid-sized projects in selected premium geographical locations that have historically shown limited volatility and reduced exit risk,” said Monark chief investment officer and co-founder Adam Slade-Jacobson.