SQM says the commercial banks have reduced their exposure to real estate development and commercial real estate in recent years, providing opportunities for more nimble players at attractive risk-adjusted returns.

The Alceon Debt Income Fund holds a portfolio of loans primarily secured by registered first ranking mortgages held over Australian property, mostly on the east coast of Australia. The loans finance a mix of real estate development, construction and ownership. The fund only invests in secured senior and second ranking loans with a maximum loan-to-valuation ratio (LVR) of 65 per cent.

Alceon Group Director and Head of Wholesale Capital, Omar Khan, says: “We believe wealth groups are seeking to diversify their credit exposure with a move away from syndicates to open ended funds that provide diversification, regular income and reduce the administration burden of managing clients across numerous syndicates across multiples managers or asset classes.

In awarding its rating, SQM notes that “Alceon Group has close to a 10-year track-record” in real estate debt and “has a well-resourced and highly experienced investment team.”

SQM further notes, the firm’s “investment/lending process is thorough and robust. Significant due diligence on investments is undertaken, with independent property and construction experts engaged along the investment pipeline.”

Features of the fund include monthly distributions, a conservative weighted average LVR and short weighted average duration.

SQM says another strength is that Alceon co-invests in all of its funds, aligning the firm’s interests with those of its clients.

The fund’s objective is to provide investors with a total return of between 5% and 7% a year, after fees. Over the 12 months to June 2021, the fund returned 8.37% and has produced an annualised return of 8.5 per cent since inception in October 2019.

Alceon is a financier and multi-strategy alternative investment manager established in 2010, with funds under management of almost $3 billion across asset classes including real estate, private equity and listed equities. It has more than 47 investment and operations professionals.

Since 2011, no Alceon real estate debt investment has lost interest or capital.

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