A Product Complexity Indicator of ‘YELLOW’ has also been assigned to designate the view that the Fund is a COMPLEX financial product, indicating that the underlying assets require specialist investment skills to acquire and to monitor. ‘In addition, investment in this Fund is effectively Illiquid and investors should have a good understanding of the term and characteristics of the distributions from this type of fund. This Fund is available to wholesale investors only.

A rating of STRONG indicates a strong level of confidence that the Fund can deliver a risk-adjusted return in line with its investment objectives. The experience of the Fund’s management team supports this rating.

The Labassa Capital Australian Real Estate Credit Fund (the Fund) is managed by Labassa Capital Pty Ltd, a debt and equity investor focused on Australian real estate. The Fund is an open-ended Australian unit trust, which is expected to be fully invested in secured loans in the real estate financing sector; looking primarily for opportunities in major capital cities and east coast cities of Australia such as Newcastle, Wollongong, Gold Coast, and Geelong. The Fund is expected to invest in construction loans, land bank loans, and investment loans.

Though a new fund, with inception in August/September 2019, the Fund has produced relatively consistent returns above its target, with the FUM having grown steadily from $5m in September 2019 to approximately $21m in January 2020. In addition, there are further loans amounting to $102m contracted, awaiting satisfaction of conditions.

Australia Ratings’ analyst, Maggie Callinan, says “the rating reflects the experience of the Fund’s management team”. She added, “all key decision makers have personal investments in the Fund, which adds to the level of confidence in the investment process”.

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