Commercial Real Estate Debt Performance

On the 6th September August the RBA increased the official cash rate by 0.50%. The current official cash rate as determined by the Reserve Bank of Australia (RBA) is 2.35% and it seems like it is continuing to rise, after almost a decade of no rise in rates. This rise in rates directly translates to potential higher returns for CRE debt. 

CRE debt offers exposure to real estate and has proven its ability to ride out periods of rising interest rates. A previously underinvested asset class, this fast-growing alternative is accessible to investors through specialist funds managed by commercial real estate debt experts.

So is now the time for savvy investors to be looking towards CRE debt to diversify their portfolio? Let’s take a look.

What Is CRE Debt?

CRE debt are loans made to commercial borrowers requiring funding for real estate investment and development.

These loans can be used to purchase developable land or for property building that is either completed or under construction. The land or property is then used as mortgage collateral for the loan.

Income is generated for investors when borrowers pay their fees and interest payments on the loan. Loans can be either first mortgage loans or second mortgage loans.

Why Invest?

• Accessible asset classes, suitable for all investors: commercial, wholesale and retail.

• Loans secured by real property over mortgage.

• Diversification of property portfolio without the equity risk of direct property investing.

• Potential regular and stable income derived from agreed loan interest rates and fees.

Why Now?

The alternative real estate financing sector grew off the back of the global financial crisis. Banks were forced to restrict their lending criteria and keep hold of more capital. 

This means that non-bank lenders, able to offer flexible and faster turnarounds to borrowers were able to step in and fill the gap and offered attractive terms to lenders. CRE debt aims to provide regular income and portfolio diversification with risk adjusted returns to lenders.

The asset class also benefits from embedded downside protection as borrower equity takes the first loss on asset value reductions.

Thinking Of Investing In CRE Debt?

With traditional banks withdrawing from development funding, alternative lenders have gained significant market share. But how do you know who to choose?

At Mountain Asset Management we only procure development funding from relevant partners, on the best terms, to help you achieve your specific goals.

To ensure real estate investors have the most innovative debt solutions, our advisory specialists source domestic and global debt to connect our investors across all major markets. 

We provide expert advice across debt refinancing, development funding and acquisition financing.

Why Choose Mountain Asset Managament?

With over a decade of experience, our advisors have an extensive network in acquisition financing and reliable acquisition finance to win bids and minimize settlement risks.

We have the experience and know-how to ensure that your funds are receiving the highest returns on investment. We are trustworthy, open and transparent in every piece of advice we give. 

We make decisions based on experts’ knowledge and advice. Our core ethos of professional integrity and our investor-first approach is at the heart of every decision we make.