Good Time to Invest with Labassa Capital Australian Real Estate Credit Fund

Optimism has returned to the domestic commercial real estate market following high uncertainty throughout 2020. What makes now a good time to invest with Labassa Capital Australian Real Estate Credit Fund?

At Labassa, our focus is delivering capital preservation and income for investors, and we accomplish this by developing deep market relationships, following prudent underwriting standards, and keeping a strong pulse on the prevailing market fundamentals.

Labassa’s real estate debt fund offers investors compelling risk-weighted return in an investment climate where interest rates are expected to remain historical low till 2024 or longer. The fund’s attractive yield of 8%p.a. plus net to investors on a trailing twelve-month basis offers a competitive return, while principal investment is secured against high quality real assets.

Labassa’s prudent credit underwriting processes concentrate on experienced project delivery teams in both project management, construction, and asset management. This is achieved through a focus on:

• Asset classes that are on demand or expected to outperform, which include house land lots, quality boutique apartments, and well located industrial and logistics facilities.
• Lending parameters and leverage ratios that balance risk and return.
• Project delivery team’s experience in managing construction projects or adding long-term value creation to income producing real estate.

Market Fundamentals

Residential: at the onset of the pandemic, the residential market outlook across Australia was considerably negative given the economic outlook and impacts of border closures on immigration flows. A year later, however, the market has proven incredibly resilient, with house price growth and sales improving. Trends in the sector including the shift to larger homes and increased demand in more affordable, regional parts of the country are expected to remain in place.

Office: the short-term impact on the office sector was particularly sharp and negative, however, with employment returning to pre-pandemic levels and most employers following return to the office mandates for employees, the longer-term outlook remains stable. While the effects of work-from-home orders is yet to be fully realized, it’s our opinion that a return to pre-pandemic office culture with some balance for employees is the likely course. 

Industrial & Logistics: this asset class is the clear beneficiary of the impacts of covid-19 on the broader real estate sector including macroeconomic trends in e-commerce and supply chain management. With high investor appetite for the space, we anticipate the sector to continue to outperform over the next twelve months.

Retail: much like the industrial & logistics space, the impact on the past year on the retail sector has accelerated macroeconomic trends that were already in play, leading to a further bifurcation of the asset class. While some areas such as CBD storefront and specialty retail have been heavily impacted, neighbourhood centre and grocery anchored shopping have remained resilient. While we see these trends as likely to continue, the ultimate story is the retail sector is not dead - it has just evolved.

Hotels: as vaccine rollout continues to progress globally, hopes are building for the return of international travel to Australia. The recent opening of the Trans-Tasman travel bubble with New Zealand provides a glimpse into what post-recovery travel may look like. In the meantime, domestic travel has increased and government schemes to boost tourism to hard-hit locations across the country will add some buoyancy to the sector. Overall sentiment remains cautious, however, with markets most reliant on international travel (Sydney, Melbourne) to lag their counterparts in demand recovery. 

As market fundamentals continue to recover, especially in key focus sectors, demand for debt capital will continue to increase, providing Labassa with a steady flow of institutional quality investments.

Labassa’s deal selection process and approach to balancing risk and growth, provides Labassa investors a defensive investment strategy with compelling relative returns underpinned by quality real asset value in an up-trending market curve.  

Investors interested in knowing more about investing with Labassa, we welcome to hearing from you: [email protected]; +61 2 9061 6600; www.labassa.com

Melissa Hosgood | [email protected]