Real estate credit (also known as real estate debt) is a rapidly growing asset class in Australia.
Through a series of three insight pieces, our Head of Real Estate Credit, Drew Bowie, provides an introduction to real estate credit, exploring its fundamental attributes and advantages.
What is real estate credit
A defensive asset class offering downside protection, real estate credit is well-positioned to take advantage of a rising interest rate environment and volatile financial markets. In the hands of an experienced manager with multi-cycle experience, it seeks to provide investors with a reliable income return adjusted for inflation.
Importantly, real estate credit offers the opportunity for capital protection via secure lending structures attached to the underlying investment, the first-ranking mortgage.
Defensive in nature with a relatively attractive, resilient return profile, by design real estate credit can be shielded from the inflation challenges ahead. It can be an attractive through-the-cycle option for investors now both cyclically and structurally.
The cyclical and structural case for investing in the private market alternative of real estate credit is strong. As part of a diversified portfolio, it can offer a reliable and inflation-adjusted income return.
Equally important is the defensive strength and clear line of sight for downside capital protection provided by the security attached to its underlying investment – the first ranking mortgage.
As in all investment decisions, the experience and track record of the asset manager is an important factor. So, what are the key questions investors should ask when considering investing in real estate credit?
