When the risk-free (money in the bank) rate is c. 5%, I see a 13-15% IRR and 8% distribution as attractive.*
When the risk-free (money in the bank) rate is c. 5%, I see a c. 13-15% IRR and c. 8% annual distribution as attractive*. Especially when the deal has been conservatively modeled, is underpinned by defensible property investment attributes and fundamentals, and with what I would believe to be a high probability of outperformance to the stated base case on a risk-adjusted basis.
Current market and economic dynamics mean that risks have materially increased overall, so a transaction that is underpinned by sound property fundamentals (meaning strong downside risk protection) will often have a lower return when compared with the current ‘risk-free rate’ (or having your money in the bank with the benefit of liquidity and earning a c. 5% return based on current rates). The higher interest rate environment means that investment needs to be more aggressively priced to be interesting from a risk-reward perspective.
In relative terms, a deal must be priced attractively enough on a risk-adjusted basis and underpinned by very solid property fundamentals to warrant taking the money out of the bank and earning its 5% (which still does not beat today's rate of inflation).
A summary of the key deal points of this transaction is available via the MP Report Professional Subscription here, and the Information Memorandum together with a 15% discount on Manager Performance Fees can be accessed via the MP Report Premium Subscription here.^
You can also contact me directly to discuss the opportunity or reserve an allocation via myp@mpgroupinternational.com
Mandi Prager
CEO, MP Funds Management
*View the complete Information Memorandum via the MP Report Premium. Sign-in here.
^MP Report Premium is available to Wholesale Investors only. Apply now.
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This communication is not intended to serve as investment advice or an investment recommendation. The content does not take into account your financial objectives, situation or needs. You should do your own research and, if appropriate, obtain independent advice from a suitably licensed professional before making investment decisions.
* Actual investment performance may differ materially from forecast returns.
** Please note that past performance is not a reliable indicator of future performance.
Disclaimer: Each of Golden Goose Capital Pty Ltd, (AR No:1301 947), MP Funds Management Pty Ltd currently (AR No:1301 946) and MP Report Australia Pty Ltd (AR No:1301 948) has been appointed as an authorised representative of Durant Wyot Funds Management Pty Ltd (ABN 41 655 164 864, AFSL No: 537318).