Watch Ausbiz Interview Now

Transcript: Mark Sherwood Ausbiz interview on iPartners Core Fund and Sunbury

00:00:00:07 - 00:00:23:05

Interviewer

Well, shall we take a bit of a breather from commodities for a moment and we can chat all things alternatives. That's quite the shift. Let's bring in Mark Sherwood from iPartners. Mark, welcome to the program. I'll talk volatility shallow in these volatile times. What is the interest in alternatives? I know that's a very general question, but do you see people looking for more of that diversification?

00:00:23:06 - 00:00:47:13

Speaker 2

I've had a number of conversations about the importance of diversification this morning. Just a lone Yeah, I had an idea. I think it's fair to say that price stability in the alternative assets arena during these very turbulent and volatile times is definitely playing a part. February was maybe a touch quieter for us, but things have really, really started to ramp up in March.

00:00:47:13 - 00:01:07:15

Speaker 2

We currently have two opportunities. Now live, we've got another four that we're working on that we expect to launch in the next week or two. So to your comment. Absolutely. No doubt. I think investors are seeking some assets with some price stability and ultimately it really plays a role as a big part there.

00:01:08:02 - 00:01:30:15

Interviewer

All right, Mark, well, let's get specific then. You mentioned two opportunities you're seeing right at the moment. Where are they? Yeah. So the two deals where they have on that go, Andrew, are coming from quite different areas of the old sector. I'd say that that is, for example, we're doing a a senior real estate loan for a new housing subdivision in an outer suburb of north west Melbourne.

00:01:31:07 - 00:01:56:24

Speaker 2

We're also doing a structured equity note transaction as well. And also in our managed funds business that we run, which essentially take a diversified exposure to alternatives that that's just received recommended rating. So that's, that's a new investor interest into the managed funds as well. Okay. And what type of investors are these? Just to be clear. Yeah, private wholesale investors.

00:01:56:24 - 00:02:20:21

Speaker 2

So our target market is very much those individual private investors under a wholesale certificate clarification. And really people that are self-directed in their investment style law or through their advisor. That is still a wholesale registered investor, but done through an advisor as well. So what's driving this? What is investor sentiment like at the moment?

00:02:21:08 - 00:02:45:07

Interviewer

Just where they're trying to look for that opportunity, given obviously the volatility we're seeing in equities, we know where interest rates are going, particularly overseas. Perhaps the end is going to come here eventually, of course, and that overall inflation picture. So how does that influencing investors right now in what they're looking for? I think from our point of view, we've seen investors questioning there.

00:02:45:07 - 00:03:10:17

Interviewer

They're waiting towards some of their listed market exposures. So there's no doubt that some of the private self-directed investor stalls are reassessing what kind of weightings they got towards alternatives. And knowing that some of the assets, if they can, that they can take exposure to, won't be daily price fluctuating like they listed exposure. So I think that's one element that we're definitely seeing.

00:03:10:18 - 00:03:42:10

Speaker 2

I think the other element that we're seeing is people questioning the exposure towards inflation or the price volatility towards higher inflation. And of course, that given higher rates that are that are inevitable, So I think, you know, when we look at an asset in the alternative sector, it's really about analyzing the risk reward equation of that individual asset on a very defined term so that we know the outcome, we know the return, and we know that it steps up from a risk reward point of view.

00:03:42:21 - 00:04:04:13

Interviewer

Okay. And how does property fit into the whole mix? Because we're talking about property prices coming off, but still a lot, a lot of activity in the commercial industrial space. How do you gain exposure to that? Potentially through alternatives? Yeah. One of the ways you can gain exposure to the property asset class through alternatives is actually as a debt fund.

00:04:05:03 - 00:04:29:11

Speaker 2

So for instance, that the deal that we've got on the go right now is one way we're providing our first mortgage debt facility for a land subdivision that's a land subdivision in a suburb called Sunbury in Victoria. Sunbury, for those that now is about 30, 30 kilometers north west of the Melbourne CBD, it's just about 12 KS past the Melbourne Tullamarine Airport.

00:04:29:17 - 00:05:10:07

Speaker 2

But that's an example where the developer is essentially building a brand new house, a land community. The area is actually approved for about 19,000 new dwellings in total as well as new schools, etc. But in that instance, Nadine, our investors are essentially being able to play the role of the bank and being the senior IT provider to that, to that particular construction and that development and, and that is allowing them to essentially know that they're funding a high quality development and they've got the security of, of course the first mortgage over the, over the land.

00:05:10:11 - 00:05:20:16

Interviewer

Now that's, that's just one way that investors can take a slightly differentiated exposure to real estate as an asset class using the alternative sector.