The Alceon Debt Income Fund has achieved an annual return of 8.03%, performing above its return target range of 5% to 7% for the calendar year 2021.
The fund primarily finances residential real estate but may also finance commercial property assets and is positioned relatively conservatively. All loans are secured by underlying real estate with a portfolio weighted average loan to value ratio (LVR) of 61% and weighted average loan duration of 12.8 months.
As at 31 December, 80% of the fund’s portfolio was exposed to residential real estate and the remaining 20% exposed to commercial and mixed-use asset. Alceon had AU$1.8 billion in loans under management, with its open-ended funds comprising AU$500 million of those loans. New loans originated exceeded $350 million for the quarter.
Managing Director Real Estate at Alceon Damien Cronin said the residential market had experienced very strong growth over the past 12 months, with price growth in the range of 20% to 25%, providing an additional buffer to the reported portfolio LVR.
“In light of the strong growth from the past year, we are maintaining a conservative outlook for 2022 and assuming an orderly correction in the residential market in the range of 5% to 10% when assessing new transactions,” Mr Cronin said.
“With interest rates remaining low and more lenders entering the market, developers are continuing to look elsewhere from large domestic banks who are at times restricted in the amount and circumstances they can lend. This is particularly the case in construction where borrowers are offered very little in way of timeframes.
“From an investor standpoint, the Alceon Debt Income Fund offers attractive risk-adjusted returns that are uncorrelated to equity markets.”
Mr Cronin said with international borders reopening on 21 February, Alceon expects the return of tourists, students and migrant workers to be positive for housing demand.
