Banner Property (Low LVR) Income Fund
The Fund will aim to provide income returns of at least the target return of BBSW plus 4%.
The Banner Property (Low LVR) Income Fund provides Wholesale Clients with a conservative entry into the Australian property debt market, targeting an income return of BBSW plus 4.0 per cent.
The Fund prioritises capital preservation by limiting exposure to a maximum loan-to-value ratio of 50 per cent, significantly reducing the risk of capital loss from property value fluctuations. Investments are secured by first registered mortgages and managed by a professional team of analysts and legal experts who capitalise on market dislocations.
Through a unique structure, the Fund maintains its low LVR priority position even when loans are topped up by subordinated debt, ensuring efficient capital deployment without compromising security. All assets undergo stringent oversight by an Investment Committee and the Board of the Trustee, providing a disciplined approach to income generation from residential, commercial, and industrial property assets across Australia.
Target Return
The Banner Property (Low LVR) Income Fund will aim to provide income returns of BBSW plus 4.0%.
Returns are net to Investor and the BBSW rate is reset every quarter. The Target Returns are targets only, and the Funds may not meet their objective.
The Fund has been established to provide Wholesale Clients with an opportunity to invest in a pooled managed investment and to receive income from investments where the underlying security is registered mortgages over real property.
The Fund adopts a credit strategy which aims to realize value for Investors by acquiring investment positions in Australian property debt instruments, typically mortgages. The Trustee invests the assets of the Fund in accordance with the investment strategy and policies set out in the IM.
The Banner Property (Low LVR) Income Fund limits the exposure of the Fund and investor to an agreed LVR Limit (being the principal lent as a percentage of the assessed value of the Security Property) as at the date of the loan. The LVR is generally considered a measure of risk which, all else being equal, reduces (but does not remove) the risk to the investor of any capital loss from any decrease in property values.
Units provide the Unit Holder with an undivided share of the Fund’s asset pool, but not an interest in any specific asset.
Certain rights are attached to the Units, and these rights are exercisable by the Investors who own the Units. The Fund’s investment objective is to provide income returns of at least the Target Return whilst preserving capital.
Any investment will be subjected to stringent lending policies, defined exposure to the property asset on a loan-to-value basis, and will be supported by underlying securities (such as guarantees).
Security
The Fund’s underlying investments are secured by interests in mortgages over real property (either directly, through Sub-Schemes or assignment of interests).
Distributable Income
Distributable Income is reinvested in Units for the Investor or, if elected by an Investor, paid Quarterly to the Investor’s bank account. Defined investment criteria Applied to prospective loans by the Investment Committee to reduce the risk of capital losses.
Professional management
The Trustee employs both a macro-economic view and an individual loan focussed asset selection process and seeks where possible to take advantage of dislocations within the Australian property credit market. The Manager employs a number of finance professionals, analysts, legal and property experts to actively manage all investments.
Oversight
The Manager’s and the Fund’s compliance with its asset selection criteria, procedures, financial performance and structure are overseen by the Investment Committee and the Board of the Trustee.
The Manager seeks to enhance Investor returns and security by acquiring lower-risk investment in Australian property mortgages – limited to 50% of the property value as assessed by an independent valuer prior to an investment being made. This is achieved through:
- Direct investments in property mortgages to a maximum of the LVR Limit for the Fund (50%) secured by first registered mortgage;
- Investment in Sub-Schemes, to the extent that the underlying loan asset (the loan principal advanced) is to a maximum of the LVR Limit for the Fund and secured by first registered mortgage;
- Interests in mortgages obtained through the assignment of interests in other Banner Funds; and
- Securing a priority position (to a maximum LVR Limit for the Fund) in higher LVR loans where the repayment of the Fund is prioritised over the other lender’s debt.
The Trustee also acts as trustee of the Banner Funds. The Fund may invest in Banner Fund loans, either directly or by assignment, where the underlying loan parameters satisfy the Investment Criteria of this Fund (Banner Fund Investments).
Traditionally, funds which lend on a limited LVR basis have difficulty in finding a loan market for investment at a low LVR and with the difficulty in investing their funds, will hold cash which impacts returns to investors. As investments by this Fund may be ‘topped up’ by other Banner Funds (provided those Banner Funds loans are subordinated to the investment by this Fund) the Fund may achieve distribution of its lending product whilst preserving this Fund’s priority position and limited exposure.
Investment Criteria
The Fund invests in loans secured by property assets frequently which are undergoing planning or construction.
Origination of these loans for the Fund is the responsibility of the Manager and is undertaken by a team of Portfolio Managers who are responsible to investigate and prepare the investment proposal, and on-going loan management once the investment is made.
Primarily, the Fund’s investments will be secured by investments in loans where the underlying security is a registered first mortgage over Australian property assets, obtained through taking security directly or through Banner Funds loans or Sub Schemes.
The majority of the Fund’s investments will be interests in mortgages (through Sub Schemes) which are first mortgage secured with respect to the Fund’s investment.
In all cases, a first mortgage will be the underlying security. To ensure its security position, the Fund may also take supporting securities such as general security agreements, specific security agreements, priority or subordination deeds, company charges, personal and corporate guarantees, and side deed arrangements with builders. The Fund may invest in assignments of securities (or participation interests) where it is satisfied with the underlying first mortgage security position.
A minimum holding period of 12 months applies to Units issued by the Fund.
Unit Holders may request a redemption of Units any time after 12 months from the time those Units are issued to the Unit Holder, with 90 days’ notice to the Manager.
Redemption requests and approvals are always subject to the Trustee’s discretion and Fund liquidity at the redemption date.
Withdrawal Fee
A fee of up to 5% plus GST of the total value of units redeem may be charged by the Trustee to the relevant Unit Holder for redemptions made within the first 12 months of the investment. After the Initial Investment Term, no fees apply to redemptions. This fee does not form part of the Fund.
Established in 2010, Banner has consistently delivered superior returns to its investors.
Investments include property specific investments secured by a single asset and a number of pooled funds offering differing risk and return to match investor risk and return appetites. Banner adopts a consistent and rigorous approach to its appraisal of each potential investment, with a detailed due diligence and adoption of risk mitigation measures specific to each transaction.
We focus our investments in the major population centres of Australia’s East Coast, which have greater underlying market depth and liquidity.
Banner also offers experienced wholesale investors with higher yielding investments such as equity participations in development projects. All investments are actively managed by Banner throughout the investment term through to repayment of the investment.
Andrew founded Banner Asset Management in 2010, with a vision to establish a truly independent lender with an original view. With 25 years of experience in Global Financial Markets behind him, Andrew set up one of Australia’s independently owned private investment firms specialising in real estate, with his investor-first approach shaping the ethos of the company to this day. Andrew has extensive banking and financial expertise, with a long track record of working in capital markets. He has worked in London, Tokyo and Australia with leading international financial institutions and has been investing in alternative real estate opportunities since 1998.
Andrew is a voting member of the Banner Investment Committee, a member of the Banner Funding Committee and also an owner of Melbourne United.
Brett has over 30 years of experience in funds management and law, including over 20 years’ as partner in several Melbourne based legal firms and an international consultancy practice. Brett has an extensive track record of representing international and local banks, listed corporates, funds and private financiers. Throughout his career, Brett has specialised in finance and the funds management industry and has owned and operated managed funds. As Group Legal Counsel at Banner, Brett works across legal, business structuring, compliance, lending, investor publications and establishing new funds, in addition to a broad range of roles within operations.
Brett holds a Bachelor of Economics and a Bachelor of Laws. He is a compliance officer, responsible manager and a member of the Banner Investment Committee and a director.
Jeremy has been an active investor in international real estate since 1986. He has 27 years of experience in the international money markets, specialising in managing interest rate options groups. Since 1989, Jeremy has held director and senior management positions in leading brokerage companies in Hong Kong, London and Tokyo. He is currently a principal of Estuary LLP, a fund specialising in Argentine agricultural and construction investment trusts.
Jeremy is a member of the Banner Investment Committee.
Matt has over 25 years experience in the property industry having held senior roles for public companies and consulting to high net worth family offices and landowners, driving strategic town planning initiatives and managing individual development projects and portfolios throughout the project life cycle. He has developed projects in his own right and has worked on, repositioned and delivered a wide variety of assets from industrial, commercial, retail, land subdivision and medium density housing, as well as infill and brownfield sites with complex town planning and remediation matters.
Matt is a voting member of the Banner Investment Committee.
To receive further information in relation to Banner Diversified Real Estate Credit Fund Reports, please click here to get in touch directly with our investor relations team.
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