Tycoon Core Income Fund

The Tycoon Core Income Fund offers investors a stable and secure way to invest in Australian property. By lending to experienced developers and investors, the fund provides a steady stream of income, secured by first mortgages on prime properties.

With a focus on Australian residential, office, retail, industrial, and commercial properties, the fund diversifies risk and offers a consistent return. The experienced management team carefully selects investments, ensuring that they meet stringent criteria for safety and profitability.

Investors can enjoy regular income distributions, benefit from professional management, and have peace of mind knowing their investments are backed by solid property assets.

Investment Strategy

The Manager seeks to enhance Investor returns by acquiring investments in Australian property mortgages to a maximum of 75% of the property value as assessed by an independent valuer. The enhanced rate is achieved by allowing priority for part of the mortgage debt at lower rates, the benefit of which flows to the investors in this Fund.

The type of financial instruments in which the Fund may invest include, but are not limited to:

• Loans for the development or acquisition of Australian residential, office, retail, industrial or commercial property secured by first mortgages;
• Interests in Other Funds; and
• Other liquid securities to meet ongoing cash needs of the Fund.

It is intended that the Fund will create a spread of investments across property income funds and direct loans which will create a diversity of risk of investments.

Once the Fund has achieved $100 million of funds under management, a maximum of 25% of the Fund’s funds under management can be invested in any single investment.

How are investments funded?

The Fund's investments will be funded from:

• Application monies and reinvested distributions (by Investors who have elected not to receive cash distributions); and
• reinvestment of principal repayments and interest payments on existing loans.

Underlying Security

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 Other Funds.

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.

Security - the Fund's underlying investments are secured by interests in mortgages over real property (either directly, through Other Funds).

Distributable Income - is reinvested in Units for the Investor or, if elected by an Investor, paid semi-annually 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 Trustee may accept or reject a redemption request at any time in its absolute discretion. The Trustee will not generally accept a redemption request in respect of Units until the Unit Holder has held those Units for a period of more than 12 months (Initial Investment Term). Where a Unit Holder seeks to redeem part or all of their investment prior to the expiration of the Initial Investment Term, the Trustee may (if it decides in its discretion to accept the redemption request) charge a Withdrawal Fee as detailed in Section 10 of the Investment Memorandum (dated 9 August 2024).

Following the Initial Investment Term, Unit Holders may make a redemption request by written notice to the Trustee. The factors that may impact whether or not the Trustee will accept or reject redemption from the Fund will include the liquidity of the Fund and the Fund’s commitments at the time of the request.

Redemption requests may be submitted to the Trustee electronically. If the Trustee accepts a redemption request, the redemption proceeds will be calculated and paid by the Trustee within 90 days from the time the redemption request is accepted. The Trustee reserves the right to request receipt of the original redemption request before it will accept a request for redemption.

Loan origination for the Funds is the responsibility of the Manager and is undertaken by a team of Portfolio Managers who are responsible for the investment proposal, and on-going loan management once the investment is made. Investment proposals must be within the investment criteria of the Fund. 

These criteria include:

Borrowers 

The underlying Borrowers will be well established and experienced property developers or investors in Australia, often acting through a special purpose company. The Trustee will assess the developer/borrower's corporate experience, credit-worthiness and the security offered. Where a development is involved, and any deficiency in borrower experience exists, but the investment is otherwise sound, the Investment Committee may require an acceptable development manager be engaged to undertake the development.

Loan Size 

Typically, a minimum loan amount of $300,000 to a maximum of $10,000,000. Loans of lesser or greater amounts may be co-invested with other lenders on a pari passu or equal footing basis.

Investments in Other Funds

The Fund may invest directly in Other Funds, where the underlying principal loan amount does not exceed the LVR Limit and is secured by first registered mortgage. The LVR Limit may be achieved by priority arrangements with co-investors or trustees which provide the Fund’s priority of the repayment of the investment.

Loan to Value Ratio (LVR)

Principal loan exposures will not exceed the LVR Limit on an ‘as is’ or Gross Realisation Value of the property as independently assessed by a Valuer (Refer to Section 7 of the IM).

Term 

The maximum term for an investment is 5 years. Typically, however,  loan terms will range from 12-24 months.

Interest rate 

Determined by the Trustee on a deal-by-deal basis having regard the Trustee’s risk assessment and prevailing market conditions and the Fund’s target rate of return.

Sector 

Primarily development loans in any sectors (residential, office, industrial, retail) with the Trustee having regard to prevailing economic conditions.

Location 

Security Properties will be predominantly located in New South Wales and Victoria, with limited exposure to the rest of Australia.

Security 

Underlying security of a first registered mortgage over real estate, within the LVR Limit for the Fund.

A first mortgage is the main underlying security. To ensure its full priority position the Fund may also take supporting securities such as second mortgages, general security agreements, specific security agreements, priority or subordination deeds, company charges, personal and corporate guarantees, and side deed arrangements with builders. The security granted to the Fund is reviewed by the Investment Committee.

This website does not constitute financial advice. lt is also not comprehensive as it is intended to be an overview only, providing a summary of points usually of interest to investors. Intending investors must obtain a copy of the Fund's information Memorandum (lM) and an investment can only be made by completing the application form. Intending investors should seek independent financial advice on whether an investment in the Fund is appropriate for them. All investments, including that of the Tycoon Core Income Fund, involve the risk of losing all or part of investors' investment capital and/or interest. Past performance is not necessarily a guide to future performance.