MBF will lend with safe LTVs to a diversified portfolio of properties in proven locations to ensure sustainability.
As a lender rather than direct owner, this provides the fund with the ability to maximise profit and minimise risk by spreading the investment of investors capital across a multitude of real estate securitised assets
Target a number of real estate markets.
- Properties in key areas with sustainable valuations mitigating downside risk.
- Provide financing to both private and corporate developers.
- Only use accurate valuations and lending practices.
- Aim to take “first charge” where possible to ensure investors are protected, whilst still accessing high yield opportunities.
Risk management of real estate loan transactions is crucial. This is why we apply stringent operational procedures and carefully oversee all legal requirements.
Key risks we address:
- Decline in real estate prices, which is our collateral.
- The fund has a credit risk due to the potential default on payment by the creditor.
- The assets financed may be hard to sell in a down market, increasing the risk to our interest payments and return of capital.
Managing Real Estate Risk
The fund lends to owners or developers of real estate assets, it does not undertake direct purchase of properties. This strategy allows the Fund to take advantage of the real estate market, through lending and not direct exposure, generating high double digit returns, however with a small price risk.
Key risk management features:
- Fund will focus on properties and locations, where the price downside risk is minimal.
- Private client cornerstone money invested to ensure stability in accrual period.
- Fund will not normally be using leverage.
- Fund will use independent and conservative property valuation experts.
- Absolute return philosophy – the Fund is not dependent on the increase of real estate prices. Through its focus on opportunistic lending and shrewd asset management, the Fund seeks to generate yield, irrespective of the condition and direction of the market.
Managing Operational Risk
The main risk on a property does not come from pricing or credit risk, but rather from a lack of due diligence on the legal permits and requirements with which the property and investors need to comply to execute a transaction
Managing real estate risk is primarily dependent on the appropriate management of operational risks such as:
- Proper legal certificate/title of property
- Check of property valuation standards and data
- Proper KYC of clients and buyers
- Check of liabilities and convenants on property
- Check of proper insurance and permits
- Check of proper zoning and government approvals on property