Merricks Capital

This week, our funds achieved the repayment of a $36m facility secured against a $55m portfolio of meat and livestock properties in New South Wales. The largest property in the borrower’s portfolio transacted to an institutional investor focused on the carbon and biodiversity potential of that asset. This investment achieved a net 16% IRR over several years for investors but did require several extensions to maximise the borrower’s outcome. This outcome exemplifies the liquidity premium achieved in private credit in return for more patient capital.

Recent rate cuts in New Zealand (NZ) (-75bps to a 4.75% cash rate) have spurred business confidence to the highest level in a decade, along with stronger intentions for commercial real estate and agriculture activities. However, history indicates that a period of asset price adjustment and reset will come first before these intentions could translate into a normalising real estate market. Click the link below to read our latest market review. #merrickscapital #privatecredit #fundmanager #fundsmanagement #newzealand

Last Thursday, we celebrated the launch of our new office at 35 Collins Street in Melbourne! It was a fantastic evening with our strategic partners and dedicated team members coming together to mark this important milestone. Following our recent transaction with Regal Partners, this new location symbolises fresh beginnings and growth for our team.

The Merricks Capital Partners Fund (the Fund) returned 0.6%* in September and 10.1%* on an annualised basis since inception. While the RBA held rates, markets are still pricing in 80bps of cuts over the next year. The Fund’s macro credit hedging cost was higher in September due to semi-annual contract rolls (CDS -8bps). Higher FX hedging cost this month (-6bps ) was attributed to the mark to market of flattening AUDNZD forward curve driven by aggressive rate cuts expectation by RBNZ. In the long run, the reversal on AUDNZD forward rates will allow the Fund to capture higher performance on NZ loans over time given the positive FX carry (rate differential to hedge NZD back to AUD). Click the link below to read our full report. #merrickscapital #fundsmanagement #fundmanager #agriculture #agriculturecredit #privatecredit #commercialrealestate #infrastructure

The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.8%* in September and 10.3%* on an annualised basis since inception. During the month, a 3.6% allocation ($13.5m) to a Grazing loan’s exit strategy progressed with an executed contract of sale for the secured assets. The sale is expected to facilitate full repayment of the facility, timing of settlement is expected in October 2024. Click the link below to read our full report. https://lnkd.in/gZUR6cdc #merrickscapital #fundsmanagement #fundmanager #agriculture #agriculturecredit #privatecredit

During 2021 -2023 we were cautious on construction finance due to building challenges and had lower levels of new commitment than in the preceding five years. However, we still had a material level of loans to new projects and witnessed the pain of developers, as many projects were late by 6-12 months due to delayed building times. This month we have several borrowers with projects that have just reached practical completion, including 51 Albert Street in Auckland (hotel/residential) and 32 York Street in Sydney (office). Additionally, several other projects are nearing completion at the month’s end, including Melbourne Place Hotel and River Street in South Yarra (office). With $650 million of developments coming to completion and repayments expected via refinance and sale over the coming 6 months, we have been actively engaged in due diligence on new developments with a major focus on infrastructure and residential sectors. In the residential space, we are in advanced due diligence on our first loan in the emerging Build-to-Rent (BTR) sector after monitoring broader market acceptance of the product by institutional buyers and tenants. Click the link below to read our market review in full. #merrickscapital #buildtorent #fundmanager #fundsmanagement #privatecredit

The successful completion of 51 Albert Street in Auckland’s CBD underscores the value of private credit funding in-demand assets when other forms of capital cannot. Click the link below to read our market review in full. #merrickscapital #fundsmanagement #privatecredit

As central banks begin cutting rates, the effects of 2024’s high-rate environment are still unfolding, particularly in real asset prices. While monetary easing should plot a path to real asset values recovering as long-term yields improve, history indicates that a period of adjustment comes first. This period brings both challenges and opportunities for equity investors and private credit lenders. Click the link below to read our weekly market review in full. #merrickscapital #fundsmanagement #interestrates

The Merricks Capital Agriculture Credit Fund (the Fund) returned 0.8%* in August and 10.3%* on an annualised basis since inception. A 4.0% distribution was paid during the month. The Bureau of Meteorology’s (BOM) long-range forecast for October to December 2024 indicates a slightly higher chance of above-average rainfall across much of eastern Australia, while central and western regions are expected to experience typical seasonal rainfall. Sea surface temperatures (SSTs) in the central equatorial Pacific are El Niño-Southern Oscillation (ENSO) neutral, having cooled from earlier 2024 predictions when the possibility of La Niña developing was 70%. Global SSTs have been exceptionally warm, setting records for several months in 2023 and 2024 which complicates the prediction of climate patterns based on past ENSO events and increases the risk of unforeseen weather events. Click the link below to read in full.

Merricks Capital’s funds often provide capital to asset-rich, cash-poor borrowers, offering solutions beyond the scope of commercial banks constrained by the current regulatory regime. A recent example of this is the Australian egg industry, which has been dealing with avian influenza disruptions and supply shocks. Click the link below to read our market in full. #merrickscapital #fundsmanagement #privatecredit