IMFM launches new income fund
Boutique fund manager International Mezzanine Funds Management (IMFM) has launched a new income fund, which will invest in a diversified pool of commercial mortgages financing small to medium-sized businesses across Australia.
IMFM managing director Martin Ashe said the Australian Mezzanine Income Fund would target yields of more than 10 per cent per annum in year one.
He said as mezzanine finance has traditionally been associated with development project loans, there is the perception that it is quite risky since repayment of capital “may be contingent on the success of the particular project”. However, Ashe believes the new IMFM fund offers an alternative.
“The Australian Mezzanine Income Fund’s lending profile is quite different. We are taking small credit exposures to a range of small Australian businesses enabling them to operate and grow their businesses, while our lending is secured against real property assets,” he said.
“Thus, we are able to provide diversity of asset security and yet provide the returns to investors that are normally associated with mezzanine funding.”
The fund is designed for investors who are seeking alternative asset classes to generate above average returns. Each investment is secured by a variety of properties in Australia. It aims to provide investors with regular monthly income at a higher rate of return than for conventional mortgage trusts, cash trusts or bank accounts.
Meanwhile, IMFM has formed a series of alliances with established mortgage providers whereby they will provide a mezzanine portion to loans originated by the mortgage provider. The alliances allow them to make loans they would not have otherwise made due to their lower loan to valuation (LVR) restrictions.
IMFM will take the loan from the mortgage providers maximum LVR and provide additional funding to a maximum LVR of 85 per cent.
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