Bedrock Mortgage Fund – June 2024

June 2024 Fund Commentary

June ’24 marks Bedrock’s 7th month since launch and the end of the 2024 financial year. June saw a return to investors (net of fees) of 0.93% or 11.30% annualised, and a cumulative annualised return of 11.32%. At the end of June, FUM was $40.3m reflecting a material inflow of $11.4m in the month. Approximately $5m has been received or pledged for unit issue in July which will see FUM exceed $45m by the end of July. We are pleased to again report that approximately 50% of the Bedrock FUM is from existing Ark investors, with long experience in Ark investments, our returns and diligent investment management, and who are prepared to increase their investments with Ark.

Given the Funds inflow in the month, June saw the Manager actively investing in available Ark Wholesale Fund originated loans, with investments made in 5 new loans, including:

– a $2.1m and a $3.8m investment in two syndicated Residential Land bank loans in Melbourne (1st mortgage, 60% and 63% LVR respectively)

– a $4.2m investment in a syndicated Commercial Land loan in Perth (1st mortgage, 60% LVR, proposed Student Accommodation project adjacent to Edith Cowan University, jointly funded by ECU and both the Commonwealth and WA State Governments)

– a $1m investment in a syndicated Residential Land subdivision in Sellicks Beach, Adelaide (1st mortgage, 65% LVR)

– a $1.1m investment in a syndicated Residential Land subdivision in Bracken Ridge, Brisbane (1st mortgage, 55% LVR)

Additional amounts were invested in several existing loans during June, whilst one loan matured and one loan was exited near the end of June, resulting in a cash holding of $3.6m at month end, which is planned for deployment in new investments in early July.

The Trustee’s clear determination to maintain a fully diversified portfolio is reflected in the fact that at the end of June the Bedrock fund was invested in 18 separate loans with 14 different borrowers, across 10 different geographic regions in 5 states/territories, in 3 different development sectors and in 3 different loan types. The weighted average LVR of 62.8% is 90 basis points lower than in May and remains comfortably within the Manager’s risk settings.

Consistent with recent months, nearly 90% of the fund’s investments are in Land or Land and Civil Construction loans, with only 10% in Built-Form Construction loans. This is important when comparing Mortgage funds and considering relative risk. Our leadership team continually re-evaluates Ark’s lending settings and we presently maintain a heavy weighting toward investments in mid-market sized loans in Land and Civil Construction. This is where we see the lowest risk at this time in our industry, and where we are focussing the majority of our lending. Our settings are informed by our proprietary research, market observations and feedback, and critically, through our team’s long experience through numerous economic, development and credit cycles.

As we commence the new financial year we look forward to continuing to deliver our existing investors, and investors new to Ark with excellent risk-weighted returns on the capital they entrust to us.