Bedrock Mortgage Fund – May 2024
May 2024 Fund Commentary
May ’24 marks Bedrock’s 6th month since launch and saw a return of 0.96% (11.36% annualised) and a cumulative annualised return of 11.34%. At the end of May, the FUM was $29.9m with a further $5.7m received or pledged for unit issue in June, bringing FUM to $34.6m. This is a pleasing result for the Manager as we strive to grow the scale of the fund whilst continuing to deliver excellent risk-weighted returns to our investors.
May saw Bedrock make 8 new investments and reduce the size of one previous investment to better balance the Fund. At month-end, Bedrock was invested in 16 separate loans with 15 discreet borrowers, across 7 different geographic regions in 4 states, in 3 different development sectors, and in 3 different loan types.
All current Ark Bedrock loans are performing with nil arrears since all Bedrock’s investments are in “prepaid interest” loans, substantially eliminating the risk of loan arrears which may otherwise have impacted monthly distributions.
At 63.7%, the portfolio average LVR is comfortably within the Manager’s risk settings, particularly given that approximately 90% of the fund’s investments are in Land or Land and Civil Construction loans. This is important when comparing Mortgage funds and especially when considering relative risk. At Ark Capital, it is mid-market sized loans in Land and Civil Construction where we are currently most comfortable placing our investors’ capital, and the place we see as the “lower end” of the risk curve in the current development environment. Ark is fortunate to have developed enduring relationships with excellent repeat borrowers in this space, who in turn have enduring relationships with excellent builder/contractors. It is our deep understanding of the borrowers we lend to, their development projects, and the strength and capability of their contractors which is key to our track record of 100% capital and interest recovery through Ark’s history.
During the month, we were again able to deploy over 99% of our Bedrock investors’ funds, contributing meaningfully to the return levels being generated. We will continue to maintain vigilant cash management practices, utilising Bedrock’s relationship with the Ark Wholesale Mortgage Fund to make tactical, temporary investments within a month where the opportunity arises.
We are pleased to again report that nearly 50% of the Bedrock FUM is from existing Ark investors with long experience of our investments, returns, and diligent investment management processes.