Embrace the Low

At Woodbridge Capital we embrace the low. Our 1st mortgage private credit fund currently has an average weighted LVR of only 52%.

Why should investors embrace the low? Here's why -

Capital Preservation - a lower LVR indicates that a larger portion of the investment is backed by the underlying asset's value. In case of borrower default, the fund has a better chance of recovering the outstanding loan amount through the sale of the asset. This capital preservation feature reduces the potential for significant losses.

Lower Default Risk - lower LVR investments are less exposed to property value fluctuations and economic downturns. Borrowers with a substantial equity stake are more motivated to avoid defaulting on their loans. This translates to a lower likelihood of default, leading to more stable and predictable cash flows for the fund.

Flexibility in Workouts - in the event of a default, a lower LVR provides the fund with more flexibility to work out solutions that avoid a distressed sale. This can include loan restructuring, refinancing, or negotiating with the borrower. These alternative solutions can help protect the investment and maintain stable returns.

Resilience in Market Volatility - low LVR private credit funds are generally better positioned to weather market volatility and economic downturns. The lower risk exposure makes them less susceptible to sudden shifts in property values or changes in market conditions, resulting in more consistent returns over time.

Risk Adjusted Return - while high LVR investments might sometimes offer higher returns, they come with higher levels of risk. Low LVR investments might have slightly lower returns but provide a more favorable risk-to-return ratio. The risk-adjusted return therefore tends to be more attractive in the case of low LVR investments.

🔘 not all loans are the same

🔘 not all funds are the same

🔘 not all managers are the same

⚪ woodbridge // think different