WEBVTT 00:00:09.769 --> 00:00:12.449 Welcome back to The Rated Change with York Wealth 00:00:12.449 --> 00:00:14.789 Management. As advised, this is some of the wealthiest 00:00:14.789 --> 00:00:16.750 families in the country. The Rated Change is 00:00:16.750 --> 00:00:18.809 a podcast designed to help you in the pursuit 00:00:18.809 --> 00:00:21.289 of building long -term wealth through the insights 00:00:21.289 --> 00:00:23.329 of some of the brightest minds in asset management. 00:00:23.809 --> 00:00:26.690 I'm your host, Murdoch Gady, and in today's broadcast, 00:00:27.010 --> 00:00:30.530 we have Melissa Hosgood, the Managing Director 00:00:30.530 --> 00:00:35.789 and Portfolio Manager and Founder at Labasa Capital. 00:00:36.810 --> 00:00:39.630 Labasa Capital is an Australian real estate credit 00:00:39.630 --> 00:00:46.109 fund. They have a target return of 9 % annualized 00:00:46.109 --> 00:00:50.929 real return of 12 .46 % with a half percent management 00:00:50.929 --> 00:00:55.729 fee, no performance fee. Why I got Melissa on 00:00:55.729 --> 00:00:59.750 is they do a very, very interesting thing. Like 00:00:59.750 --> 00:01:02.429 we've had a number of great guests on in the 00:01:02.429 --> 00:01:05.379 property space that do the credit side. Some 00:01:05.379 --> 00:01:09.739 do the equity side, but what Labasa does is they 00:01:09.739 --> 00:01:14.439 have the ability to fund the entire life cycle 00:01:14.439 --> 00:01:18.200 of a project. Some of the other fund managers 00:01:18.200 --> 00:01:19.780 do as well, but what I find that's interesting 00:01:19.780 --> 00:01:24.359 is they're doing it at a boutique level and the 00:01:24.359 --> 00:01:28.319 subcategories of the properties, a number of 00:01:28.319 --> 00:01:31.260 the property asset classes that I really, really 00:01:31.260 --> 00:01:36.060 like, in particular land subdivision. with growing 00:01:36.060 --> 00:01:40.879 Australia, farmland, converting it. It is a great 00:01:40.879 --> 00:01:44.500 space. The other space which I have been eager 00:01:44.500 --> 00:01:46.120 to get involved with and have gotten involved 00:01:46.120 --> 00:01:50.159 with since COVID has been the rise of distribution 00:01:50.159 --> 00:01:52.879 centres. And one thing Melissa discussed is I 00:01:52.879 --> 00:01:55.159 thought distribution centres, you get one for 00:01:55.159 --> 00:01:57.760 Port of Newcastle, New South Wales, Queensland, 00:01:58.060 --> 00:02:01.219 Perth, and then they're done. But what I'm hearing 00:02:01.219 --> 00:02:05.140 is a number of these companies are requiring 00:02:05.140 --> 00:02:09.840 more than one distribution hub for sickness breaks 00:02:09.840 --> 00:02:11.699 out, they can still function. But the other thing 00:02:11.699 --> 00:02:14.060 Melissa said, the culture of the delivery business 00:02:14.060 --> 00:02:18.800 is changing from being something arriving in 00:02:18.800 --> 00:02:22.379 a day to apparently China is doing it within 00:02:22.379 --> 00:02:25.180 two hours. So if that's the path that Australia 00:02:25.180 --> 00:02:30.699 is going, having both a state and then a municipality. 00:02:31.580 --> 00:02:34.060 when I can do jobs within half an hour I find 00:02:34.060 --> 00:02:36.340 very very interesting and the other space as 00:02:36.340 --> 00:02:39.599 well is the the rise and the growth of the work 00:02:39.599 --> 00:02:42.360 anywhere strategy which has been made really 00:02:42.360 --> 00:02:46.860 really easy and more accessible via these light 00:02:46.860 --> 00:02:50.879 industrial warehouses or business parks with 00:02:50.879 --> 00:02:52.520 a roller door you know you can park your boat 00:02:52.520 --> 00:02:54.520 downstairs in the gym operate whatever business 00:02:54.520 --> 00:02:58.460 you want anything from my business to a dropshipping 00:02:58.460 --> 00:03:01.139 company, a Pokemon store, I don't know, like, 00:03:01.240 --> 00:03:05.219 you know, making surfboards in the middle of 00:03:05.219 --> 00:03:07.180 nowhere. You can move to Queensland, you can 00:03:07.180 --> 00:03:10.400 move to, you know, the back of Bourke and then 00:03:10.400 --> 00:03:12.860 run one of these businesses, which I think is, 00:03:12.939 --> 00:03:15.580 you know, quite interesting as well. Join us 00:03:15.580 --> 00:03:20.340 as Melissa unpacks the credit fund. She also 00:03:20.340 --> 00:03:23.960 does direct projects, having wealthy families 00:03:23.960 --> 00:03:26.300 and wealthy investors. you know participating 00:03:26.300 --> 00:03:29.979 alongside in some of these projects and you know 00:03:29.979 --> 00:03:32.300 hear Melissa discuss you know how they look at 00:03:32.300 --> 00:03:34.539 a project some of the deals and then you know 00:03:34.539 --> 00:03:38.340 what happens from a risk component if a deal 00:03:38.340 --> 00:03:41.280 goes sideways and how they work with that particular 00:03:41.280 --> 00:03:45.460 investor or client or developer to get a positive 00:03:45.460 --> 00:03:49.210 outcome. So before we get in this podcast Please 00:03:49.210 --> 00:03:51.629 remember, this podcast is intended for entertainment 00:03:51.629 --> 00:03:56.030 purposes only and should not be taken as any 00:03:56.030 --> 00:03:58.270 form of financial advice. Be sure to listen to 00:03:58.270 --> 00:04:00.050 the disclaimer at the end of the broadcast and 00:04:00.050 --> 00:04:03.330 keep your feedback coming. You can reach me at 00:04:03.330 --> 00:04:08.490 mgatty at ywm .com .au. So with that being said, 00:04:08.629 --> 00:04:10.889 I hope you enjoyed this conversation as much 00:04:10.889 --> 00:04:23.469 as I did. So sit back, relax, and enjoy. Melissa 00:04:23.469 --> 00:04:26.069 Hosgood, welcome to The Rate of Change with York 00:04:26.069 --> 00:04:28.430 Wealth Management. Good morning, Madhav. Thanks 00:04:28.430 --> 00:04:31.649 for having me. It's great to have you on, Melissa. 00:04:31.990 --> 00:04:34.829 Why don't we begin things off and telling us 00:04:34.829 --> 00:04:37.629 a little bit about yourself and how you got into 00:04:37.629 --> 00:04:43.610 the world of finance. Thanks for that. Now, I 00:04:43.610 --> 00:04:46.949 originally came from China. I'll go back a little 00:04:46.949 --> 00:04:50.100 bit more about myself. I've been here in Australia 00:04:50.100 --> 00:04:54.160 for 20 years now, Australia's home. I came here 00:04:54.160 --> 00:04:57.740 to do my English study initially back in 2004, 00:04:58.240 --> 00:05:04.699 did my four -month English study and fell in 00:05:04.699 --> 00:05:07.240 love with the country. I came from Shanghai, 00:05:07.439 --> 00:05:11.600 a very busy city, very busy. Since I came here, 00:05:11.699 --> 00:05:15.199 what stood out to me is the people factor. letting 00:05:15.199 --> 00:05:19.040 along the the environment just so beautiful um 00:05:19.040 --> 00:05:22.680 there's a lot of um individual attention uh and 00:05:22.680 --> 00:05:25.899 there's a lot of warmth between uh you know from 00:05:25.899 --> 00:05:29.620 the human interaction i felt hence i stayed i 00:05:29.620 --> 00:05:34.720 uh continued on with my uh master's study with 00:05:34.720 --> 00:05:39.040 the university of technology sydney um had a 00:05:39.040 --> 00:05:41.180 had a great fun for two years and learned heaps 00:05:41.980 --> 00:05:45.060 Luckily, straight after that, I got into a row 00:05:45.060 --> 00:05:48.720 into the banking world. And fast forward, that 00:05:48.720 --> 00:05:52.160 journey ended up to be 11 and a half years in 00:05:52.160 --> 00:05:56.879 banking, of which six and a half years with HSBC 00:05:56.879 --> 00:06:01.339 head office here in Sydney, followed by about 00:06:01.339 --> 00:06:04.899 45 years with Westpac head office in Brisbane. 00:06:06.339 --> 00:06:09.939 In the banking days, I look after banks largest. 00:06:10.600 --> 00:06:13.899 clientele portfolio, I look after a portfolio 00:06:13.899 --> 00:06:17.259 of financial institutions groups as the relationship 00:06:17.259 --> 00:06:23.379 management team. This cross -covers one of some 00:06:23.379 --> 00:06:25.860 of those most prominent financial institutions 00:06:25.860 --> 00:06:30.519 in the world. Customers are such as all the investment 00:06:30.519 --> 00:06:36.759 banks, Gomez Morgan in global top 40 to 50 fund 00:06:36.759 --> 00:06:39.399 managers and asset managers and insurance groups. 00:06:40.220 --> 00:06:42.439 So I learned, threw myself into deep end and 00:06:42.439 --> 00:06:47.040 learned heaps. Now, after 11 and a half years, 00:06:47.160 --> 00:06:51.779 I start thinking, you know, what I do next. I've 00:06:51.779 --> 00:06:55.639 learned this much. It is also the same time. 00:06:55.819 --> 00:06:59.459 Whilst I'm still working a very high, fast -paced 00:06:59.459 --> 00:07:02.079 banking role, I start to take an interest on, 00:07:02.279 --> 00:07:08.720 okay, I'm so devoted and busy. working 95 and 00:07:08.720 --> 00:07:13.319 90 10 actually um if i were to choose to invest 00:07:13.319 --> 00:07:18.779 my own banking salary which i have very little 00:07:18.779 --> 00:07:22.120 time to look after whilst looking after big customers 00:07:22.120 --> 00:07:26.220 what i'm going to invest comfortably in terms 00:07:26.220 --> 00:07:29.500 of risk and return now this is when real estate 00:07:29.500 --> 00:07:36.370 to start to to come into my radar looked at Again, 00:07:36.470 --> 00:07:39.769 naturally as a banker, as a risk manager, doing 00:07:39.769 --> 00:07:43.209 deals in the banks. And when I looked at the 00:07:43.209 --> 00:07:46.290 market, the cycle, where Australia is at in property, 00:07:46.529 --> 00:07:50.589 real estate, historical data, and how real estate 00:07:50.589 --> 00:07:54.129 as asset class behave. I just fell in love into 00:07:54.129 --> 00:07:59.310 it. So I started investing in real estate then, 00:07:59.389 --> 00:08:04.649 which eventuated to 2019 to start and funded 00:08:04.649 --> 00:08:07.810 Labasa Capital as a real estate -focused investment 00:08:07.810 --> 00:08:14.350 manager. The rest is history. Labasa. I was trying 00:08:14.350 --> 00:08:17.170 to figure it out. What is Labasa? Why the name 00:08:17.170 --> 00:08:19.629 Labasa? Good question. I love a good origin story. 00:08:19.689 --> 00:08:23.240 Many people ask. Why Labasa? Yes, yes, we get 00:08:23.240 --> 00:08:25.740 that question, this question a lot. People want 00:08:25.740 --> 00:08:28.600 to know what's the story behind it as a boutique 00:08:28.600 --> 00:08:31.980 house, of course. And I'm glad the name means 00:08:31.980 --> 00:08:35.320 something. So Labasa being a real estate focused 00:08:35.320 --> 00:08:39.259 investment management house, we named ourselves 00:08:39.259 --> 00:08:45.259 after a historical building. So Labasa House 00:08:45.259 --> 00:08:50.899 is a heritage building in North Caulfield, Melbourne. 00:08:51.790 --> 00:08:56.629 And it's a building with beautiful architectural 00:08:56.629 --> 00:08:59.610 design for that era, and it's still beautiful. 00:09:00.649 --> 00:09:05.169 It's also known for another name for the house 00:09:05.169 --> 00:09:11.370 is House of Elites, House of Dreams. It has beautiful 00:09:11.370 --> 00:09:15.610 stony structures, so the structure is very solid. 00:09:15.870 --> 00:09:20.090 Now, the Labasse logo, the arch window, it's 00:09:20.090 --> 00:09:22.940 taken. from the inspiration of the labasa house 00:09:22.940 --> 00:09:27.000 again it's a it's a stone same stone structure 00:09:27.000 --> 00:09:32.259 grounded level -headed which represents our approach 00:09:32.259 --> 00:09:35.980 and our thinking as the investment manager the 00:09:35.980 --> 00:09:38.500 money manager for our investors you know we are 00:09:38.500 --> 00:09:42.200 not emotion driven we're data driven we make 00:09:42.200 --> 00:09:45.100 sound and grounded conservative decisions for 00:09:45.100 --> 00:09:49.720 our investment at the same time it is uh It is 00:09:49.720 --> 00:09:53.159 an arch. It's a door. It's an open door to opportunities 00:09:53.159 --> 00:09:58.620 for our investors and project sponsors. Yeah, 00:09:58.620 --> 00:10:04.019 right. It makes sense. It makes sense. I do love 00:10:04.019 --> 00:10:05.759 it as well. Yeah, little known fact about myself. 00:10:05.860 --> 00:10:07.659 I wanted to become an architect back in the day. 00:10:09.100 --> 00:10:10.860 So much so they told me to go to Sydney University, 00:10:11.159 --> 00:10:13.980 missed out by like two marks or one mark. And 00:10:13.980 --> 00:10:15.299 then they told me to go do a Bachelor of Design 00:10:15.299 --> 00:10:17.480 in Computing. But when I got there, some of the 00:10:17.480 --> 00:10:20.220 kids at Sydney University were so good. I just 00:10:20.220 --> 00:10:21.460 kind of looked myself in the mirror and went, 00:10:21.500 --> 00:10:23.360 it just isn't happening. And it rotated into 00:10:23.360 --> 00:10:26.600 finance. It's just interesting how everyone kind 00:10:26.600 --> 00:10:29.460 of makes their way in the world and ends up where 00:10:29.460 --> 00:10:31.200 they are. But the reason I wanted to have - You 00:10:31.200 --> 00:10:32.980 can always pick it back up. Pick it back up. 00:10:33.039 --> 00:10:35.600 You never know your hidden talent and, you know, 00:10:35.620 --> 00:10:39.850 do something about it. Absolutely. But the reason 00:10:39.850 --> 00:10:42.129 we wanted to have you on is, look, I'll phrase 00:10:42.129 --> 00:10:45.269 it this way. We've had some fantastic guests, 00:10:45.690 --> 00:10:49.409 a number of your competitors on, in both the 00:10:49.409 --> 00:10:52.870 funding space, the lending space on the credit 00:10:52.870 --> 00:10:55.090 side, you know, for these types of projects, 00:10:55.169 --> 00:10:57.250 which we'll discuss today. And we've also had 00:10:57.250 --> 00:11:00.370 a number of developers on, or we work privately 00:11:00.370 --> 00:11:03.509 with a lot of, you know, land sub, et cetera. 00:11:03.649 --> 00:11:07.230 But what I find really, really fascinating, about 00:11:07.230 --> 00:11:11.250 what you do is you cover the entire life cycle 00:11:11.250 --> 00:11:15.149 of a development project. Not exactly common, 00:11:15.289 --> 00:11:19.250 right? And a bit of context of why I've been 00:11:19.250 --> 00:11:21.610 looking for this type of strategy for a while 00:11:21.610 --> 00:11:24.470 and why I find this interesting is you mentioned 00:11:24.470 --> 00:11:27.669 2019 when you kicked this off. I remember speaking 00:11:27.669 --> 00:11:29.990 with my friends and colleagues and investors 00:11:29.990 --> 00:11:33.389 saying that the single best investment now since 00:11:33.389 --> 00:11:37.139 the CBD was just hemorrhaging. The South African 00:11:37.139 --> 00:11:40.220 mob in Sydney went under on the construction 00:11:40.220 --> 00:11:43.080 side. All these construction companies in mass 00:11:43.080 --> 00:11:46.600 CBD locations were struggling. Meanwhile, there 00:11:46.600 --> 00:11:51.500 was this huge boom in warehouses being built 00:11:51.500 --> 00:11:54.940 for distribution hubs, you know, off major ports 00:11:54.940 --> 00:11:57.899 and airports, you know, for like Amazon. Everyone 00:11:57.899 --> 00:11:59.320 knows, like, you know, everyone's saying, like, 00:11:59.340 --> 00:12:00.879 you can just click a button and all of a sudden 00:12:00.879 --> 00:12:03.759 a product's at your door, right? I've always... 00:12:04.159 --> 00:12:07.360 I've been wanting for a long time to find a fund 00:12:07.360 --> 00:12:10.440 manager that has that capacity to go down the 00:12:10.440 --> 00:12:14.039 warehouse path, but also the land sub and the 00:12:14.039 --> 00:12:16.220 light industrial up in Queensland. But to my 00:12:16.220 --> 00:12:19.639 understanding, and please, I'd love to hear the 00:12:19.639 --> 00:12:21.879 philosophy about how you invest and why you've 00:12:21.879 --> 00:12:24.799 chosen to fund the entire life cycle of a project. 00:12:25.159 --> 00:12:30.320 And also how the catalyst or the thesis of why 00:12:30.320 --> 00:12:33.399 you specifically chose these three or maybe more. 00:12:33.960 --> 00:12:36.580 distinct asset classes within the property side. 00:12:36.799 --> 00:12:39.500 I'd love to learn more about your thought process 00:12:39.500 --> 00:12:42.580 on all that, Melissa. That's a great question. 00:12:42.740 --> 00:12:48.179 I will start it by just to touch on Labasa's 00:12:48.179 --> 00:12:52.860 fundamental investment thesis and investment 00:12:52.860 --> 00:12:59.720 philosophy. Now, Labasa was funded initially 00:12:59.720 --> 00:13:04.340 was on the back of Me as a busy banker looking 00:13:04.340 --> 00:13:08.820 for answers for myself and looking to invest 00:13:08.820 --> 00:13:14.580 in a safe asset class, don't risk too much, robust, 00:13:15.019 --> 00:13:18.639 that don't correlate and not volatile to small 00:13:18.639 --> 00:13:21.019 changes in market confidence or major global 00:13:21.019 --> 00:13:26.320 event. Something that I can go to bed knowing 00:13:26.320 --> 00:13:30.159 it's slowly occurring over time and that can 00:13:30.159 --> 00:13:32.039 become the cookies in the jar for the stormy 00:13:32.039 --> 00:13:37.639 days. So I started investing in real estate, 00:13:37.940 --> 00:13:41.720 not wanting to lose money, basically. That's 00:13:41.720 --> 00:13:44.259 why I don't choose other asset class, which is 00:13:44.259 --> 00:13:47.940 a bit more sensitive to macro environments. So 00:13:47.940 --> 00:13:50.519 I started investing and then eventually this 00:13:50.519 --> 00:13:54.129 became a business. I'm very proud of. So that 00:13:54.129 --> 00:13:58.230 leads to La Paz's investment thesis is capital 00:13:58.230 --> 00:14:02.850 preservation is at the centre of what we do. 00:14:03.289 --> 00:14:08.070 We, as a team, are real estate experts and finance 00:14:08.070 --> 00:14:12.929 investment experts. We hone our muscles on a 00:14:12.929 --> 00:14:15.490 daily basis through going through numerous number 00:14:15.490 --> 00:14:17.889 of deals. And we say a lot of those to pick up 00:14:17.889 --> 00:14:21.710 the right, the yeses. Now we leverage on our 00:14:21.710 --> 00:14:26.690 experience on deal origination, structuring, 00:14:26.809 --> 00:14:32.070 negotiation, and risk management to protect investors' 00:14:32.330 --> 00:14:35.809 capital. We treat investors' capital more seriously 00:14:35.809 --> 00:14:40.580 than our own, which goes to our second. Pillar 00:14:40.580 --> 00:14:44.220 of our investment thesis is that we invest with 00:14:44.220 --> 00:14:47.259 high conviction. We believe in asset classes. 00:14:47.679 --> 00:14:51.419 We're very attuned with the market, where the 00:14:51.419 --> 00:14:54.639 pricing is at, where the risk lies in the macro 00:14:54.639 --> 00:14:58.360 environment, how each pocket of this real estate 00:14:58.360 --> 00:15:00.700 market, the sub -markets and sub -asset classes 00:15:00.700 --> 00:15:03.220 behave. Because real estate is a very localized 00:15:03.220 --> 00:15:06.210 business. One side of the highway could behave 00:15:06.210 --> 00:15:08.049 very different to another side of the highway 00:15:08.049 --> 00:15:13.970 in terms of liquidity volume. So we go deep on 00:15:13.970 --> 00:15:16.330 real estate fundamentals. At the same time, we 00:15:16.330 --> 00:15:19.350 co -invest with our investors based on our high 00:15:19.350 --> 00:15:22.289 conviction and also just to back our judgment 00:15:22.289 --> 00:15:25.190 on that investment decision for our investors. 00:15:25.509 --> 00:15:29.350 So we often place our capital as the first last 00:15:29.350 --> 00:15:33.110 piece to back our judgments. And to date, we've 00:15:33.110 --> 00:15:36.919 not. Never lost a dollar. And again, proudly 00:15:36.919 --> 00:15:40.639 speaking, the basis entire duration to date of 00:15:40.639 --> 00:15:44.639 five and a half years. We have not needed to 00:15:44.639 --> 00:15:50.100 put one asset to mortgage through recovery process 00:15:50.100 --> 00:15:52.720 of mortgage in possession, selling someone out 00:15:52.720 --> 00:15:55.340 to recover investors funds. So all investments 00:15:55.340 --> 00:15:58.460 that we've completed to date has come back through 00:15:58.460 --> 00:16:03.240 the planned normal exit channels. market sell 00:16:03.240 --> 00:16:07.620 or refi completion of the project so our investment 00:16:07.620 --> 00:16:10.279 thesis is capital preservation co -investment 00:16:10.279 --> 00:16:12.500 for interest alignment and we run an acts of 00:16:12.500 --> 00:16:18.519 portfolio management approach and that is the 00:16:18.519 --> 00:16:23.960 overarching context now then comes to labasa 00:16:23.960 --> 00:16:28.960 being a whole a full project life cycle investor 00:16:29.580 --> 00:16:33.340 Now, we call ourselves an investor than just 00:16:33.340 --> 00:16:36.620 a lender for this particular reason because we 00:16:36.620 --> 00:16:40.460 do have equity and debt capability. In addition, 00:16:40.580 --> 00:16:43.879 we fund the full lifecycle of the project. Now, 00:16:43.980 --> 00:16:47.580 putting ourselves in a project sponsor's shoes, 00:16:47.679 --> 00:16:50.860 the developer side for a minute. Now, if I were 00:16:50.860 --> 00:16:54.019 a developer, I come and I'm not going to the 00:16:54.019 --> 00:16:57.919 banks. I go to a non -bank. The rates is a bit 00:16:57.919 --> 00:17:01.769 higher. However, what am I getting then in return? 00:17:02.769 --> 00:17:07.269 Now, in private markets, currently, it's certainly 00:17:07.269 --> 00:17:11.430 fast soaking up some of the voids that the bank 00:17:11.430 --> 00:17:14.589 has left. Banks are under their own pressures 00:17:14.589 --> 00:17:19.390 by the policymakers, not because they don't want 00:17:19.390 --> 00:17:21.589 to write deals, not because some of those deals 00:17:21.589 --> 00:17:24.670 are not bankable. People often ask us, you know. 00:17:25.240 --> 00:17:27.359 Are the sponsors or the deal not bankable so 00:17:27.359 --> 00:17:31.460 they come to private? Now, that's a no, not always. 00:17:31.740 --> 00:17:34.039 Of course, some of the deals are just not good 00:17:34.039 --> 00:17:36.839 quality and we also say no to. However, there 00:17:36.839 --> 00:17:39.180 is a good batch of deals that are actually of 00:17:39.180 --> 00:17:42.539 good quality. The sponsors rather go private 00:17:42.539 --> 00:17:48.599 for a few reasons. One is the private markets, 00:17:48.680 --> 00:17:53.259 the lenders are more flexible in terms of looking 00:17:53.259 --> 00:17:58.420 at. Again, a project as an investment. However, 00:17:58.720 --> 00:18:02.079 banks were, given the volumes, probably looking 00:18:02.079 --> 00:18:06.019 at more surrogate sort of exercise. It's never 00:18:06.019 --> 00:18:08.579 black and white, of course. Banks are also coming 00:18:08.579 --> 00:18:12.680 up with innovative solutions these days. Privates 00:18:12.680 --> 00:18:14.779 can just have a little bit more discretion because 00:18:14.779 --> 00:18:17.240 the investment committee decisions can be undertaken 00:18:17.240 --> 00:18:20.799 a lot more flexibly. Now, this doesn't mean that 00:18:20.799 --> 00:18:25.569 we don't go X degree to... identify and quarantine 00:18:25.569 --> 00:18:29.930 risks to some extent because we understand the 00:18:29.930 --> 00:18:33.250 space that we're playing um some by giving certain 00:18:33.250 --> 00:18:36.710 flexibilities which does represent we're going 00:18:36.710 --> 00:18:39.109 a little bit higher on the risk scale in terms 00:18:39.109 --> 00:18:44.250 of the capital stack now to compensate and to 00:18:44.250 --> 00:18:47.569 protect our position we actually go very deep 00:18:47.569 --> 00:18:50.609 in terms of risk analysis our due diligence checklist 00:18:50.609 --> 00:18:56.250 has more than 60 items to go into it. People 00:18:56.250 --> 00:18:58.910 often say, they think, oh, private lending is 00:18:58.910 --> 00:19:02.329 pretty simple, right? Because one side, it does 00:19:02.329 --> 00:19:06.730 sound like a very simple business. And for some 00:19:06.730 --> 00:19:10.369 of our existing investors, before they fund us, 00:19:10.549 --> 00:19:13.029 they're already doing some sort of lending just 00:19:13.029 --> 00:19:15.269 through their solicitor funds, through their 00:19:15.269 --> 00:19:17.750 lawyers and accounting, professionals assisting 00:19:17.750 --> 00:19:22.069 them. to do some on and off deals before they 00:19:22.069 --> 00:19:24.869 fund us, they can do it quite simply. However, 00:19:25.089 --> 00:19:27.509 in private lending, private credit, to do it 00:19:27.509 --> 00:19:33.009 well is not easy. It's one to be able to navigate 00:19:33.009 --> 00:19:36.950 through the trough, actually have a process that 00:19:36.950 --> 00:19:41.190 look at 60 items or more in an outset class from 00:19:41.190 --> 00:19:44.849 the outset looks simple, which at the same time, 00:19:44.849 --> 00:19:48.329 you know, very... closely monitor and run an 00:19:48.329 --> 00:19:51.369 active portfolio management to be writing groups 00:19:51.369 --> 00:19:55.289 of the market movements and the changes through 00:19:55.289 --> 00:19:58.390 the life cycle of the asset. If there is any 00:19:58.390 --> 00:20:01.549 early signs of risks, to be able to pick it up 00:20:01.549 --> 00:20:05.470 before it becomes a substantial risk so that 00:20:05.470 --> 00:20:08.910 it, again, can help navigating through. Now, 00:20:08.930 --> 00:20:12.970 we look at a deal from an entire life cycle perspective, 00:20:13.009 --> 00:20:15.900 which is simply to say, When we look at a development 00:20:15.900 --> 00:20:19.339 project, we will be willing to fund the project 00:20:19.339 --> 00:20:23.680 from land acquisition stage to then allow it 00:20:23.680 --> 00:20:28.519 to further progress through various condition 00:20:28.519 --> 00:20:31.759 precedents that it needs to meet to turn it into 00:20:31.759 --> 00:20:35.700 a construction project. For example, to complete 00:20:35.700 --> 00:20:38.819 the authority approval process, to achieve a 00:20:38.819 --> 00:20:42.759 level of pre -sales, to get to... shovel ready 00:20:42.759 --> 00:20:46.319 and then we would give them that land traditional 00:20:46.319 --> 00:20:50.140 land facility to to then get to the construction 00:20:50.140 --> 00:20:53.019 ready stage at that stage we would then top up 00:20:53.019 --> 00:20:57.339 to fund the entire construction and cost to complete 00:20:57.339 --> 00:21:00.720 basis as a senior lender or stretch senior lender 00:21:00.720 --> 00:21:06.380 to complete the deal to full completion as an 00:21:06.380 --> 00:21:10.700 established asset now along the way Some of the 00:21:10.700 --> 00:21:14.039 stock or majority of stock may be sold. The developer 00:21:14.039 --> 00:21:18.279 may decide to keep a portion, maybe 20 lots or 00:21:18.279 --> 00:21:22.180 30 apartments for their portfolio purposes or, 00:21:22.279 --> 00:21:24.880 you know, just from tax reason or from trying 00:21:24.880 --> 00:21:27.529 to capture the... rising market perspective, 00:21:27.750 --> 00:21:30.789 they may want to delay the sales to earn a bit 00:21:30.789 --> 00:21:34.970 more on the final realisable value of the project. 00:21:35.190 --> 00:21:38.849 So we're happy to stay on to also fund the residual 00:21:38.849 --> 00:21:43.170 stock facility to provide the extra runway for 00:21:43.170 --> 00:21:45.490 the developed to sell it either in an orderly 00:21:45.490 --> 00:21:50.029 manner or at the prime time. So by doing so... 00:21:51.210 --> 00:21:53.910 There is great advantage by approaching an asset 00:21:53.910 --> 00:21:57.049 this way. Now, we have seen some cases that didn't 00:21:57.049 --> 00:22:01.609 quite work well, work out from some of our peers. 00:22:02.130 --> 00:22:05.049 For example, they may, they just don't touch 00:22:05.049 --> 00:22:07.289 construction at all, maybe because they don't 00:22:07.289 --> 00:22:10.390 feel comfortable or they're just not quite ready 00:22:10.390 --> 00:22:14.470 to take it on. Now, then if they only do land 00:22:14.470 --> 00:22:19.539 facilities, now just looking at... as is direct 00:22:19.539 --> 00:22:22.880 comparison valuation for land facility for a 00:22:22.880 --> 00:22:27.740 project site it's often not necessarily right 00:22:27.740 --> 00:22:32.460 because as is comparison comparing one site development 00:22:32.460 --> 00:22:36.700 site to another based on most recent sales are 00:22:36.700 --> 00:22:40.799 never in our experience so accurate because the 00:22:40.799 --> 00:22:44.779 apple is never exactly comparable to another 00:22:44.779 --> 00:22:48.180 Apple in a real estate sense because of the proximity 00:22:48.180 --> 00:22:50.720 of the location, the characteristic of the site, 00:22:50.799 --> 00:22:53.720 what you can do with it, not exactly comparable. 00:22:53.940 --> 00:22:57.579 So if the fund only lent on a valuation basis, 00:22:57.799 --> 00:23:01.039 on an as -is, and don't assess what's going to 00:23:01.039 --> 00:23:04.180 happen later with this development site, sometimes 00:23:04.180 --> 00:23:06.700 that value can be obscured. Now, if they lent 00:23:06.700 --> 00:23:10.700 on a 65 % LVR, Before they realize it, before 00:23:10.700 --> 00:23:15.140 they go into a recovery process, they identify 00:23:15.140 --> 00:23:17.799 it. Actually, if you look at it in a project 00:23:17.799 --> 00:23:21.680 sense, which is project -related site value, 00:23:21.880 --> 00:23:24.960 and that's putting the site, assess the land 00:23:24.960 --> 00:23:29.440 value in a feasibility sense, this LVR they've 00:23:29.440 --> 00:23:33.420 lent on is 110%. So that's when, even if the 00:23:33.420 --> 00:23:36.099 fund go out and recover the asset, they still 00:23:36.099 --> 00:23:39.220 lose money. Now, the advantages for us to look 00:23:39.220 --> 00:23:42.779 at entire lifecycle is also from a risk management 00:23:42.779 --> 00:23:45.619 perspective. One side, we tick the bus for the 00:23:45.619 --> 00:23:47.420 developer because when they come to us, they 00:23:47.420 --> 00:23:51.279 know, okay, if I speak to Labasa, I know they 00:23:51.279 --> 00:23:55.279 will be there for the entire time for me. And 00:23:55.279 --> 00:23:58.359 I just then, one side, we often can even give 00:23:58.359 --> 00:24:01.799 interns on land and construction. So at the land 00:24:01.799 --> 00:24:05.809 stage, we already completed due diligence. We 00:24:05.809 --> 00:24:08.509 do the forecast, we test the models, we test, 00:24:08.690 --> 00:24:13.009 we check the major checkpoints on developer capability, 00:24:13.250 --> 00:24:17.309 experience, visibility of the construction, you 00:24:17.309 --> 00:24:22.009 know, numbers. Is there profit left for the project? 00:24:22.069 --> 00:24:25.109 Can this sponsor or can this project actually 00:24:25.109 --> 00:24:29.230 progress to construction stage? Is the product 00:24:29.230 --> 00:24:31.630 they're producing, has a market take up for it? 00:24:31.809 --> 00:24:36.299 Are they... Are they priced appropriately? So 00:24:36.299 --> 00:24:39.500 we assess them independently based on the market 00:24:39.500 --> 00:24:41.980 data from multiple sources we see before we even 00:24:41.980 --> 00:24:44.240 receive a valuation. Valuation is the last point 00:24:44.240 --> 00:24:48.559 just to check that our judgment is on par with 00:24:48.559 --> 00:24:51.700 what values think. So when we've gone this far 00:24:51.700 --> 00:24:56.039 for land loan even, it comes with a few folds. 00:24:56.859 --> 00:24:58.819 Developer love it because they know we're going 00:24:58.819 --> 00:25:00.940 to be there the whole way. We give them terms 00:25:00.940 --> 00:25:03.400 at land stage. We can give them land and construction 00:25:03.400 --> 00:25:05.619 terms so they know what their cost would be. 00:25:05.839 --> 00:25:07.859 So then all they need to do now is just focus 00:25:07.859 --> 00:25:11.099 on the delivery of the project. On the investment 00:25:11.099 --> 00:25:15.900 side, we have assessed this from end to end, 00:25:16.000 --> 00:25:19.920 how and what we're going to do with the site, 00:25:20.079 --> 00:25:24.140 whether this site, this idea, this architecture 00:25:24.140 --> 00:25:27.640 during. can be turned into reality and still 00:25:27.640 --> 00:25:31.920 remain to be financially sound. And we also scope 00:25:31.920 --> 00:25:36.480 out the major risk pillars to make sure, okay, 00:25:36.619 --> 00:25:39.880 can this project go smoothly, sell through the 00:25:39.880 --> 00:25:43.299 process of construction in this duration the 00:25:43.299 --> 00:25:46.420 project's planned for, the market cycle, and 00:25:46.420 --> 00:25:50.079 still achieve the price point that they're willing 00:25:50.079 --> 00:25:53.130 to achieve. And we also build for every project 00:25:53.130 --> 00:25:55.549 we assess, we, Labasa, do our own feasibility 00:25:55.549 --> 00:25:58.529 as well. Developers do theirs. We do our own 00:25:58.529 --> 00:26:02.549 feasibility. We buffer up a lot. We flush through 00:26:02.549 --> 00:26:06.230 the buffers that's necessary for rainy days for 00:26:06.230 --> 00:26:09.710 developers. Sometimes, you know, obviously when 00:26:09.710 --> 00:26:13.630 our project sponsors are very proud of the project 00:26:13.630 --> 00:26:16.970 and it's their baby and we appreciate that and 00:26:16.970 --> 00:26:21.670 the optimism. Sometimes when it comes to us and 00:26:21.670 --> 00:26:26.829 we act to be that level thinker, that other, 00:26:26.950 --> 00:26:29.890 you know, the more conservative, the gray hair 00:26:29.890 --> 00:26:35.970 partner to essentially push through the deal. 00:26:36.289 --> 00:26:42.390 Very much the more worst of case, just make sure 00:26:42.390 --> 00:26:44.470 the project is resilient so that all of us can 00:26:44.470 --> 00:26:47.470 come out in the end. So this coming back to entire 00:26:47.470 --> 00:26:52.039 life cycle approach, Brings us multiple advantages 00:26:52.039 --> 00:26:54.839 and goes from the project sponsor's point of 00:26:54.839 --> 00:26:59.119 view. And ultimately, Labasa act for our investors. 00:26:59.220 --> 00:27:04.259 And this is the risk management framework that 00:27:04.259 --> 00:27:08.740 we adopt. And also this approach make us known 00:27:08.740 --> 00:27:12.259 as an investor throughout the whole lifecycle 00:27:12.259 --> 00:27:16.940 of the project. It expands our... thinking and 00:27:16.940 --> 00:27:20.000 our outlook in terms of horizon we'll look at 00:27:20.000 --> 00:27:22.940 this project from end -to -end perspective in 00:27:22.940 --> 00:27:25.359 terms of asset class you mentioned earlier on 00:27:25.359 --> 00:27:31.940 the our sweet spot so LaBasse's current sweet 00:27:31.940 --> 00:27:34.599 spot in terms of the sub asset classes that we're 00:27:34.599 --> 00:27:39.420 funding which is the majority of the book There's 00:27:39.420 --> 00:27:45.140 industrial residential land subdivision and boutique 00:27:45.140 --> 00:27:51.880 partly held prestigious sub -six level construction. 00:27:52.359 --> 00:27:56.059 Now, we're not heavily exposed into high -rises 00:27:56.059 --> 00:28:00.359 at this stage, which was... active decision that 00:28:00.359 --> 00:28:03.240 was made by the house, by our investment committee, 00:28:03.400 --> 00:28:06.680 myself, at the time, at the beginning, at the 00:28:06.680 --> 00:28:09.480 inception of COVID. We see this difficult time 00:28:09.480 --> 00:28:14.319 coming for the industry, which is unfortunate. 00:28:14.819 --> 00:28:20.019 And we... have pivoted to simple forms of construction. 00:28:20.279 --> 00:28:22.359 It's never to say that we won't participate in 00:28:22.359 --> 00:28:24.380 high -rises. We're actively looking at quite 00:28:24.380 --> 00:28:29.480 a few right now, and I think the shake -up in 00:28:29.480 --> 00:28:33.259 the construction industry will further stabilise, 00:28:33.299 --> 00:28:36.359 particularly beginning of next year. So we're 00:28:36.359 --> 00:28:38.660 already gearing ourselves up to start looking 00:28:38.660 --> 00:28:42.160 at some high -quality projects in some great 00:28:42.160 --> 00:28:45.859 leadership locations. Do you participate in high 00:28:45.859 --> 00:28:50.119 -rises? But as it is now, the whole book is very 00:28:50.119 --> 00:28:56.000 healthy. We haven't gone unstuck due to construction 00:28:56.000 --> 00:29:01.720 or builder go bankrupt or anything. We haven't 00:29:01.720 --> 00:29:04.740 gotten in those cases in our hands. None of the 00:29:04.740 --> 00:29:07.619 project is stored. Everything's churning. So 00:29:07.619 --> 00:29:12.059 we're quite pleased with where we're at. See, 00:29:12.099 --> 00:29:14.480 that's quite unique and it's very interesting 00:29:14.480 --> 00:29:16.579 because you speak to someone about property that 00:29:16.579 --> 00:29:18.079 doesn't understand it, they do understand it 00:29:18.079 --> 00:29:20.640 and they understand the risk. It's just such 00:29:20.640 --> 00:29:22.539 an interesting concept how you're investing and 00:29:22.539 --> 00:29:24.440 you're doing the full life cycle. Because my 00:29:24.440 --> 00:29:25.980 understanding with the risk side is if you cover 00:29:25.980 --> 00:29:29.039 one side and you specialize in it, that's fantastic. 00:29:29.559 --> 00:29:31.579 But what happens if the other part of the team 00:29:31.579 --> 00:29:33.799 doesn't hold up there in the bargain, then essentially 00:29:33.799 --> 00:29:35.680 it doesn't matter what the deal is or if you're 00:29:35.680 --> 00:29:38.660 making 50 % or 100 % or a billion dollars. If 00:29:38.660 --> 00:29:40.920 you can't see it. the full life cycle all the 00:29:40.920 --> 00:29:43.740 way through and one particular element, it collapses. 00:29:44.200 --> 00:29:48.319 That's where the risk is, right? Surely. Yeah, 00:29:48.380 --> 00:29:50.619 which is really interesting. So from an investment 00:29:50.619 --> 00:29:52.660 perspective, with the fund, so my understanding 00:29:52.660 --> 00:29:54.519 is you're doing private deals as well, but you 00:29:54.519 --> 00:29:57.980 also have the fund. So just to unpack the mechanics 00:29:57.980 --> 00:30:01.759 of the fund, what's it currently returning? What 00:30:01.759 --> 00:30:04.680 are the fees? Sorry, what's the target return? 00:30:04.940 --> 00:30:07.000 What have you returned the past 12 months? What's 00:30:07.000 --> 00:30:09.609 the management fee? How does it? How's it structured? 00:30:09.849 --> 00:30:14.470 Sure. Thanks for that. So Labasa offer our investors 00:30:14.470 --> 00:30:19.309 flexibility in terms of how they want to invest 00:30:19.309 --> 00:30:21.809 and what style of investing they're more attuned 00:30:21.809 --> 00:30:26.829 to. Everyone has a slight difference in their 00:30:26.829 --> 00:30:31.690 preferences and hence we offer both a pool fund 00:30:31.690 --> 00:30:34.849 structure, which is... More passive and set and 00:30:34.849 --> 00:30:39.390 forget, manager would construct and create a 00:30:39.390 --> 00:30:44.589 good, robust portfolio of assets in line with 00:30:44.589 --> 00:30:48.930 the objectives set out for the pooled fund. So 00:30:48.930 --> 00:30:56.599 our current pooled fund invests in... first mortgages 00:30:56.599 --> 00:30:59.859 and it does allow a small portion of second mortgage 00:30:59.859 --> 00:31:03.200 up to 30 % of the portfolio. But as of end of 00:31:03.200 --> 00:31:07.140 June, currently it's 100 % first mortgages across 00:31:07.140 --> 00:31:12.720 Sydney, Melbourne, Brisbane, primarily land subdivision 00:31:12.720 --> 00:31:19.920 assets. The funds Target return is 9%. We do 00:31:19.920 --> 00:31:23.500 give investors floating returns. So we go out 00:31:23.500 --> 00:31:25.779 and negotiate very hard on behalf of investors 00:31:25.779 --> 00:31:29.539 to get the market return and also price risk 00:31:29.539 --> 00:31:33.119 for premium and yet never go excessive risk for 00:31:33.119 --> 00:31:39.359 return. So the LaBasse Private Credit Pool Fund. 00:31:39.960 --> 00:31:44.019 object is to construct a portfolio which is most 00:31:44.019 --> 00:31:48.460 suited for some of our risk adverse and very 00:31:48.460 --> 00:31:53.299 conservative self -managed super fund investors, 00:31:53.779 --> 00:31:58.460 our old money. This particular pool fund bucket 00:31:58.460 --> 00:32:03.319 is designed to be a bucket where you can over 00:32:03.319 --> 00:32:07.660 time accumulate a healthy balance by reinvesting. 00:32:08.009 --> 00:32:12.089 the returns into the fund. Also, you know, whenever 00:32:12.089 --> 00:32:16.970 investors can do a gradual top -up, whilst a 00:32:16.970 --> 00:32:21.890 lot of them are still business owners and very 00:32:21.890 --> 00:32:25.609 sophisticated investors themselves too, whilst 00:32:25.609 --> 00:32:28.849 they run some active investment strategies, whether 00:32:28.849 --> 00:32:32.769 it's in key or active real estate, they still 00:32:32.769 --> 00:32:36.009 put aside some passive funds into the pool fund 00:32:36.009 --> 00:32:41.630 knowing this vault is robust in terms of risk 00:32:41.630 --> 00:32:44.829 characteristics. If anything happened in the 00:32:44.829 --> 00:32:47.150 outside world to the active investment they're 00:32:47.150 --> 00:32:50.069 running in some higher risk strategies, they 00:32:50.069 --> 00:32:53.390 can come back to this little cookie jar and they 00:32:53.390 --> 00:32:57.190 can live on that. So our pool fund is designed 00:32:57.190 --> 00:33:00.690 to be a very dispensive income -driven fund. 00:33:01.119 --> 00:33:04.900 which is a fund that will help our investors 00:33:04.900 --> 00:33:11.039 to build wealth over time with robust asset classes 00:33:11.039 --> 00:33:14.680 underneath, which is every dollar we invest in 00:33:14.680 --> 00:33:17.680 Labasa across the board. Of course, the pool 00:33:17.680 --> 00:33:19.819 fund is underpinned by real asset values. So 00:33:19.819 --> 00:33:22.940 the fund currently, whilst we target return is 00:33:22.940 --> 00:33:27.220 nine, manager charges on 0 .5 % fixed manager 00:33:27.220 --> 00:33:32.180 fee. And investors get the extra if the market 00:33:32.180 --> 00:33:35.920 is going up. We can negotiate harder to get extra 00:33:35.920 --> 00:33:39.900 returns. Investors get the upside. So currently, 00:33:39.960 --> 00:33:43.460 as of end of June, the last financial year, the 00:33:43.460 --> 00:33:48.119 fund 12 months rolling performance net of fees 00:33:48.119 --> 00:33:55.910 is 11 .09%. fund from inception basis since 2019, 00:33:56.490 --> 00:33:59.670 which includes, you know, earlier days we've 00:33:59.670 --> 00:34:04.170 got a small amount of MES in the fund. So funds 00:34:04.170 --> 00:34:06.849 performance since inception is 12 % plus, which 00:34:06.849 --> 00:34:10.710 is very high, very high for how conservative 00:34:10.710 --> 00:34:16.579 the underpin, you know, risk is. Very proud of 00:34:16.579 --> 00:34:19.380 where this fund is at. Now, on the deal -by -deal 00:34:19.380 --> 00:34:23.619 level, we offer our larger investors family offices. 00:34:23.719 --> 00:34:25.739 Some of them have got this much to allocate. 00:34:26.519 --> 00:34:30.039 They like to go directly into the deals and write 00:34:30.039 --> 00:34:32.900 a bigger check. So we do offer a deal -by -deal 00:34:32.900 --> 00:34:37.260 opportunities as well. We recently opened one 00:34:37.260 --> 00:34:42.579 that is a $15 million raise. just last week, 00:34:42.659 --> 00:34:47.360 and we closed the raise in about 11 hours, over 00:34:47.360 --> 00:34:50.380 -raised $10 million. We had to trim everyone 00:34:50.380 --> 00:34:54.840 back. So it's very humbling. Our investors have 00:34:54.840 --> 00:34:57.360 followed us. The investors have known us and 00:34:57.360 --> 00:35:02.019 followed us for a long time. One thing we're 00:35:02.019 --> 00:35:04.960 quite, I'm personally quite proud of is that 00:35:04.960 --> 00:35:09.900 no one has left us. because of the return or 00:35:09.900 --> 00:35:14.480 because of Levasse's service or investment decisions. 00:35:14.800 --> 00:35:19.539 No investors has left us ever since the early 00:35:19.539 --> 00:35:25.300 days. So that is something that makes me very 00:35:25.300 --> 00:35:28.920 happy. So with the credit funds, so just trying 00:35:28.920 --> 00:35:31.760 to get my mind straight on this, is the credit 00:35:31.760 --> 00:35:34.840 fund purely lending and then the equity piece 00:35:34.840 --> 00:35:37.699 is? on a deal -by -deal basis? Is that how that 00:35:37.699 --> 00:35:40.659 works? Or is there an equity component in the 00:35:40.659 --> 00:35:44.619 fund? Very good question. So the pooled fund 00:35:44.619 --> 00:35:49.659 is debt only. So it's just a registered mortgage, 00:35:49.880 --> 00:35:55.179 given its conservative nature. Now, for a stretched 00:35:55.179 --> 00:35:59.019 senior position or senior, which is senior and 00:35:59.019 --> 00:36:05.059 mares blended, or equity deals, now we structure 00:36:05.059 --> 00:36:08.980 it at the special purpose vehicle deal by deal 00:36:08.980 --> 00:36:13.420 level, which the pool fund may or may not participate 00:36:13.420 --> 00:36:18.159 depending on whether we feel the risk profile 00:36:18.159 --> 00:36:21.659 is most suited for the pool fund. The pool fund 00:36:21.659 --> 00:36:27.239 is the very conservative market. So wait, I'm 00:36:27.239 --> 00:36:28.780 just trying to get it. You have one fund, the 00:36:28.780 --> 00:36:31.280 credit fund. Is there a second fund for the pool 00:36:31.280 --> 00:36:34.019 fund or is the credit fund also have the pooling 00:36:34.019 --> 00:36:37.719 component? Okay, so the Proto Fund is an open 00:36:37.719 --> 00:36:40.159 -ended pool fund, so it has multiple mortgages 00:36:40.159 --> 00:36:43.559 underneath. Now, alongside, in parallel, we have 00:36:43.559 --> 00:36:47.000 got multiple deal -by -deal structures. Each 00:36:47.000 --> 00:36:49.559 structure is a unit trust on its own. Close -ended 00:36:49.559 --> 00:36:55.119 funds are issued based on one deal only. Now, 00:36:55.139 --> 00:36:57.900 the pool fund can elect to take some positions 00:36:57.900 --> 00:37:02.099 in those assets as well to whatever capacity 00:37:02.099 --> 00:37:05.250 managers think deemed suit. to the pool fund 00:37:05.250 --> 00:37:08.309 at the time. The pool fund may not participate 00:37:08.309 --> 00:37:11.489 at all on those single asset vehicle levels. 00:37:12.010 --> 00:37:16.670 So we've got a pool fund open -ended with multiple 00:37:16.670 --> 00:37:19.849 assets underneath. Alongside with that, we have 00:37:19.849 --> 00:37:23.789 many deal -by -deal structures. Now that makes 00:37:23.789 --> 00:37:25.070 sense. The reason why I just wanted to distinguish 00:37:25.070 --> 00:37:26.710 this is someone's listening to this and going, 00:37:26.829 --> 00:37:28.730 okay, I'm allocating money as a wholesale investor 00:37:28.730 --> 00:37:31.309 into the wholesale fund. You know, I'm targeting. 00:37:31.719 --> 00:37:33.880 I like the credit component, but I also want 00:37:33.880 --> 00:37:35.900 the equity piece. They can get that exposure 00:37:35.900 --> 00:37:38.820 purely by the pool fund. They're not having to 00:37:38.820 --> 00:37:41.019 go, okay, I've got money in the credit piece 00:37:41.019 --> 00:37:43.940 to get access to the lend component and then 00:37:43.940 --> 00:37:48.139 also having to do the direct component. That's 00:37:48.139 --> 00:37:51.519 a choice. Yeah, that's what I just wanted to 00:37:51.519 --> 00:37:55.599 distinguish. Yes, Nana, it's a very good question 00:37:55.599 --> 00:37:59.280 for clarity. So the pool fund at the moment is 00:37:59.280 --> 00:38:02.630 for its mortgages only. occasionally some small 00:38:02.630 --> 00:38:04.550 portion of second mortgages. Now, if investors, 00:38:04.710 --> 00:38:07.670 and often we do have investors being with us 00:38:07.670 --> 00:38:11.510 for senior for a long time to say, hey, I'm ready 00:38:11.510 --> 00:38:15.889 to go up the risk ladder. And at least I'm happy 00:38:15.889 --> 00:38:19.349 to reinvest my profit into equity deals. Can 00:38:19.349 --> 00:38:22.429 you put me in? So at this stage, if they were 00:38:22.429 --> 00:38:25.170 to go debt and equity, we need to put them into 00:38:25.170 --> 00:38:31.449 the deal by deal SPV vehicles. Equity deals are 00:38:31.449 --> 00:38:35.449 a separate SPV on its own. It's quarantined from 00:38:35.449 --> 00:38:39.429 the pool fund at the moment. Now, we are contemplating 00:38:39.429 --> 00:38:43.409 and it's on the roadmap that we will issue a 00:38:43.409 --> 00:38:46.510 pool fund number two in the second half of this 00:38:46.510 --> 00:38:49.789 year, which will be an equity fund. Oh, excellent. 00:38:49.849 --> 00:38:52.530 So there's going to be a blend, either leaning 00:38:52.530 --> 00:38:54.309 to the credit side with the current one you have, 00:38:54.369 --> 00:38:56.289 but then potentially towards the end of the year, 00:38:56.289 --> 00:38:58.170 you're going to be listing an equity -only piece. 00:38:58.920 --> 00:39:00.980 A high -yield firm. That's going to be interesting. 00:39:01.260 --> 00:39:04.159 I want to see that. Now, that's the fun part. 00:39:04.380 --> 00:39:06.940 Everyone wants to listen to what's the deals? 00:39:07.059 --> 00:39:08.840 How do you think about the deals? Why do you 00:39:08.840 --> 00:39:12.179 say no to a deal? But why don't we discuss, since 00:39:12.179 --> 00:39:14.199 you mentioned it before, you've just closed a 00:39:14.199 --> 00:39:17.340 $15 million transaction. I don't know if you 00:39:17.340 --> 00:39:19.900 want to discuss potentially what that deal is 00:39:19.900 --> 00:39:21.940 or how does it look like if you can or maybe 00:39:21.940 --> 00:39:25.699 another one. It'd be very interesting to hear 00:39:25.699 --> 00:39:29.119 it all play out with an actual deal. No, thank 00:39:29.119 --> 00:39:33.480 you, thank you. Doing deals is the thrilling 00:39:33.480 --> 00:39:36.940 part. And even from the banking days, I'm always 00:39:36.940 --> 00:39:40.539 at the front line, responsible for revenue, front 00:39:40.539 --> 00:39:46.480 office, revenue -making teams for the banks. 00:39:46.760 --> 00:39:52.059 So the thrill of closing a deal, you never get 00:39:52.059 --> 00:39:55.139 numb to it, big or small. So I love doing deals, 00:39:55.179 --> 00:39:58.699 love closing deals. It makes me happy. Now, this 00:39:58.699 --> 00:40:02.519 particular transaction is, again, it actually 00:40:02.519 --> 00:40:06.079 speaks to what we mentioned earlier, is an entire 00:40:06.079 --> 00:40:10.940 lifecycle play again. It's a 39 -lot subdivision 00:40:10.940 --> 00:40:15.440 residential house lot subdivision in the north 00:40:15.440 --> 00:40:19.019 -west Sydney. It's a very robust location, fast 00:40:19.019 --> 00:40:22.000 growth, walking distance to the proposed shopping 00:40:22.000 --> 00:40:26.000 centre, which is under construction. Now, we 00:40:26.000 --> 00:40:29.900 have... backed the sponsor to purchase the land. 00:40:30.400 --> 00:40:34.059 At the time, it has the DA already, no pre -sale, 00:40:34.199 --> 00:40:38.579 no construction certificate. So we settled the 00:40:38.579 --> 00:40:42.780 land with them and provided the runway, the lead 00:40:42.780 --> 00:40:48.280 time to construction. And based on also the robust 00:40:48.280 --> 00:40:53.340 demand and demographic social economics, we see 00:40:53.340 --> 00:40:58.329 we also have given this transaction very flexible 00:40:58.329 --> 00:41:02.750 pre -sale terms. We allow the deal to start construction 00:41:02.750 --> 00:41:05.989 earlier without having to be held for too long 00:41:05.989 --> 00:41:10.750 and then sell it as the civil works progress 00:41:10.750 --> 00:41:13.969 throughout the construction period and we've 00:41:13.969 --> 00:41:18.630 got a midway progressive pre -sale hurdle. i 00:41:18.630 --> 00:41:22.469 .e., the facility is 15 months. We have by month 00:41:22.469 --> 00:41:26.289 nine, we will have a pre -sale debt cover of 00:41:26.289 --> 00:41:30.429 50%. These sort of covers and measures make sure, 00:41:30.510 --> 00:41:33.889 one, we allow the project to start earlier. We 00:41:33.889 --> 00:41:37.090 have done our assessment. This product will sell. 00:41:37.210 --> 00:41:40.590 So that's not a blanket, just a blind option 00:41:40.590 --> 00:41:43.829 to the sponsor. We're looking at the data, looking 00:41:43.829 --> 00:41:45.989 at the market. This product will sell. So they 00:41:45.989 --> 00:41:49.730 can start a bit earlier. And then most recently 00:41:49.730 --> 00:41:56.030 they've finished everything's done. They've sold 00:41:56.030 --> 00:42:02.190 more than 60 % of the lots, which all the settlement 00:42:02.190 --> 00:42:07.809 has come through as of end of July. So now we're 00:42:07.809 --> 00:42:11.429 just tipping the rest of the stock into residual 00:42:11.429 --> 00:42:14.829 stock. So that's a perfect example for this whole 00:42:14.829 --> 00:42:18.769 lifecycle approach, For the developer, it's very 00:42:18.769 --> 00:42:22.130 easy for them because throughout the whole duration 00:42:22.130 --> 00:42:24.170 of the project, they're talking to one team. 00:42:24.590 --> 00:42:28.429 And this one team has in -depth knowledge about 00:42:28.429 --> 00:42:32.289 this project from start to finish. So often what 00:42:32.289 --> 00:42:35.730 we find is that there's not even a lot of incentives 00:42:35.730 --> 00:42:39.869 to even inquire for pricing elsewhere because 00:42:39.869 --> 00:42:44.530 there's not even if the difference is 0 .5 % 00:42:44.530 --> 00:42:47.480 here and there. it doesn't really move the needles 00:42:47.480 --> 00:42:50.239 for the developer coming to this point. So we 00:42:50.239 --> 00:42:53.820 love it too. From the developer's perspective, 00:42:54.219 --> 00:42:59.619 what's their process? Do they have an option 00:42:59.619 --> 00:43:04.119 on the land or a letter of intent? Why did Labasa 00:43:04.119 --> 00:43:06.360 come in and provide the capital to settle on 00:43:06.360 --> 00:43:10.119 the transaction? For this transaction, it's a 00:43:10.119 --> 00:43:13.099 straight sales contract. So they've entered into 00:43:13.099 --> 00:43:16.159 a purchase contract on the land, put the deposit 00:43:16.159 --> 00:43:19.599 down, and then start talking to finances, which 00:43:19.599 --> 00:43:22.139 is Labasa at the time, on the land facility. 00:43:22.579 --> 00:43:24.920 And then we essentially say, okay, we'll come 00:43:24.920 --> 00:43:27.880 in for land and we'll fund the whole thing. To 00:43:27.880 --> 00:43:31.090 make a deal like this worthwhile, instead of 00:43:31.090 --> 00:43:32.489 you just going and finding the deals yourself. 00:43:32.630 --> 00:43:35.590 My understanding is these transactions have to 00:43:35.590 --> 00:43:37.210 have like something unique, you know, something 00:43:37.210 --> 00:43:41.510 interesting to get it there. From a returns perspective, 00:43:41.750 --> 00:43:44.909 what's the minimum return that you're looking 00:43:44.909 --> 00:43:47.090 for from an equity play, you know, on this type 00:43:47.090 --> 00:43:50.389 of project? Is it 30, 40, 50 %? Like what are 00:43:50.389 --> 00:43:53.889 the numbers? Okay. So this particular case study 00:43:53.889 --> 00:43:58.250 is debt only. So we were the senior lender and, 00:43:58.269 --> 00:44:01.590 you know, slightly stretched manner. So the LDR 00:44:01.590 --> 00:44:05.929 is still sub 70%. It's within the senior equation. 00:44:07.150 --> 00:44:12.010 Senior, we measure ourselves on an internal rate 00:44:12.010 --> 00:44:17.230 of return. Essentially, it's a relative term. 00:44:17.389 --> 00:44:19.530 It's anywhere from single digit to early tens, 00:44:19.750 --> 00:44:23.389 which is where majority of the private houses 00:44:23.389 --> 00:44:25.889 are playing for senior at the moment, regardless. 00:44:27.719 --> 00:44:30.900 The banks, this is much lower. That's actually 00:44:30.900 --> 00:44:33.840 the spread between banks and private. Everyone 00:44:33.840 --> 00:44:37.920 is seeing that it's getting crunched when cash 00:44:37.920 --> 00:44:41.900 rate is high. The differential is not huge, but 00:44:41.900 --> 00:44:44.619 it still varies between that high single digit 00:44:44.619 --> 00:44:47.639 to early tens based on the characteristic of 00:44:47.639 --> 00:44:50.400 the project and how high we go on LVR, how much 00:44:50.400 --> 00:44:53.719 risk we take is the variable. Now, on equity 00:44:53.719 --> 00:44:57.460 side, again, the variables is even. Hence, the 00:44:57.460 --> 00:45:02.300 return bracket is also wider because equity capital 00:45:02.300 --> 00:45:06.239 comes into the project in the earlier phase of 00:45:06.239 --> 00:45:12.559 a development process. So in the risk sense, 00:45:12.719 --> 00:45:15.969 the earlier you come into the project. the more 00:45:15.969 --> 00:45:19.630 risks you are actually wearing throughout the 00:45:19.630 --> 00:45:22.170 project, the project risks as it goes, right, 00:45:22.250 --> 00:45:26.570 by obtaining all of the authority approvals, 00:45:26.570 --> 00:45:29.070 by obtaining some pre -sales, and by locking 00:45:29.070 --> 00:45:33.349 builders, the project de -risks as they go. So 00:45:33.349 --> 00:45:36.769 we price our equity in a very dynamic manner, 00:45:36.869 --> 00:45:40.369 which is the right way to do so as well. We assess 00:45:40.369 --> 00:45:42.789 how much risk we're taking. Are we taking the 00:45:42.789 --> 00:45:46.179 full cycle of a project risk? then we price ourselves 00:45:46.179 --> 00:45:51.800 as a true equity player from more inclined to 00:45:51.800 --> 00:45:56.800 ordinary equity style of return and it is definitely 00:45:56.800 --> 00:46:01.539 it starts from high teens to to to mid -20s and 00:46:01.539 --> 00:46:05.019 that's sort of very wide range depending on how 00:46:05.019 --> 00:46:06.780 much risk we're taking but if we're only coming 00:46:06.780 --> 00:46:09.960 in at a later stage when the project is largely 00:46:09.960 --> 00:46:13.760 de -risked with the construction builder lined 00:46:13.760 --> 00:46:18.519 up ready to go and the obtained some pre -sales 00:46:18.519 --> 00:46:22.320 proved the price point of the asset in the market 00:46:22.320 --> 00:46:25.139 obtain all the approvals shovel ready when we 00:46:25.139 --> 00:46:27.900 come in the last mile then we act more like a 00:46:27.900 --> 00:46:32.000 mess sort of returns so that's for the land sub 00:46:32.000 --> 00:46:36.780 is the um so just thinking about the three Which 00:46:36.780 --> 00:46:39.539 you do. So you do the land subdivisions, right? 00:46:39.679 --> 00:46:42.440 And then you got the light industrial. I find 00:46:42.440 --> 00:46:44.480 light industrial fascinating. Actually, I wouldn't 00:46:44.480 --> 00:46:46.940 mind getting into that and specifically Southeast 00:46:46.940 --> 00:46:49.519 Queensland where it's just booming. Why I find 00:46:49.519 --> 00:46:51.940 this so interesting is my family, my grandfather 00:46:51.940 --> 00:46:53.820 retired up in Noosa. You know, my uncle lives 00:46:53.820 --> 00:46:55.880 up there and he always made a joke that, you 00:46:55.880 --> 00:46:57.599 know, everyone wants to live in Noosa. But what 00:46:57.599 --> 00:46:59.679 they don't understand is you can't get a job 00:46:59.679 --> 00:47:01.519 in Noosa. You kind of have to bring a job or 00:47:01.519 --> 00:47:04.280 bring a business. And in COVID, what I found 00:47:04.280 --> 00:47:06.300 fascinating is when everything crashed and everything 00:47:06.300 --> 00:47:09.800 got destroyed, these, how would I best explain 00:47:09.800 --> 00:47:12.239 light industrial? You take a lot, 12 ,000 square 00:47:12.239 --> 00:47:16.219 metres, you allocate, you put what, 20 to 23 00:47:16.219 --> 00:47:18.800 lots of them. But what these are, to paint the 00:47:18.800 --> 00:47:20.940 picture, I don't know if you've ever driven around, 00:47:21.079 --> 00:47:24.679 like people listening, business hubs and you 00:47:24.679 --> 00:47:27.099 see the, like a drive -in and then you've got 00:47:27.099 --> 00:47:29.039 like a roller door either side and then you've 00:47:29.039 --> 00:47:31.699 got like a walk -up. Why I love these assets 00:47:31.699 --> 00:47:33.780 is you can stick anything in there. My business, 00:47:33.920 --> 00:47:36.079 I could go move to New South Sunshine Coast, 00:47:36.420 --> 00:47:39.559 drop in, have a gym downstairs, et cetera, park 00:47:39.559 --> 00:47:41.579 the car, park the boat. Meanwhile, I can run 00:47:41.579 --> 00:47:44.239 a full financial advisory business upstairs or 00:47:44.239 --> 00:47:47.619 an accountant, anything. You can go full fiberglass. 00:47:48.159 --> 00:47:51.960 My understanding is from a recession perspective, 00:47:52.099 --> 00:47:54.969 from the risk curve. This asset is very, very 00:47:54.969 --> 00:47:56.989 interesting because anyone can work there at 00:47:56.989 --> 00:47:59.250 any point in time. It's not, you know, purely 00:47:59.250 --> 00:48:03.889 just for the CBD. So, yeah, I'm just curious 00:48:03.889 --> 00:48:08.230 on… Yes. I don't know how to attack this, but 00:48:08.230 --> 00:48:14.050 maybe let's look at, I don't know, for this particular 00:48:14.050 --> 00:48:18.289 sub -asset class, you know… What suburbs, what 00:48:18.289 --> 00:48:20.949 regions is this the most attractive currently? 00:48:21.050 --> 00:48:23.730 And if you were looking at a deal, like what 00:48:23.730 --> 00:48:25.449 returns on the equity piece would you be looking 00:48:25.449 --> 00:48:34.090 for? Sure. Great little sub -market topic to 00:48:34.090 --> 00:48:38.949 hash. Now, industrial is very hot and we love 00:48:38.949 --> 00:48:42.429 these asset cards. And ever since 2019, we have 00:48:42.429 --> 00:48:47.559 repetitively lent to industrial. And we've backed 00:48:47.559 --> 00:48:52.840 a couple of industrial project sponsors across 00:48:52.840 --> 00:48:56.380 six, seven different projects with the same sponsor 00:48:56.380 --> 00:49:00.960 until they're quite large players. And we see 00:49:00.960 --> 00:49:03.960 the fundamentals as the lender from our lens. 00:49:04.139 --> 00:49:06.980 We just love it, both from the debt and equity 00:49:06.980 --> 00:49:10.780 angle. Industrial asset is hot in Australia, 00:49:10.860 --> 00:49:13.960 driven by quite a few factors. One is that there 00:49:13.960 --> 00:49:19.210 aren't enough. or approved land use for industrial 00:49:19.210 --> 00:49:25.730 asset. At the same time, the society or the way 00:49:25.730 --> 00:49:29.610 people live and work demands more industrial 00:49:29.610 --> 00:49:36.190 assets to service them. From a mum and dad individual's 00:49:36.190 --> 00:49:42.030 lifestyle perspective, there is the downsizing 00:49:42.030 --> 00:49:44.449 effect. People are moving to more prominent... 00:49:44.920 --> 00:49:50.179 primary prime areas in a smaller living environment 00:49:50.179 --> 00:49:55.179 maybe a beautiful owner occupied apartment in 00:49:55.179 --> 00:49:57.820 the lower north shore but they might still have 00:49:57.820 --> 00:50:02.099 you know their vintage cars their boats and their 00:50:02.099 --> 00:50:05.500 toys and there's nowhere to store in the apartment 00:50:06.380 --> 00:50:09.380 which creates the self -storage service requirements 00:50:09.380 --> 00:50:12.219 for people getting used to higher density or 00:50:12.219 --> 00:50:16.340 downsizing living environment. On the business, 00:50:16.539 --> 00:50:19.280 that's factor one. And factor two, on the business 00:50:19.280 --> 00:50:23.300 side, there is this natural evolution of how 00:50:23.300 --> 00:50:25.860 business is delivered and conducted, how the 00:50:25.860 --> 00:50:30.280 services are rendered. These last few years, 00:50:30.380 --> 00:50:33.420 COVID accelerated it. As you mentioned earlier, 00:50:33.639 --> 00:50:36.400 people don't... don't necessarily have to work 00:50:36.400 --> 00:50:40.639 or live in the CBD of Sydney to benefit from 00:50:40.639 --> 00:50:43.579 the employment opportunity that Sydney offers. 00:50:44.760 --> 00:50:49.460 They can be living out of Noosa or run their 00:50:49.460 --> 00:50:54.019 business out of places in the outer areas by 00:50:54.019 --> 00:50:56.639 creating a space whereby you have your showroom, 00:50:56.739 --> 00:50:59.199 you have your storage display downstairs and 00:50:59.199 --> 00:51:01.320 have a mesling office upstairs and you can... 00:51:01.769 --> 00:51:04.670 create some very creative spaces and enjoy that 00:51:04.670 --> 00:51:09.070 headspace and the actual space to be more productive 00:51:09.070 --> 00:51:15.670 in that way. So the businesses on Occupy Style 00:51:15.670 --> 00:51:19.889 or rental for these sort of mid -size spaces 00:51:19.889 --> 00:51:24.969 is also rising rapidly, driven by the way businesses 00:51:24.969 --> 00:51:28.699 and services are delivered these days. Now, thirdly, 00:51:28.719 --> 00:51:33.000 is from a servicing perspective, that's servicing 00:51:33.000 --> 00:51:37.699 for both, again, the individual and businesses 00:51:37.699 --> 00:51:43.320 perspective, which requires more of regional 00:51:43.320 --> 00:51:47.780 satellite industrial parks to service people, 00:51:47.920 --> 00:51:50.579 one, from an individual's perspective, may choose 00:51:50.579 --> 00:51:54.159 to live. outside of the CBD and save this travel 00:51:54.159 --> 00:51:57.519 time, but they might still be running a sizeable 00:51:57.519 --> 00:52:01.039 business, whether it's cold storage or major, 00:52:01.300 --> 00:52:04.500 you know, trade businesses, they need larger 00:52:04.500 --> 00:52:09.000 warehouses. However, the existing warehouses, 00:52:09.099 --> 00:52:12.059 you know, service those regional, those regions 00:52:12.059 --> 00:52:16.909 may have also be out of capacity, hence. industrial 00:52:16.909 --> 00:52:20.889 park, the expansion or a widening of this footprint 00:52:20.889 --> 00:52:24.210 of existing industrial park is on demand. Some 00:52:24.210 --> 00:52:27.130 of those are being created to cater for people 00:52:27.130 --> 00:52:29.809 who decide to leave and run their business out 00:52:29.809 --> 00:52:32.550 of the CBD, which is more convenient, more time 00:52:32.550 --> 00:52:36.630 efficient for them. On the other side, and because 00:52:36.630 --> 00:52:40.190 the city became more spreaded and population 00:52:40.190 --> 00:52:44.690 is growing, Australia is growing at a world leading. 00:52:45.150 --> 00:52:48.329 pace in advanced countries since you're at close 00:52:48.329 --> 00:52:52.610 to high ones and 2 % population growth. This 00:52:52.610 --> 00:52:55.329 is a very high number versus compared to other 00:52:55.329 --> 00:52:57.489 advanced countries. Some are shrinking, some 00:52:57.489 --> 00:53:01.769 are there sort of steady at the same pace. So 00:53:01.769 --> 00:53:04.210 Australia is still growing. While it's growing 00:53:04.210 --> 00:53:07.969 then, which means the city is spreading further 00:53:07.969 --> 00:53:14.679 out of the CBD, it requires more larger facilities 00:53:14.679 --> 00:53:20.739 which will cater for logistic centers to go and 00:53:20.739 --> 00:53:23.900 reach out to provide goods and deliveries to 00:53:23.900 --> 00:53:27.500 those satellite cities to serve as a broader 00:53:27.500 --> 00:53:30.300 gradient in the sense that people where people 00:53:30.300 --> 00:53:33.679 live and work so larger companies is also securing 00:53:33.679 --> 00:53:38.760 bigger facilities in broader region to one optimize 00:53:38.760 --> 00:53:42.079 their their efficiencies from a logistic distribution 00:53:42.079 --> 00:53:45.880 perspective to service broader area to create 00:53:45.880 --> 00:53:49.780 centres. On the other side, businesses also needed 00:53:49.780 --> 00:53:53.800 to expand because the natural demand is expanding 00:53:53.800 --> 00:53:56.579 too. So industrial, in a nutshell, is very hot. 00:53:57.079 --> 00:54:01.460 Now, La Paz is looking, we love this asset class, 00:54:01.599 --> 00:54:03.440 so we are going equity and debt in this asset 00:54:03.440 --> 00:54:09.480 class. On one side, it's simpler than high -rises. 00:54:09.519 --> 00:54:15.840 We love it too. its larger land content footprint. 00:54:16.900 --> 00:54:22.360 We recently secured a project whereby one of 00:54:22.360 --> 00:54:26.380 LaBasse's special purpose vehicle fund will acquire 00:54:26.380 --> 00:54:30.159 the land and work the asset and then establish 00:54:30.159 --> 00:54:34.159 warehouse sheds and hold on behalf of our investors 00:54:34.159 --> 00:54:37.739 for long -term income and capital precision. 00:54:39.630 --> 00:54:42.449 Yeah, it's a fascinating asset class. And I think 00:54:42.449 --> 00:54:45.030 I was speaking to a colleague, I can't remember 00:54:45.030 --> 00:54:47.989 if it was Chemist Warehouse or another one of 00:54:47.989 --> 00:54:50.969 the major players, but something about the distribution 00:54:50.969 --> 00:54:53.909 hubs with these large, you touched on the distribution 00:54:53.909 --> 00:54:56.070 hubs like Amazon, all these dropshippers, or 00:54:56.070 --> 00:54:57.750 you can just be a one -person shop and have a 00:54:57.750 --> 00:55:00.090 huge warehouse space for these dropshipping -style 00:55:00.090 --> 00:55:03.550 businesses. But from a risk management, which 00:55:03.550 --> 00:55:07.210 also benefits the demand side with COVID or getting 00:55:07.210 --> 00:55:10.659 the flu, These days, if one warehouse gets the 00:55:10.659 --> 00:55:12.539 flu, they kind of send everyone home and it goes 00:55:12.539 --> 00:55:15.579 to a standstill. But what I'm hearing from large 00:55:15.579 --> 00:55:18.079 businesses, they're seeing that risk in the past 00:55:18.079 --> 00:55:21.159 couple of years going, oh dear. And then they're 00:55:21.159 --> 00:55:22.980 just naturally going to go, they're going buying 00:55:22.980 --> 00:55:26.480 different hubs just in case if one shuts down, 00:55:26.599 --> 00:55:28.440 you've got another two to go. So essentially 00:55:28.440 --> 00:55:31.460 the flow doesn't stop. So people can get their 00:55:31.460 --> 00:55:33.920 products in a timely fashion and it doesn't disrupt 00:55:33.920 --> 00:55:37.679 the cashflow process. Are you seeing that? That 00:55:37.679 --> 00:55:40.480 strategy is becoming quite common now or is that 00:55:40.480 --> 00:55:44.519 just a knee -jerk reaction to past events that's 00:55:44.519 --> 00:55:49.179 slowing down? Oh, it's certainly the trend. Even 00:55:49.179 --> 00:55:51.840 from the office space where people are seeing 00:55:51.840 --> 00:55:56.739 the headquarters trim back on leasing footprint 00:55:56.739 --> 00:56:02.480 and create, again, the region -centred sub -hubs 00:56:02.480 --> 00:56:06.079 for employees to go and work in the neighbourhood. 00:56:06.860 --> 00:56:12.019 Now, industrial side, it's case by case and depending 00:56:12.019 --> 00:56:17.880 on the business's efficiencies, mostly for larger 00:56:17.880 --> 00:56:21.719 tenants, that they would evaluate the whole network 00:56:21.719 --> 00:56:25.820 footprint of the country, for example, in the 00:56:25.820 --> 00:56:30.800 strategic planning time, potentially look at, 00:56:30.880 --> 00:56:35.980 okay, if we jig, take up a... a footprint in 00:56:35.980 --> 00:56:38.380 this particular strategic location which will 00:56:38.380 --> 00:56:42.519 feed to the next one in terms of exchange and 00:56:42.519 --> 00:56:47.039 stopover and then go to the next stopover to 00:56:47.039 --> 00:56:50.760 service the other region. So they may shuffle 00:56:50.760 --> 00:56:54.280 their distribution centres and reorganise it 00:56:54.280 --> 00:56:59.179 in a more effective way to get either consolidation 00:56:59.179 --> 00:57:03.920 or actually split from whichever sense that makes 00:57:03.920 --> 00:57:08.579 sense. more economic sense to deliver services. 00:57:08.820 --> 00:57:10.340 You know, for example, for distributions and 00:57:10.340 --> 00:57:12.480 logistics centers, we're seeing more split at 00:57:12.480 --> 00:57:16.079 the moment because the last mile logistics has 00:57:16.079 --> 00:57:20.099 become very hot because the businesses that is 00:57:20.099 --> 00:57:26.360 doing the B2C delivery wanted to be same -day 00:57:26.360 --> 00:57:30.539 delivery before it's 3 -5. two weeks, it's no 00:57:30.539 --> 00:57:34.059 longer competitive. And it's in Asia countries, 00:57:34.159 --> 00:57:36.119 it's two hours delivery when you buy online. 00:57:36.179 --> 00:57:38.599 Sorry, did you say in Asian countries like China, 00:57:38.639 --> 00:57:42.519 it's two hours delivery? And it's actually put 00:57:42.519 --> 00:57:44.920 on the website when you purchase. For example. 00:57:44.980 --> 00:57:48.260 The logistics on that would be crazy, the number 00:57:48.260 --> 00:57:50.800 of trucks. So these are the new behavior and 00:57:50.800 --> 00:57:55.780 consumers trends. And then to also beat your 00:57:55.780 --> 00:57:59.519 competition. So this then creates more. Last 00:57:59.519 --> 00:58:05.059 mile, the sub -distribution centers. So the major 00:58:05.059 --> 00:58:09.260 warehouses were distributed to these sub -logistic 00:58:09.260 --> 00:58:12.000 centers that is actually within 30 minutes drive 00:58:12.000 --> 00:58:16.480 to where most people live. So that's the example 00:58:16.480 --> 00:58:19.119 of the spread. And then from a cost efficiency, 00:58:19.619 --> 00:58:21.679 they might close down a couple, the businesses 00:58:21.679 --> 00:58:24.380 might close down a couple, satellite distribution 00:58:24.380 --> 00:58:27.900 center might build a bigger new facility for 00:58:27.900 --> 00:58:31.659 it. storage cost or cost efficiencies because 00:58:31.659 --> 00:58:34.460 they've now got this other substance that is 00:58:34.460 --> 00:58:38.079 riding the heart of the city so driven by business 00:58:38.079 --> 00:58:40.239 demands it could vary a bit but these are some 00:58:40.239 --> 00:58:43.719 of the trends we see which which lines up with 00:58:43.719 --> 00:58:49.500 this more fast -paced competitive consumer consumption 00:58:49.500 --> 00:58:52.320 side If I'm understanding you correctly, because 00:58:52.320 --> 00:58:54.619 how I was thinking of it is just every single 00:58:54.619 --> 00:58:56.599 major port, you know, you stick in a massive 00:58:56.599 --> 00:58:58.780 distribution hub. And then I was thinking, okay, 00:58:58.860 --> 00:59:01.480 you get one for each major state and then off 00:59:01.480 --> 00:59:05.420 it goes. But what you're saying is they're going 00:59:05.420 --> 00:59:08.719 distribution hub for the state for the main port 00:59:08.719 --> 00:59:11.659 or even Newcastle or something specific. But 00:59:11.659 --> 00:59:14.659 then they're also putting in a sub smaller one 00:59:14.659 --> 00:59:18.119 on a regional scale. just essentially across 00:59:18.119 --> 00:59:21.019 the entire footprint. So theoretically, every 00:59:21.019 --> 00:59:25.880 single major consumption from a consumer standpoint 00:59:25.880 --> 00:59:28.239 that actually is a big consumer, they'll potentially 00:59:28.239 --> 00:59:31.780 put in a distribution hub just to service that 00:59:31.780 --> 00:59:36.539 municipality. Is that what I'm hearing? So that 00:59:36.539 --> 00:59:38.760 means the demand is just going to keep climbing 00:59:38.760 --> 00:59:44.730 in this space. they're right so it's not slowing 00:59:44.730 --> 00:59:46.610 down like i thought i thought potentially like 00:59:46.610 --> 00:59:48.369 okay once everyone's got covered it just stops 00:59:48.369 --> 00:59:51.210 but it's never going to stop because the the 00:59:51.210 --> 00:59:53.969 more population grows in and find places to live 00:59:53.969 --> 00:59:56.750 people are farmlands just being bought up for 00:59:56.750 --> 00:59:58.289 you know tens of millions or hundreds of millions 00:59:58.289 --> 01:00:00.309 of dollars they're doing 600 houses you know 01:00:00.309 --> 01:00:02.130 it's just growing and growing and growing which 01:00:02.130 --> 01:00:04.369 means every single place for every single major 01:00:04.369 --> 01:00:08.409 company will require some form of satellite distribution 01:00:08.409 --> 01:00:12.219 house there so this this space if I'm understanding 01:00:12.219 --> 01:00:14.139 it correctly, isn't really slowing down. It's 01:00:14.139 --> 01:00:16.719 just naturally going to evolve like a beautiful 01:00:16.719 --> 01:00:20.400 virus. There is a growing demand. So one is from 01:00:20.400 --> 01:00:23.440 fulfillment centers for fast delivery we touched 01:00:23.440 --> 01:00:26.519 on. The other side is business owners may decide 01:00:26.519 --> 01:00:30.099 to exit from a shopping center because business 01:00:30.099 --> 01:00:34.920 these days is not entirely dependent on pedestrian 01:00:34.920 --> 01:00:38.239 traffic anymore. So it's online competition. 01:00:38.480 --> 01:00:43.360 It's the selling to do the work. internet -based 01:00:43.360 --> 01:00:46.820 customers. So they may decide to retreat themselves 01:00:46.820 --> 01:00:49.599 and exit from a shopping center paying high rent 01:00:49.599 --> 01:00:53.519 and limited space and don't have space for lesser 01:00:53.519 --> 01:00:56.500 organized items to be not put on display. And 01:00:56.500 --> 01:00:57.800 then they might decide to, okay, I don't want 01:00:57.800 --> 01:01:00.679 to go far. I'm leaving my cart in a city and 01:01:00.679 --> 01:01:02.500 I want to have a warehouse just in the inner 01:01:02.500 --> 01:01:05.480 city and I'll run it from there. So that is also 01:01:05.480 --> 01:01:09.829 another stream. I love it. Now, there's probably 01:01:09.829 --> 01:01:11.809 a lot of developers going to listen to this and 01:01:11.809 --> 01:01:13.230 they're probably thinking to themselves, hmm, 01:01:13.349 --> 01:01:15.969 if I was going to speak to La Bassa, what is 01:01:15.969 --> 01:01:19.929 their wish list? You know, what suburbs? So let's 01:01:19.929 --> 01:01:22.469 say Queensland to begin with, like what suburbs 01:01:22.469 --> 01:01:27.030 do you think right now possess the hottest opportunity? 01:01:27.369 --> 01:01:29.369 Like what's the most attractive, fast -growing 01:01:29.369 --> 01:01:31.409 suburbs like, you know, in Queensland? If like, 01:01:31.489 --> 01:01:33.610 you know, someone's looking at a project and, 01:01:33.630 --> 01:01:35.090 you know, you had your pick of the litter, like 01:01:35.090 --> 01:01:40.539 what would flag your interest? This is a million 01:01:40.539 --> 01:01:44.260 -dollar question. This is the fun part. Well, 01:01:44.380 --> 01:01:47.699 we'll share it over a glass of red wine. However, 01:01:47.840 --> 01:01:50.920 broadly speaking, because we do, as Labasa's 01:01:50.920 --> 01:01:54.099 investment house, we're location agnostic and 01:01:54.099 --> 01:01:58.320 essentially asset class agnostic. We do look 01:01:58.320 --> 01:02:01.920 deeply into every deal. It's fundamental. There's 01:02:01.920 --> 01:02:04.699 one great advantage as well as we say agnostic. 01:02:05.789 --> 01:02:08.809 Because Labaste only invests in real asset class 01:02:08.809 --> 01:02:12.389 and we don't touch anything else, we are able 01:02:12.389 --> 01:02:16.590 to and for a broader footprint in terms of location 01:02:16.590 --> 01:02:20.750 of the asset and asset types. So we do hold a 01:02:20.750 --> 01:02:24.789 very good amount of knowledge base in each vertical. 01:02:25.090 --> 01:02:30.099 So from... The hot pocket and where we trade 01:02:30.099 --> 01:02:33.619 most, we still end up noticing that we trade 01:02:33.619 --> 01:02:36.440 most in Eastern Seaboard. So currently all of 01:02:36.440 --> 01:02:38.739 our assets are in Sydney, Melbourne, Brisbane. 01:02:39.320 --> 01:02:44.260 We also traded, transacted in Adelaide. We keenly 01:02:44.260 --> 01:02:48.840 look into Perth and other locations. We are agnostic. 01:02:49.079 --> 01:02:52.099 We can go Metro, we can go regional, which we 01:02:52.099 --> 01:02:55.519 have done. Again, we assist every deal on its... 01:02:55.760 --> 01:02:58.739 It's merit and we'll price each deal based on 01:02:58.739 --> 01:03:03.900 the risk profile and time span in that sense. 01:03:04.159 --> 01:03:08.119 So we do approach every deal not in a quickie 01:03:08.119 --> 01:03:13.139 cutter way. In terms of the sweet spot, we would 01:03:13.139 --> 01:03:16.199 love to continue to bring our footprint on in 01:03:16.199 --> 01:03:19.940 terms of investment appetite is again still the 01:03:19.940 --> 01:03:25.760 land subdivision space. The industrial subdivision 01:03:25.760 --> 01:03:32.039 and build form, we love them. And also the boutique 01:03:32.039 --> 01:03:36.679 build, beautiful quality, medium -high finish 01:03:36.679 --> 01:03:45.059 residential apartment in that 25 to 150 key sort 01:03:45.059 --> 01:03:50.659 of scale, which I think is a good size for one 01:03:50.659 --> 01:03:57.039 for just the... to also from a risk management 01:03:57.039 --> 01:03:59.639 perspective, if something goes wrong, we can 01:03:59.639 --> 01:04:02.599 still, you know, work it out together and it's 01:04:02.599 --> 01:04:06.400 a good size that we can sort of solve problems 01:04:06.400 --> 01:04:12.159 on. So I'll leave it at that. We'll have a glass 01:04:12.159 --> 01:04:13.760 of wine to figure out where the hotspots are, 01:04:13.840 --> 01:04:18.280 but no, but that makes a lot of sense. You know, 01:04:18.320 --> 01:04:22.110 that's very, very interesting. Is there another 01:04:22.110 --> 01:04:26.309 deal example that, you know, you've done recently 01:04:26.309 --> 01:04:28.510 that you want to dig into or is there any other 01:04:28.510 --> 01:04:30.670 areas you want to discuss that's on your mind? 01:04:31.769 --> 01:04:35.349 I'll mention a quick one. So everyone knows that 01:04:35.349 --> 01:04:39.489 the COVID period hasn't been easy for any new 01:04:39.489 --> 01:04:42.389 builds and certainly it's not to say LaBasse 01:04:42.389 --> 01:04:44.909 hasn't experienced a project not going as planned. 01:04:45.599 --> 01:04:48.400 Now, we're always going into a project, one, 01:04:48.559 --> 01:04:51.659 we assess very tight. We want to choose a successful 01:04:51.659 --> 01:04:55.559 project rather than a project that is going down 01:04:55.559 --> 01:04:58.840 and only finances make the money. It's just not 01:04:58.840 --> 01:05:01.820 our style of investing. We assess and select 01:05:01.820 --> 01:05:05.940 the right deals to go in whereby everyone is 01:05:05.940 --> 01:05:09.079 going to take their share and we're going to 01:05:09.079 --> 01:05:12.460 come out successfully. So we do go into project 01:05:12.460 --> 01:05:16.119 with... a conservative assessment but still choose 01:05:16.119 --> 01:05:19.320 a successful robust resilient project to go into 01:05:19.320 --> 01:05:22.059 however when something happened like the broader 01:05:22.059 --> 01:05:24.920 broad environment as a disruption as the scale 01:05:24.920 --> 01:05:29.760 of covid um we had a project where um and it's 01:05:29.760 --> 01:05:34.260 a new build it's an apartment um and it's certainly 01:05:34.260 --> 01:05:38.280 experienced cost overruns because the labor cost 01:05:38.280 --> 01:05:43.369 time delays and the construction materials, it 01:05:43.369 --> 01:05:49.269 compounded to quite a sizable cost of the run, 01:05:49.389 --> 01:05:51.590 which we're talking about in construction, because 01:05:51.590 --> 01:05:56.150 the price rise during COVID was 30 % plus. But 01:05:56.150 --> 01:06:01.969 again, it's one that we were very comfortable. 01:06:02.289 --> 01:06:03.929 We always, when something happened, we approach 01:06:03.929 --> 01:06:07.510 it not going as planned. Our approach, because 01:06:07.510 --> 01:06:11.639 we run an active, portfolio management approach 01:06:11.639 --> 01:06:16.280 we're in touch on a weekly bi -weekly monthly 01:06:16.280 --> 01:06:19.780 if not more frequent every other day basis um 01:06:19.780 --> 01:06:24.059 when something is when environment is tightening 01:06:24.059 --> 01:06:29.400 which is experiencing some issue we we jump onto 01:06:29.400 --> 01:06:33.820 the forefront of it and we appreciate often when 01:06:33.820 --> 01:06:37.179 something happens Our sponsors communicate with 01:06:37.179 --> 01:06:43.940 us openly and proactively just so that the problems 01:06:43.940 --> 01:06:46.880 aren't vested and until it gets your explosive 01:06:46.880 --> 01:06:51.880 stage. And we also have our checks and our monitoring 01:06:51.880 --> 01:06:55.440 scheme. So often we identify issues and prevent 01:06:55.440 --> 01:06:58.340 issues from occurring in an early stage. For 01:06:58.340 --> 01:07:00.019 example, we're looking at details on whether 01:07:00.019 --> 01:07:04.670 a major order has been made. Now, if... within 01:07:04.670 --> 01:07:07.230 a certain period in a context of the project 01:07:07.230 --> 01:07:10.309 program. Now, if a major order hasn't been made 01:07:10.309 --> 01:07:13.349 by a certain time, we just know this project 01:07:13.349 --> 01:07:16.409 is going to experience a delay. So we surface 01:07:16.409 --> 01:07:20.170 that in advance, and if it's oversight or if 01:07:20.170 --> 01:07:22.210 there's a reason it's not made yet, we have a 01:07:22.210 --> 01:07:24.570 conversation with our sponsors, make sure we 01:07:24.570 --> 01:07:28.130 keep them in check, nothing's missed, and we 01:07:28.130 --> 01:07:31.190 work as a team with them. When cost overrun happens 01:07:31.190 --> 01:07:35.750 during COVID, And we assess, again, is this the 01:07:35.750 --> 01:07:38.530 stock that the market will still be willing to 01:07:38.530 --> 01:07:43.170 take? And it was yes. Sure, it's a very tightly 01:07:43.170 --> 01:07:50.230 held market. And is this a risk that is materially 01:07:50.230 --> 01:07:54.110 escalating the credit risk profile? Now, to a 01:07:54.110 --> 01:07:56.489 degree, yes, because there's cost of the runs. 01:07:56.690 --> 01:08:00.130 But however, if we go a bit longer and then give 01:08:00.130 --> 01:08:03.880 them time and extra. extra capital to bankroll 01:08:03.880 --> 01:08:06.380 the project. Is this a better outcome for investors? 01:08:06.659 --> 01:08:09.440 It's yes. Because the worst case is to sell the 01:08:09.440 --> 01:08:13.059 project halfway before the end realizable value 01:08:13.059 --> 01:08:16.079 for a construction project is actually crystallized. 01:08:16.340 --> 01:08:21.279 If a funder is backing off midway, it's a disaster. 01:08:22.090 --> 01:08:25.569 So we, however, you know, we've got our frameworks. 01:08:25.710 --> 01:08:29.369 We make sure our credit risk escalation is still 01:08:29.369 --> 01:08:31.930 within our threshold and investors getting paid 01:08:31.930 --> 01:08:35.449 for taking that extra risk. And the risk is still 01:08:35.449 --> 01:08:39.029 within threshold matter so that because every 01:08:39.029 --> 01:08:44.430 go up, every letter, every mark of the risk threshold 01:08:44.430 --> 01:08:47.210 requires LaBasse to take a different approach 01:08:47.210 --> 01:08:50.710 in terms of managing our risk profile. And we're 01:08:50.710 --> 01:08:57.590 very. with that and for me and the team, we respond 01:08:57.590 --> 01:09:00.250 to things quickly and we'll work around the clock 01:09:00.250 --> 01:09:02.250 to solve problems and we're proud of that. So 01:09:02.250 --> 01:09:05.289 this particular project went through the difficult 01:09:05.289 --> 01:09:07.850 period and we stuck in there the whole time. 01:09:08.010 --> 01:09:11.250 We backed the sponsors. We backed our judgment. 01:09:11.430 --> 01:09:14.770 We backed the project. At the end, the project 01:09:14.770 --> 01:09:16.369 was fully completed at the end of last year. 01:09:18.000 --> 01:09:21.500 One of the few sweet factors was we were also 01:09:21.500 --> 01:09:25.840 allowed, because at the initial DD stage, this 01:09:25.840 --> 01:09:30.899 type of product is very short of supply. It's 01:09:30.899 --> 01:09:33.539 extremely short of supply in Sydney North Shore. 01:09:33.819 --> 01:09:36.859 So we allowed the project to go with lower pre 01:09:36.859 --> 01:09:39.720 -sale threshold to allow them to sell better 01:09:39.720 --> 01:09:42.939 for a better price when people can see the finishes. 01:09:43.100 --> 01:09:45.680 And typically that's how these more luxury products 01:09:45.680 --> 01:09:50.380 end up. So the project has overachieved, even 01:09:50.380 --> 01:09:53.899 though there has been cost overruns. In terms 01:09:53.899 --> 01:09:57.460 of the end sales value, one of the units has 01:09:57.460 --> 01:10:03.399 picked up an extra 40 % in price and that's largely 01:10:03.399 --> 01:10:07.579 compensated to this also extra ground on costs 01:10:07.579 --> 01:10:12.000 as well. And again, because we've taken a view 01:10:12.000 --> 01:10:15.890 to allow that flexibility there. It saved the 01:10:15.890 --> 01:10:18.489 day. If we, let's just say, if they have to go 01:10:18.489 --> 01:10:23.869 to the banks or, you know, on a more strict terms, 01:10:23.970 --> 01:10:26.729 which requires selling the majority of the stock 01:10:26.729 --> 01:10:29.369 at the beginning of COVID, plus the cost of run, 01:10:29.609 --> 01:10:32.670 they will absolutely be upside down. So it was 01:10:32.670 --> 01:10:35.369 a good case. Again, this particular case, we've 01:10:35.369 --> 01:10:38.350 gone in land settlement. We've done a stretch 01:10:38.350 --> 01:10:45.340 senior and we banked the project through. construction, 01:10:45.340 --> 01:10:48.640 we're now on a residual stock tranche with them. 01:10:48.819 --> 01:10:52.159 So it's a full life cycle again. Now that's really 01:10:52.159 --> 01:10:54.479 interesting. And that's, you know, from the beginning 01:10:54.479 --> 01:10:57.380 of our conversation, what I find very interesting 01:10:57.380 --> 01:11:00.199 about this, the entire life cycle of a project 01:11:00.199 --> 01:11:04.119 strategy is, and look, anyone that invests or 01:11:04.119 --> 01:11:06.399 looking at assets, as we know, timing, you can't 01:11:06.399 --> 01:11:08.319 control it to an extent. And if someone goes, 01:11:08.439 --> 01:11:11.510 something goes badly. It's how do you respond 01:11:11.510 --> 01:11:14.010 in that particular environment, which will determine 01:11:14.010 --> 01:11:19.310 potentially how the result is. And it's nice 01:11:19.310 --> 01:11:21.710 to hear that you're not forced into making, like 01:11:21.710 --> 01:11:24.470 some companies or, as you mentioned, banks, they 01:11:24.470 --> 01:11:26.970 force you into essentially cutting your losses, 01:11:27.010 --> 01:11:30.449 getting out immediately to essentially stop the 01:11:30.449 --> 01:11:34.189 bloodshed. That might help in the short term, 01:11:34.270 --> 01:11:37.250 but the long -term ramifications of that can 01:11:37.250 --> 01:11:41.260 be... huge when when essentially if you have 01:11:41.260 --> 01:11:44.579 a full life cycle partner that understands there 01:11:44.579 --> 01:11:48.739 are risks and it's not the decision about just 01:11:48.739 --> 01:11:50.319 getting rid of it and stopping the bloodshed 01:11:50.319 --> 01:11:52.760 it's it's okay what options do we have how can 01:11:52.760 --> 01:11:54.420 we resolve this and still get a good outcome 01:11:54.420 --> 01:11:56.979 which i find very interesting yeah if i'm understanding 01:11:56.979 --> 01:12:01.180 correctly which is what you do right you essentially 01:12:01.180 --> 01:12:07.039 help a partner yeah and also we ultimately act 01:12:07.659 --> 01:12:11.500 you know, with the framework. So we also, you 01:12:11.500 --> 01:12:15.600 know, we manage threshold matters, but we make 01:12:15.600 --> 01:12:19.199 sound commercial decisions. And if something 01:12:19.199 --> 01:12:22.060 goes wrong, one thing that our investors will 01:12:22.060 --> 01:12:25.079 have and our project partners will have out of 01:12:25.079 --> 01:12:27.960 the bus is if something goes wrong, one phone 01:12:27.960 --> 01:12:30.779 call comes to us, the whole team, we will be 01:12:30.779 --> 01:12:34.520 on the clock, 20 coffees a day until this thing's 01:12:34.520 --> 01:12:36.989 done. How many in the team? I forgot to ask because, 01:12:37.050 --> 01:12:40.489 you know, you can't be everywhere. How many is 01:12:40.489 --> 01:12:44.050 in the Labasa team now? We're nine of us. We're 01:12:44.050 --> 01:12:47.390 still British where everyone is very cross -trained 01:12:47.390 --> 01:12:51.170 and multitasked. Six of us are full -time, three 01:12:51.170 --> 01:12:54.689 of us are senior advisors. We're quite sufficient 01:12:54.689 --> 01:13:00.289 in the way we are. Everyone multitask. Yeah, 01:13:00.289 --> 01:13:03.380 right. The other thing which I found is what 01:13:03.380 --> 01:13:05.239 I love about, you know, having these conversations, 01:13:05.319 --> 01:13:07.199 we don't know who's listening. There could be 01:13:07.199 --> 01:13:09.100 like a 16 -year -old kid going, I want to get 01:13:09.100 --> 01:13:11.300 into property because my dad's in it and my grandfather's 01:13:11.300 --> 01:13:14.220 in it. And, you know, is there any advice or 01:13:14.220 --> 01:13:16.500 counsel you would have to a young mind, you know, 01:13:16.520 --> 01:13:19.539 looking at the path of, you know, getting into 01:13:19.539 --> 01:13:23.199 this particular investment space? Become a real 01:13:23.199 --> 01:13:26.279 estate investment manager? Oh, yeah, anything 01:13:26.279 --> 01:13:30.119 like going down the… Yeah, getting into the world 01:13:30.119 --> 01:13:32.260 of the property side, the lending side, the equity, 01:13:32.399 --> 01:13:35.779 looking at deals. Is there any – it's not just 01:13:35.779 --> 01:13:37.939 a young mind being 16. What I've found, and you've 01:13:37.939 --> 01:13:39.680 probably found the same, some of the brightest 01:13:39.680 --> 01:13:42.560 people I've ever found in particular spaces are 01:13:42.560 --> 01:13:45.260 doing something else. They might be 27, 30 years 01:13:45.260 --> 01:13:46.880 old, listening to this, going, what am I doing 01:13:46.880 --> 01:13:48.579 with my life? But I've been running projects, 01:13:48.859 --> 01:13:51.239 I don't know, in liquor or a booze company or 01:13:51.239 --> 01:13:53.760 an accountant, and they just want to change. 01:13:54.399 --> 01:13:57.869 Is there any – thoughts you have to you know 01:13:57.869 --> 01:14:01.930 anyone looking to get into this space you know 01:14:01.930 --> 01:14:04.810 good good question good question and these are 01:14:04.810 --> 01:14:11.109 um again the major million dollar questions for 01:14:11.109 --> 01:14:15.310 for anyone to think about whether it's uh establishing 01:14:15.310 --> 01:14:18.050 a footprint into a brand new area coming into 01:14:18.050 --> 01:14:23.170 your career or uh as a career change i think 01:14:23.899 --> 01:14:28.500 Before diving into the specifics of the industry 01:14:28.500 --> 01:14:32.000 and whether it's, you know, of course, one, you 01:14:32.000 --> 01:14:35.279 choose a rising industry. So the industry that's 01:14:35.279 --> 01:14:41.800 still growing versus, for example, our station, 01:14:42.079 --> 01:14:44.819 you probably guess it's a devising industry. 01:14:45.020 --> 01:14:47.479 And if it's an industry that's fast growing, 01:14:47.640 --> 01:14:50.640 that's good. However, that's definitely not everything. 01:14:51.130 --> 01:14:53.930 You need to break it down to, okay, within this, 01:14:54.050 --> 01:14:58.010 I want to first of all sail in the direction 01:14:58.010 --> 01:15:01.090 of the wind, tick. It just means there's more 01:15:01.090 --> 01:15:02.949 opportunity. Again, that doesn't mean if you 01:15:02.949 --> 01:15:05.789 go reverse, there isn't. Life is never black 01:15:05.789 --> 01:15:10.090 or white. Just remember that. So a tick of a 01:15:10.090 --> 01:15:12.189 growing industry just potentially implies there's 01:15:12.189 --> 01:15:15.829 more opportunity. Then, however, it's most important 01:15:15.829 --> 01:15:18.390 to look into, okay, what specifically is it? 01:15:19.149 --> 01:15:21.409 There's multiple streams within this industry. 01:15:21.609 --> 01:15:24.350 Also, in real estate alone, you can choose to 01:15:24.350 --> 01:15:26.029 be an investment manager, you can be a developer 01:15:26.029 --> 01:15:29.270 or, you know, a valuer. And there's many different 01:15:29.270 --> 01:15:32.310 streams. And before you go into that, I guess 01:15:32.310 --> 01:15:35.590 real estate is the key word. So I think anyone 01:15:35.590 --> 01:15:37.989 thinking of going to real estate side needs to 01:15:37.989 --> 01:15:40.569 have a passion for real estate. You need to love 01:15:40.569 --> 01:15:44.630 looking at properties and you feel energized 01:15:44.630 --> 01:15:48.560 when you're talking about a property deal. And 01:15:48.560 --> 01:15:52.380 that's the part about finding your passion. So 01:15:52.380 --> 01:15:56.199 if it lights you up when we talk about property, 01:15:56.300 --> 01:15:59.840 which I do, you're probably in the right direction 01:15:59.840 --> 01:16:03.699 as well. And then if you fund the industry and 01:16:03.699 --> 01:16:06.840 the property, as those two boxes tick, and then, 01:16:06.899 --> 01:16:10.939 again, it's around your natural strength. What's 01:16:10.939 --> 01:16:13.439 your natural strength? Are you more on the on 01:16:13.439 --> 01:16:16.500 a deal side or on an analytical side? There's 01:16:16.500 --> 01:16:18.699 various different type of roles which guards 01:16:18.699 --> 01:16:22.659 the door of an organization in a particular stream 01:16:22.659 --> 01:16:25.180 niche. Like Labasa is in this management house. 01:16:25.399 --> 01:16:29.020 We also have our front office, our middle office, 01:16:29.279 --> 01:16:32.579 which is the compliance risk strategy reporting. 01:16:33.770 --> 01:16:36.050 And then the deal -making side, you know, what 01:16:36.050 --> 01:16:40.689 is more suited for the individual, you know, 01:16:40.789 --> 01:16:44.010 run and be the chief negotiator or you want to 01:16:44.010 --> 01:16:47.090 be, you know, this very analytical mind and to 01:16:47.090 --> 01:16:48.890 make sure everything's in order because you're 01:16:48.890 --> 01:16:51.930 just naturally super organized. I think these 01:16:51.930 --> 01:16:57.430 are not different to when people decide to make 01:16:57.430 --> 01:17:02.460 a horizontal or going deep into one area. Coming 01:17:02.460 --> 01:17:06.180 down to a few points. One is to do what you love, 01:17:06.279 --> 01:17:09.720 which is, I'll end this with my definition for 01:17:09.720 --> 01:17:12.319 happiness. I do openly share with the team and 01:17:12.319 --> 01:17:15.979 some of my customers hear this too, and it is 01:17:15.979 --> 01:17:19.619 how I run my life. So my definition of happiness 01:17:19.619 --> 01:17:22.899 when I left the banking world, this is what has 01:17:22.899 --> 01:17:29.880 driven me to establish Lobasa, is do what you 01:17:29.880 --> 01:17:32.560 love. based on what you're naturally good at. 01:17:32.699 --> 01:17:35.739 So choose an area you're passionate about and 01:17:35.739 --> 01:17:40.119 do it the way you want. So, you know, how you 01:17:40.119 --> 01:17:42.779 want to, which, what type of firms aligns with 01:17:42.779 --> 01:17:44.880 your values, what sort of cultures that they 01:17:44.880 --> 01:17:48.840 have, or do you want to go and go solo? And if 01:17:48.840 --> 01:17:51.680 you go solo, you enjoy the flexibility or you 01:17:51.680 --> 01:17:53.979 actually want to go together with others and 01:17:53.979 --> 01:17:56.380 go further, right? That's another choice as well. 01:17:57.159 --> 01:18:00.199 And then last point is crucial, is do it with 01:18:00.199 --> 01:18:05.260 people you love. And for Labasa, I choose very 01:18:05.260 --> 01:18:09.340 carefully who comes into the firm. And we sometimes, 01:18:09.699 --> 01:18:12.060 you know, unfortunately, we have to do some selections, 01:18:12.239 --> 01:18:15.180 re -selections. It's very important who we share 01:18:15.180 --> 01:18:19.420 our lives with and enrich the journey. You know, 01:18:19.420 --> 01:18:21.560 the financial outcomes will come. When you take 01:18:21.560 --> 01:18:23.859 those three things, we don't even need to think 01:18:23.859 --> 01:18:26.399 about it. We will create successes for our customers. 01:18:26.579 --> 01:18:31.119 We will create success for self, which is self 01:18:31.119 --> 01:18:36.380 -development, exceed our version today, tomorrow, 01:18:36.680 --> 01:18:40.699 right? So build self in a spiritual and capacity, 01:18:41.079 --> 01:18:43.800 holistic manner. We talk about this a lot within 01:18:43.800 --> 01:18:48.739 the firm. So I think going along, do what you 01:18:48.739 --> 01:18:51.500 love, do it the way you want. Do with people 01:18:51.500 --> 01:18:53.319 you love. If you go with those three principles, 01:18:53.500 --> 01:18:55.680 whether it's real estate or something else, you're 01:18:55.680 --> 01:18:59.039 on the right track. Well said. Couldn't agree 01:18:59.039 --> 01:19:02.199 more. If anyone wants to learn more about Labasa, 01:19:02.239 --> 01:19:08.220 how can they reach you? Our website is labasa 01:19:08.220 --> 01:19:13.039 .com. We also update some of our insights both 01:19:13.039 --> 01:19:16.560 on the website and on LinkedIn corporate profile. 01:19:18.430 --> 01:19:20.909 We just started a Facebook profile as well, which 01:19:20.909 --> 01:19:24.750 is something new. So on our website, if you're 01:19:24.750 --> 01:19:28.250 interested, parties can also subscribe to our 01:19:28.250 --> 01:19:31.449 newsletters. We do share our insights regularly 01:19:31.449 --> 01:19:34.850 given we're seeing such a large volume of deals 01:19:34.850 --> 01:19:38.670 and we do have some good understanding of how 01:19:38.670 --> 01:19:42.050 things are moving. So I would encourage everyone 01:19:42.050 --> 01:19:45.739 to check us out. Fantastic. All right, Melissa, 01:19:45.859 --> 01:19:48.319 it's been really insightful having you on and 01:19:48.319 --> 01:19:51.520 that conversation was a lot of fun and I'm looking 01:19:51.520 --> 01:19:55.520 forward to picking up again soon. I certainly 01:19:55.520 --> 01:19:58.199 enjoyed our conversations. Thank you again for 01:19:58.199 --> 01:20:01.319 having me here. All right, Melissa, have a great 01:20:01.319 --> 01:20:38.739 day. You too. Bye for now. To get in touch with 01:20:38.739 --> 01:20:39.979 York, head to our website.