Welcome back to The Rate of Change with York
Wealth Management. As advisors to some of the
wealthiest families in the country, The Rate
of Change is a podcast designed to help you in
the pursuit of building long -term wealth through
the insights of some of the brightest minds in
asset management. I'm your host Murdoch Gaddi,
and in today's broadcast, we're speaking with
Bo Zhang, one of the three managing partners
at Initium within the Hasen and Huang family
office. Must say everyone, If you're an advisor
and investor or you're currently in the space,
I think you're really going to enjoy today's
conversation. Um, and you may be thinking the
name hasten and Huang within certain circles,
uh, really rings a bell to begin with. You're
right. The hasten group founded by Ian hasten.
has established a 40 -year -old reputation for
setting industry precedents. Most notably, Hasen
was the first private developer to recognize
the potential of Darling Harbour. Their development
essentially has transformed the inner city and
most notably, when it was complete, was opened
by, yes, the Queen of England. Other high -profile
projects include Sky Garden in Sydney's Pitt
Street Mall, the Manly Wharf Retail Development,
Hoggers Town Shopping Center, Cremons Metropole
Shopping Center, Hildale Southpoint Shopping
Center. Look, if I list them all, we're going
to be here all day, but they're very, very high
profile. On that note, you may not necessarily
be familiar with the Huangs, but they have three
decades of operation, both internationally and
domestically, and they're just as well regarded.
The Huang group founded by James Huang stands
as a multi -faceted conglomerate, uniting various
entities, spanning property, financial investments,
and community -based developments. The Huang
group has founded a strong legacy and reputation
with the Chinese and the Australian Chinese communities
marked by the creation of several renowned entire
communities. So why did I want to go on? Well,
Bo is very interesting in his own right. He's
been in the banking sector for a long time and
I just love speaking with Bo regarding, you know,
how the thought process works about, you know,
working with families. So alongside his partners
Max Hasen and Victor Huang, the sons of the prominent
patriarchs mentioned, they are quite literally
embracing the essence of next -gen multi -generational
wealth through a joint family office. Join us
and hear from Bo's extensive experience in banking
as we discuss how initiatives go on about forging
this new generation of wealth, whilst honoring
family legacy. Bit of fun. Bo unpacks the how.
This is the most interesting part. right? So
it's not just about the family office, but you
know, how do they go about it? So initiative
is essentially the company, you know, within
the family office, and they primarily invest
in retail property centers focusing predominantly
on prime locations on the east of seaboard, such
as Bondi. Mossman Manley St. Leonard's, whilst
the H &H family office has expanded its interest
across nearly all financial services, which create
solutions for high noble families. These include
the Commercial Property Fund, which targets a
return of seven and a half to eight and a half
percent per annum. Funded under management is
53 million, 100 % weighted occupancy rate, 20
% co -investment and a five year weighted average
lease expiry. Secondly, they've got a private
credit fund with a direct deal approach, which
targets double digit returns per annum. Thirdly,
the Mossman Development Project Fund was $15
million raised, projects a 15 % return per annum
with a 30 to 50 % co -investment with a two to
four year hold. Initium also provides access
to other upcoming direct development funds projects
on an ad hoc basis. Essentially, you know, after
they do all the checks and the deal lands, they
send it out to their clients. And finally, they
are expanding organically because their clients
are just asking for it. And furthermore, they're
growing through acquisition into the high net
worth, high net worth wealth management and financial
advisory space. Like I said, it's gonna it's
a very, very interesting column. conversation
and lots to unpack. So you know, please join
us. It's going to be a great conversation. So
before we get into this podcast, please remember,
this podcast is intended for entertainment purposes
only and should be only should not be taken as
any form of advice. Be sure to listen to this
glamour at the end of the broadcast and keep
your feedback coming. You can reach me at mgassi
at ywm .com .au As always, I hope you enjoy this
conversation as much as I did, so sit back, relax,
and enjoy. Bo Zhang, welcome to the rate of change
with York Wealth Management. Thank you, Murdoch.
Thanks for having me. Good to have you here,
Bo. Beautiful day like today. So why don't we,
as always, start things off and tell us a little
bit about Bo and how you got into the wild world
of financial markets. A little bit about myself.
I've been banking and finance for about 15, 16
years or so. I started actually working in stock
breaking. Later, I started doing a lot of this
single stock lens through margin lending. for
a lot of the high net worth family office clients.
At the time I was actually an internal BDM rather
than an external BDM. So I had to manage a lot
of relationships with a lot of the private bankers.
We had a good relationship. Eventually basically
we moved on to the point where they really wanted
me to join, but then most of them got poached
to Credit Suisse. And what happened there was
they decided to bring me a crossover. with them,
two credit strips. So that sort of just transpired
my career from, you know, half the time, half
of my career doing stock broking, margin ending
too later, I started doing private banking. So
when I started doing private banking for about,
I think, I did it for about at least eight to
nine years of it. Throughout that time, you know,
slowly started building up my career through
that. No path, yeah. Yeah, right. So and which
bank were you at after Credit Suisse? I was at
Westpac. Westpac. Yeah. So Westpac private. I
think the specific part about myself, I was very
different to a lot of other people. I myself,
I didn't have the good grades. So I had to work
my way up. I had to take at least 80 to 100 phone
calls every day back in the days, I remembered
very clearly. I started at the beginning where
I was taking phone calls, just doing trade executions,
answering custom service inquiries. Obviously
later, you move your way up in the corporate
ladder. But the most important, and the very
big difference for me, I guess, specifically
was the transition from ANZ to Credit Suisse.
I had a lot of these direct clients that was
single stock. you know, single stock, I did a
lot of single stock lens, sorry. And a lot of
these clients are actually, you know, high net
worth individuals, you know, listed companies,
CEOs, major shareholders. And I thought I had
a good relationship with them because obviously
they were dealing with me on the margin and the
end. So naturally when I thought I'm moving to
Credit Suisse, it would have been an easy transition
where I could just pick up the phone, give them
a call and said, you know, I'm at Credit Suisse
and you know, everything should be, should be,
should be quite smooth. And in that first year,
I think in the first six months of my time at
Critisys, that was probably the toughest time
in my career that I experienced. Nobody came
across from ANZ. Nobody wanted to do deals with
me. Nobody wanted to do business with me because
I didn't hold that end relationship. So that
sort of just made me understand that relationship
is the key term and the most important part in
business and in banking. Relationship gets loosely
used in banking. You know, they say they're relationship
director, relationship manager, but really, who
really owns that relationship? Is it the bank
or you personally? And most of the time, it's
actually the banks, not the person managing the
relationship. So at the time when I started Critters,
I didn't have a book. I had to build a book up.
That was very tough. The platform wasn't specifically
catered to the type of client I wanted. We wanted.
from the sort of the Asian segment that I was
in. So I thought to myself, you know, do I continue
to stay in a big international investment bank
and try to hustle my way through managing the
portfolios? Hopefully, you know, we'll get a
few big high net worth clients and family offices,
all China with families, whatnot. Or I go back
to a major bank, which will be smooth sailing.
I believe, because obviously the major banks
offers the transactional banking, the lending,
the wealth management. And at the time, Westpac
Private was actually the best one on the market
that allowed you to do all of that, which is
quite similar to, of course, the likes of Credit
Suisse. Whereas in terms of the investment, the
whole investment availability was much less.
in comparison to Credit Suisse, but it was okay.
I mean, it was more around the specific ones
that was available that met more than having
a whole universe of investments where nobody
knows who to go to or what to choose sometimes.
So that transition actually changed, I must admit.
Because I remember when I was at Credit Suisse,
it was a time I got to the point where literally
I sat in the corner of my room and I thought,
how the hell Am I not getting deals done? You
know, I've always done so well in banking, always
done so well in sales. Why am I not getting it
done? So, you know, a lot of different variables
added together. I thought I didn't have the relationships.
I need to build it. So I changed my strategy.
When I went to Westpac, I told them that I didn't
want any clients. So I said specifically, I wanted
to go out there and build my own network, build
my own clients. And through that, I built a lot
of external parties, external networks. and built
my own personal brand in that sort of high net
worth space amongst referral partners amongst
fellow clients which really propelled my career
and I have to say you know I'm glad I made that
move because if I didn't maybe perhaps today
I was still trying I might be still struggling
just because you know no matter how good you
are in sales you know the product the platform
everything else also needs to come together as
one before It sort of makes sense. So, so I just
started rambling off. It's half the fun of it.
No, but it's interesting something you touched
on. Like we've had a number of great guests and
fund managers on that have all had a similar
path. My dad worked for NAB, but he was one of
the survivors that actually did finish his career
at NAB. But this generation, you're seeing a
lot of people, especially in the growth -based
lending or property -based lending, who built
up very good careers and relationships at the
banks like Westpac, all taking that and taking
those relationships and then going private. Would
you say that that transition is not necessarily
because you want to go private, it's maybe because
the banks chose not to look after the clients
in a way that you think is the right way to look
after them? Maybe you had to find a different
way of doing it? What do you think? It's a very
good question, Dan Meadow. I had the mentality
when I joined Westpac Private that I wanted to
do private eventually. I had that set in the
back of my mind. I'm going to go out there, start
my own business, run my own show. Why? For the
reason I know that I need to give it a shot to
have that mentality that I need to go out there
and start hustling. As much as hustling the bank,
being in the private world, it's a totally different
sort of setting, environment. So I just kept
that in the back of my mind. I mean, the banks
obviously do what they do to look after their
clients, but obviously it's a very big organization.
There's a lot of decision -making that's out
of your control. And I like to control my own
destiny, but it's going to be the right timing,
right opportunity. So from that perspective,
I think that's the more important aspect. Now,
I guess in terms of a lot of people that's been
banking, They think they have a great relationship
with clients, but when they leave the bank, sometimes
it's a big change. Why I say that is because
sometimes a lot of clients, when you were a banker,
still see you as the bank, but they don't see
you as Bo. So when I was in banking, I made sure
that I knew from the get -go that they need to
know Bo and not the bank, although they know
which bank. And surprisingly, I tell you what,
some of my clients still don't know which bank
I was in. Even after eight years, they still
ask me, which bank were you in? Which bank am
I when I was still in banking? But that to me
proves that my personal brand worked with this
client because they only cared about who Bo is.
And if Bo said, okay, this is it, then this is
it. Rather than saying, if Westpac said this,
then we believe what Westpac says. Because what's
going to happen is, as soon as I get out of that,
sort of that banking environment become private,
a lot of those clients that don't buy the personal
brand, don't know the personal brand will still
stick to Westpac. 110%, I guarantee that. I mean,
people can prove me wrong, but so far, you know,
I see that very clearly. And I think a lot of
people see that clearly. Okay. I have to, I completely
have to agree with you because like, you know,
when I left showing partners and went and went
to York, you know, um, I managed to take not
many clients with me because, and what's hilarious,
I brought them from a small shop to a large shop.
But when they're large shop, one of my clients
then said, I guess, oh, Murdock, I can't join
you now because, you know, I'm at a very good
prestigious firm. Like, how do you think you
got that? I introduced them to you. Oh, but you
know what I mean? That type of thing. But what's
interesting, what you're touching on is, and
this is what probably a lot of people are listening
to now is it's a simple question. Who do I trust?
Do I trust the advisor that's looking after me
or do I trust the shop? And why I think that's
so important is you go speak to any firm on the
market and speak to a client of any of those
firm. One will say that I had a good relationship.
One will say I had a bad relationship. And wouldn't
you agree? It's not necessarily the firm to an
extent. It's potentially the individual who they're
dealing with at that particular place. So if
anyone's listening out there considering, you
know, who do I deal with? I would absolutely
100%. Back the idea and this is for funds management
advisory anything where you're essentially looking
for a middleman to help facilitate a Transaction
or you know do all the legwork put in a silver
platter for you to make a decision Back the person
don't back the house wouldn't you agree? I totally
agree I've had a few of my clients that always
said to me it's person we're investing in not
the product not the firm Although I do represent
the product. I am the product I am the firm but
still at the end of the day They it's they still
come back and said well we're investing in you
Um, you know, there's a trust, there's a level,
there's a relationship. So I totally agree 110%.
I kind of agree. And why this becomes fun when
you've done all this, you know, with a bank and
build those relationships and they trust you.
And let's get to the good bit. Why, why, why
I brought you, why I brought you onto the podcast,
Bo is essentially with these relationships, you've
done something really, really quite interesting,
right? Um, which is essentially you're working
with a very prominent a family office from property
background, right? But what's very interesting
about this is not just a single family office,
it's a joint family office, right? That, you
know, and it's a definition of intergenerational
wealth as well, which I find, you know, fascinating.
So maybe let's begin this take a step back. For
people that don't know what is a family office,
right? And why have they gone a joint family
office? And who is the family office? Yes, yes.
I think I'll put it in layman's terms. To me,
family office is an individual family that's
built so much wealth that they can't manage it
themselves personally. So let's put it in that.
If you're worth 300 million plus, to me, that's
a family office. Anything below, I think you
can still manage your wealth quite well within
the family. But when you start moving that fund,
that 300 million plus, it gets more complicated.
You need a lot more professionals around you,
not more people around you. So really, that's
how I see it. Your personal wealth has grown
so large that you need a team of professionals,
even your family members, to help you manage
those individual wealth. If you're only worth,
say, a couple million dollars, I'm sure you can
manage it yourself. So that, to me, is what I
call family wealth. Obviously, apart from that,
You have those individual parts about family
office governance, tax governance for the family
office, legal, estate planning, wealth management,
all of that stuff will be part of that, which
forms the family office. But in reality, what
is it? It's basically that. Just very, very wealthy
people or family with a lot of money that can't
manage it themselves and they need a bunch of
people to help them run that particular office,
which is the family. Hope that makes sense. Makes
perfect sense. So the family which you're working
with. Yes, yes. Why this family? Who are the
family? You know, maybe let's start there. You
know, nice and simple. Who are the families?
Why these families in particular? Yeah, I mean,
again, it comes back to that relationship piece,
right? You know, you asked Murdoch. So these
are actually existing clients on my, both the
Hasen family and the Huang family. We've known
each other for seven or eight years, at least.
Throughout the time I've known the patriarchs
and the matriarchs and later getting to know
the kids, we've built a very good rapport relationship.
And I think it's about the level of trust we've
built with each other, understanding what each
other needs, what they need in this market, what
I want. what I need as well. And I think everything
sort of connected together. And when you connect
it together, that's when we've decided, hey,
let's start up a firm together. But as you know,
the Matriarchs and Patriarchs, they've made their
money, they've made their wealth. There's really
no need for them to go and try and make more
money because they are already on the scene.
For a bit of context, right? So who is Ian Hasing?
And then, you know, who is the Huang family and
how did they make their money? People would find
that quite interesting. Are they entrepreneurs?
Are they property? Like how? Correct. So, you
know, I guess the Heisen family, obviously they
were one of the very first property entrepreneurs
in Australia. Harbourside shopping centre was
built by them. You mean Darling Harbour, yeah?
Darling Harbour. Just paint the picture. I think
half of Darling Harbour was built by them. Back
in the days, during the 80s, that was a $2 billion
project. The Queen came down for the opening.
So obviously, that was the very big project that
they did, the most famous one. They then went
and did quite a number of other famous properties.
So they're very well -known in this property
landscape, right? I met the Heisen family through
the Huang family, right? In the Huang family,
they've always been property and financial services
in China. They know this market in China. but
they don't know it so well in Australia. And
the two families, they know each other very well
because obviously Victor and Max, my two partners,
they went to private school together. They boarded
together, actually. So it just made a lot of
sense where everything just sort of connected,
where property mixed with finance, finance mixed
with property, and everything just sort of just...
interrelated and connected and that's how we
all really got together got to know each other
and thought okay we have that capability in property
we understand finance and we also have that capability
if we really need to obviously having me around
managing wealth at the time why don't we put
the two together and then create a fund which
is obviously commercial property fund so before
that obviously we were doing a lot of that They
were doing a lot of that from a private office
perspective. We've tested the market. We've seen
results. We've seen our own track records. And
we think, OK, now it's time to make a commercial.
Because how I think of it is no matter how wealthy
you are, there's always going to be a cap on
how much money you're willing to spend. If you're
worth a billion dollars, you're not going to
go spend a billion dollars. You probably spend
a portion of that. And what do you do after you
spend that portion and you want to continue to
build up the whole portfolio along with others,
then you start raising capital. How would you
raise it? You raise it through a commercial property.
Or, of course, you can do it privately amongst
different families. However, we really wanted
to propel ourselves to become a recognizable
brand. And, of course, for people to recognize
the products that we offer as part of this Pathela
brand. which is initiative, of course. Yeah.
Okay. So the family office is Heisen and Huang
family office, right? And then the firm is initiative.
And just for just to paint the picture, it's
began as on the property side. So you got lending
on the credit side, and then you got direct private
property, and then you got the commercial fund.
But now it's You've kind of expanded quite a
bit. It's practically becoming a full financial
advisory one -stop -shop offering. The dream,
the dream where, and I love this dream as well,
where essentially you just have to go to one
place and all your needs are taken care of. But
let's just take a step back for a second, right?
So I always like to discuss the mechanics of
the funds. Let's just begin with a commercial
property fund, because you've also brought across
the chief investment officer that helps with
the SMAs, who I know quite well is... very, very
intelligent in this particular space, but what,
what is the initial commercial property fund?
What are the mechanics behind it and how's the
structure? What returns, you know, more importantly,
um, uh, where are you focusing? Is this Queensland?
Is it Sydney? You know, why, like, you know,
maybe give everyone a bit of an idea of what's
happening with the fund. Yeah. Yeah. I mean,
so for the commercial property fund, we specifically
invest in retail commercial medium to large format
stores. high street retail, I'll call it, right
across the eastern seaboard of Australia. We
see this market as a market that's quite niche.
We have done enough research to see that there
hasn't been many fire managers out there that
focuses on this market or in this area. We see
the likes of Dex's, Charter Hall, Centuria, Corvall,
they do a lot of the office, hospitals, industrial
shopping centers. But really, you don't see really
any fund managers that has investments into retail
commercial shopfronts. So we wanted to be that
particular niche. We want to be known to be as
part of that particular niche. So hence the reason
why we decided to, of course, start up the fund
in that regard. So our focus is in the eastern
seaboard of Australia. The main areas that we
look at is North Shore, Northern Beaches, and
Eastern Suburbs. Because we believe in these
particular areas, they obviously are very affluent
areas. Retail commercial space in these particular
areas are performing much better than some of
the other areas. In particular, I had clients
that had questions around the retail commercial
market. We, us ourselves in Australia, we enjoy
the recreational activities. We enjoy going out.
So, it's very different to some of the areas,
some other countries overseas where people are
very used to just using their mobile, ordering
food, buying groceries, buying, you know, anything
and everything. So, that's why we chose the likes
of Bondi Manly, you know, St. Leland's for example.
where there's a lot of foot traffic in most of
these commercial retail stores that we host at
the moment. So the over return on our fund at
the moment is around 7 .5 % to 8 .5%. And so
far, all the tenants have been quite consistent
in terms of running their own business, in terms
of managing it, in terms of, of course, maintaining
it. I think that's the most important part. So
in that regard, we're hoping that we can continue
to see more opportunities on the market. Obviously,
rates has been quite high at the moment. So it's
a lot harder to locate good opportunities, but
I'm sure there's obviously a lot more that will
come about. And of course, Max, my partner, his
main focus is always him and his team is always
looking for you know, sites or shops or wherever
that we think is suitable for the fund. So yeah.
Definitely going to get Max on to discuss, you
know, how he looks at particular opportunities,
but just with, let's just break down some of
the mechanics because a lot of people will be
interested in this. So it's targeting seven and
a half to eight and a half percent. Is that purely
growth? Is there an income component? Like how
does that work? Yeah. So four to four and a half
percent, that's the rental yield that gets paid
monthly. The three and a half to four percent.
That's based on valuation. So that'll get valued
once a year. Obviously, right now, we are in
an environment that's very tough in terms of
high interest rates. Obviously, the demand for
any commercial or any residential has sort of
slowed down. But as soon as we start seeing the
interest rate drop, we're going to see a lot
of demand. Well, the Fed's talking about it now,
right? And essentially, Australia follows the
Fed. So that's going to be quite an interesting.
How many rate cuts, I believe? they're looking
at, I think Coggins was discussing. I think three
at least we're hoping in the coming year. We
don't believe that that will start at the end
of the year this year, but hopefully beginning
of the second quarter of next year we'll start
seeing that sort of come down a little bit. Soon
as we see that, we're going to see all these
prices slowly So that's what people should consider
in terms of, of course, investing these type
of products or I should say asset class. Most
of these type of investments, you generally give
it at least five years, realistically. It is
very defensive. It's obviously not like your
stocks where you can see the prices of these
particular assets go up and down. Generally speaking,
you need to give at least five years plus. And
once you sort of see that, then you'll say, OK,
it's like you're holding individual assets yourself.
But have a think about if you only have a very
limited amount of capital, although, of course,
you are high net worth, but still there are a
limited amount of liquid capital, liquid cash,
then you may not go one and put all your money
in one asset. For example, one of the assets
are worth $16 million. Are you going to put $16
million into it? Maybe not. You want to be part
owners of it. So you may only want to put $500
,000, $1 million. Maybe that's something that
you may be more interested in. You still get
your return. You're still owner of the particular
asset. But you just don't have to take the full
risk and the full responsibility of managing
it. So that's the difference, I believe. So what
are the fees in the fund and what's the I believe
there's a wholesale and then there's a retail
feeder funds Yes, the lock -ins so locking period
for the wholesale fund It is on two years generally
speaking Two years is already a very tight timeframe
for the say management fees 0 .5 % Obviously,
we've got a retail feeder. That's enough month
to month basis and of course If anybody's interested
to find out more, we're happy to provide more
information on that, of course. Yeah. Nice. So
that's okay. So that's the, there's a lot of,
a lot of great fund managers I'm seeing that
have, it's not just one particular thing they're
doing. So this is the commercial property with
the credit side. Right. So then I believe you're
exploring doing another fund as well. And then
also you have the credit lending. So how does
your private credit and then you got private
property direct deals. So how does that work?
We've got three different products. So one obviously
is the commercial property fund we spoke about
just then, the set, hold, forget type of investments
where you're just holding that, getting your
rental yield and looking forward to that capital
upside. Blue chip property, Mossman, Manly, nice
and chilled. Nice and easy. Second part of our
product obviously is the direct project development
funds. We've got a site of Mossman. The fun part.
Yeah, so we've got a site in Mossman. We're looking
to buy another site in Mossman. Hopefully we
can exchange that today. But essentially, it's
just buying it, knocking it down, rebuilding
it. For example, the one on Military Road, four
levels, luxury high -end apartments with two
commercial shops on the bottom, right in the
heart of Mossman. So that's project development.
That's a little bit different with a product
like that. We offer 15 % returns and that's on
equity and then in 50 50 on the catch -up. So
We will continue to have let's catch up. Sorry.
So Essentially very simple We take 15 Investor
takes 15 if anything over there's a 50 50 split
between us. Yeah, right investor investor. Yep
So, okay, so you've done a project and this is
a talk about a new project So just you look at
the numbers on the last project you did What
are the numbers from that just to paint the picture?
So if we put the numbers, we're talking about
dollar figures, or we're talking about just in
terms of percentage return? Percentages and dollar
figures. I'm just trying to get an idea. It's
not going to be a direct deal. Very easy. So
just think of it as this. If a client invests
$100 ,000, hypothetically speaking, the return
on that is 50 % per annum. It's a four -year
project. 15. So four -year project, what does
that mean? So after four years, 60 % return.
It's just direct versus us. So from our perspective
then, they'll receive 15, we'll receive 15. So
you're technically looking at a 30 % return per
annum over four years. So that's about 120%.
But we get a 50 -50 split. So they get 60 % of
it. We get 60 % of it. We are, of course, ourselves
the fire manager and, of course, the development
manager. As you know, Initium has the Initium
management, which is the development manager.
The Initium capital being our manager, of course.
So there's that direct interrelation with our
project development. So all of our project developments
are set up in that way. We know the developments
ourselves very well. We have a full team. We
have our head of project development. We have
a leasing manager. We've got two acquisition
managers. So everything's all hosted in -house.
in particular. So yes, that's the exciting part,
but obviously it comes with a lot of risk because,
you know, a four -year project, what does that
mean? It means that you've got to take on development
risk. There's opportunity risk, there's a lot
of timing risk, there's a lot of different components
that comes into it. So it's suitable for a lot
of people that's looking for that high growth,
high return, and willing to take some risk. and
suitable for people that knows property to a
certain degree or wants to co -participate. So
we get a lot of clients that has co -participated
in this particular fund for the reason that they
want it again to property, they want it again
to development, but they just don't have that
capacity or the capital or even the relationships
in all aspects throughout the development stages.
So hence the reason why they've decided to just
go with us. So that deal, how much was raised
for that deal? For the three assets, $15 million
in total. And the new asset in Mossman right
now? That one's about $13 million. $13 million.
We do like this part of the market because...
What is the part of the market? Because we had
a recent guest on as well that was discussing
doing say Light Industrial or doing Amazon style
warehouses or... land subdivision and then obviously
CBD right now is incredibly difficult. That's
very, very difficult, but what is this sub asset
class? Like by definition, so you take these
townhouses or businesses which are buying, what
is the actual product which you're building on
it? Like what is it? Yeah. So let's just take
it as an example. The one on military road, that's
three commercial shops. Three commercial shops.
Is there a living, like apartments, houses? No,
nothing at all. Just pure commercial shops. Three
in a row that we've purchased, that we're going
to knock down and rebuild where we can build
four levels of residential. Apologies. That's
what I meant. Like you're buying the, yes. And
what are you putting on top of them? Yeah. What's
the development? So we're going to knock it down.
We're going to build two commercial shops on
the bottom and four levels on top. Oh, residential.
Residential, yes. The high -end quality residential.
High -end quality ones, yes. High -quality residential.
The other one over in, the other one in Mossman
that we're looking to, hopefully we can exchange
today, that one is a block of commercial apartments.
So we're gonna get a new DA, most definitely
we'll knock down rebuild it to repurpose it,
obviously to a much higher quality build. You
always see us doing a lot of these type of development
projects, because there's a lot of these type
of deals out on the market, off market, of course,
not on market. Well, the one in Mossman makes
sense. You're essentially taking three shops,
putting back three shops, but then you're going
up on the residential. Yes, correct. It just
makes sense. Yeah. And everybody wants to get
into that area. Everyone wants to get in, but
there's just no deals. It's hard to find. Then
you get priced out. The other thing which I find
great about the two prong relationship is you
have the Hason family, which is renowned, everyone
knows the name. Then you have the Wang family.
It's a nice balance. Come on, let's be honest.
This upper rate national is very clicky. Even
if you got the money and you want to do the deal
with them, they might not know who you are and
just sell to you. Isn't that a problem? organizing,
if even people want to do this thing. Yeah, I
mean, that is the part. So that's why Maxis is
relationships in that sort of area, in that particular
space. And that's a space that, you know, if
you ask me to get into it, it's definitely not
my particular area because the relationships
from that end is totally different to the relationship
we have, of course, the capital front. So that
being said, Um, it's what gets things done. You
know, um, I think I believe a lot of things are
done based on relationship, based on who you
know. Um, and like you said, it's, it's a clique.
Um, and anywhere you go, it's always going to
be like that. So can't change that, um, as much
as you want to change that, but that's the harsh
reality, you know. You go to Noosa, it's the
Melbourne mafia. Yeah, it is what it is. Right.
But that's business, right? And again, this is
the benefit and this is why I wanted to, you
know, discuss, like you discuss how family offices
and some people asked us before, like, you know,
is it a good idea to have a joint family office?
You say the minimum is 300 ones, you've got 150
each. You can't just put two families together
that, you know, don't click, but you know, clearly
the synergies make sense, which I find quite
interesting. The synergy makes sense is because
of interest alignment. Interest alignment is
very important. in business to me, because if
our interests are the same, our focuses are the
same, our goals are the same, then there won't
be any doubts amongst each other. I will not
second guess what Victor or Max do. They will
not second guess what I do, because that's of
course how you manage that, right? And manage
that, meaning the business and interest alignment
is everything. It's key to everything. Um, and
I see that very clearly, you know, and I'm sure
a lot of people will agree, um, why businesses
do well, do better or some just don't. The ones
that I don't, I see the one that's that, that
don't end up succeeding or just don't end up
surviving. I see is just a lot of different ideas.
There's no direct alignment in interest. One
partner may say this, the other may want that
never, never, never, never gets a guy. So. That's
the most important part, I believe. Or if both
people are offensive and no one's defensive.
You know what I mean? Ying Yang works nicely.
Yes, correct. Ying Yang works very, very, very
nicely. So there's that side, which is very interesting.
Then you've got the credit side, because you
can't walk down the street these days without,
you know... And look, the banks, as you mentioned
before, have created this problem where essentially
they just refuse to lend in particular areas,
right? So there were so many great... um, firms,
uh, offering direct or, you know, via a fund,
um, on the credit lens side. But like, say, as
an example, you're, you're a wealthy family.
You want to do something with it, with a house.
They can come to an issue to do a direct private
credit. How does that work? Yeah. So on the private
credit fund, why we started and decided to do
private credit is because apologies. Is it a
fund or is it direct? It's a fund. It's a fund,
okay. But it's single asset. So it's not a pooled
fund. It's single asset. So single asset deals.
Right. Yeah. So meaning that if somebody wants
to borrow on a piece of land, we'll directly
lend to that borrower. Of course, it's a single
asset deal, but we'll still package it and put
it together as a fund. And is this a fund an
investor can allocate capital? How much is in
that fund currently? The one that we've recently
done is about 26 million. And I should have asked
before, how much is in the commercial fund? The
commercial property fund, we've got about 53
million. So 53 there, 20. And then for the Mossman
development projects, it's obviously 50 million
there, right? So quite a lot of allocations in
different products. Right now for the private
credit fund, we are only focusing on single asset
deals. Eventually we'll have a pooled basis.
Why we started doing the private credit fund
mainly is because we see where the market is
at. You're going to move with the market as well.
Everybody wants again private credit because
the investors want double digit returns. That's
all they want to see. So we thought, okay, that
could be an area that we could get into. We know
about credit. I came from banking. Under lending
Max has been property. So Essentially, Max will
just look at the deal is that do his own feasibility
and he'll feel okay It's a worthwhile deal for
us to take on if we were to lend if he says yes
Then I'll look at from the financial markets
perspective and add parameters around it risk
parameters around to ensure that they can pay
about on time So, you know a two -pronged approach
essentially on the private credit fund This question
is just for me. I've always been No, I'm not
a banker. My old man was, right? But, you know,
he always told me, just look at senior secured,
like, you know, ensure that whatever you do,
if everything goes to pot, you can reach in and
take assets, like just basic, simple. But you've
also just done recently a second mortgage, right?
So can you explain to me why you felt comfortable
doing a second mortgage where As an example,
my old man is like, never touch that stuff. You
can't get your money back. But like, why, why
would you do that? Why do you feel comfortable
with that? Why I feel comfortable was because
it was in Point Piper. Point Piper is the location
of the insert. Yeah. I say it's in Point Piper.
Point Piper goes well, I think. So that's thought
one. Second of all, it was short dated. Thirdly,
I know the borrower very well. I was the borrower's
banker. And investors, through one way or another,
knows about the borrower too. And we know what
it's used for. We know his asset position. Even
if we take on a position, including the first
mortgage with the second mortgage, the LVR parameters
are still within a very safe sort of area. On
top of that, we took a discount on the asset
So we took 10 million dollars off the asset,
rather than us assessing based on the valuation.
What does that mean, sorry? There's a lot of
complexity with this deal, but long story short,
the property itself is two levels. Two levels
combined together is worth X amount of dollars.
But if you were to value them individually, they're
worth much less. All right. Yes. Because to be
sold together, they're worth much more. But selling
individually is worth much less. So I took the
approach of the much less approach. So let's
just say if it's worth $100 million, right? Together.
Is it worth $100 million? Together? Yeah. But
individually, they're not worth $50 million each.
Much less than that. So I took the conservative
approach and then built risk parameters around
that. So we felt comfortable about that. So that's
the reason why. Yes, we know that Point Piper
doesn't sell overnight. Obviously, it's worth
that value. It takes time. People need to go
out, check it out. It's not like buying vegetables
out of a grocery store, right? But at least you
know the value is going to be there. It's the
most prime location you can be. Well, they also
the other interesting thing like, you know, from
my line of thing, as I like to say, I know 70
% about everything. So I know nothing. But what
I like to always look at is just macro trends
kind of came from a currency background. You
see, watch them how the money moves and why policies.
But if you look at places like Russia, China,
or other countries, they can just reach into
any point in time and seize your assets. So isn't
there a culture as well? Because I don't deal
with this community, you deal very much with
the high end. Isn't it potentially as well that
they see the West and property is essentially
you know, better than a bank in say China, right?
So hypothetically, if someone's got a billion
dollars, because they made a crap ton of money
building properties throughout South Beijing
that, you know, parking $100 million in a point
Piper. Asset which is essentially property back
There's laws to stop seizures and all that type
of stuff is potentially safer than having it
in other jurisdictions It's national jurisdictions.
Yeah, I mean, is that a thought process? Yeah,
I mean, I guess I I'm not speaking on their behalf
I'll be clear about that. But what I see from
a very third -person perspective is yes, we see
the Like so Australia is a very safe country.
It's like a safe haven in comparison to our other
jurisdictions. Um, and I think it's basically
that's the only reason why. Yeah, right. It is
the only reason why. This is a joke running around.
You go on a harbor cruise for new years or whatever,
and you look around and you'd like to see, you
see like in a building, you know, beautiful building,
like you got prime fireworks and you see only
like three levels out of like 20 with lights
on. Yeah, exactly. It's like that. It's like
it's like that. And these things are changed.
They're like five, 15, 20 million dollar apartments.
That's bad. You know, and that's why it's a bubble,
you know, and the bubbles burst. So the smarter
ones put on them for making those right decisions
10, 20 years ago. I'm not saying the ones that
didn't make those decisions now are not smart,
but it's just that maybe at the time wasn't right
for them potentially. So that being said, I believe
the likes of Australia, especially for a lot
of the new migrants, whether you're from China
or wherever else in the world, it's a great area
to, of course, park your capital. You're definitely
not going to be able to see those crazy returns
like what you see overseas, but at least you
know your money's safe. We're very well regulated.
Everything's all very transparent. in comparison
to what it's like overseas. So I'm sure anybody,
any high net with families that do come to our
show, they'll feel safe themselves too. Even
if they just leave the money in the bank, I'm
sure they'll feel much safer too. So most of
the, if you see a lot of banks, especially in
China, I see a lot of them just going bust. The
smaller ones, the ones that's not so well recognized.
You see people lining up, knocking on their doors,
trying to... grab whatever they can, all of that.
It's essentially like America before the Federal
Reserve came in. Yeah. There's not much they
could do. It's just how the market has sort of
transpired through that over time. But it is
what it is. That's how different markets are.
I'm not here to make comments on whether it's
good or bad, but I'm sure the ones that made
that decision, they made the right choices or
they made the right choice and they just have
to on with it basically. Yeah, it's just smart
money with capitalism. Yeah, I'm speaking of
capitalism and looking at other areas. You've
also gone into another space, the sorry, actually,
is this just such a maxicide. So you've also
got real estate and mortgage broking as well.
So you're kind of covering all areas of the property.
Yeah. What was the thinking behind that? Yeah.
So like I said, I've been private banking for
so long. I've been banking for so long. we know
this market so well and we thought why don't
we just offer that service on the broken perspective,
the mortgage breaking perspective. Now from Max's
perspective, he knows property so well, his team
knows property so well, why don't they focus
and not focus but put more of their services
out there? Because we get a lot of inquiries
from our clients directly that ask us for these
type of help. I've had clients that ask me, hey
Bo, can you help us manage this particular asset?
And we have done that, help us bring in tenants.
And we have done that. We get clients ask us,
hey, Bo, can you help us with some lending needs?
There's a lot of different lending stuff, anything
and everything. And we thought, OK, why don't
we offer that service? Because obviously, we
ourselves, yes, we are Nishim. Yes, we are a
financial manager. Yes, we offer other services
in financial services. But we are backed by family
office. We know this particular space so well,
so we know what family offices need. We know
what ultra -high net worth, high net worths need.
They don't just look at one part of the aspect
of financial services being wealth management.
They're going to look at property. How do you
manage your property? They're going to look at
lending, borrowing money. They're going to look
at the future in terms of succession planning,
estate planning, a whole suite of works. So I
thought, why don't we offer that as a full package
service and at least When a client walks through
the door, we know that we have that relationship
through one of our services or through one of
our products. And that's how we maintain that
relationship. You know, we are, of course, a
lot different to, you know, your traditional
file managers where the focus is purely directly
on the product, which we are, of course, but
we do also believe that the services that we
have, the added services that we have, is what's
going to also help us maintain the relationship,
because we ourselves have a lot of the high net
worth relationship, family office relationships,
and through that, in that particular, in that
sort of area, it's always about relationship.
So a very, very different way of thinking from
our final end. That's why a lot of things takes
time, I believe, and things take time with us.
But at least you got to stay consistent. If you're
consistent, I'm sure, you know, we eventually
get to where we want to be. I couldn't agree
more. I think we're essentially where everything's
going is a one -stop shop. You have one summer.
Look at the end of the day, everyone is just
a family, right? What does a family need? There's
so many different things that like in the life
cycle of any family, like any family, my family,
your family. But if you can help at the end of
the day, it's not pitching someone a product.
It's like, how can I help you today? And they
go, what's your biggest problem right now? Leave
everything alone. Right? What's your biggest
issue? And if you can help them with that problem
there, then they go, okay, I was very happy with
that relationship you delivered. What else you
got? Right? You know, what else can you do? And
then, okay, from a business perspective, if you
offer three services, the retention rate. staying
with our family increases, which is essentially
the banking model. And then you've also expanded,
I believe, into financial advisory as well, Hunter,
with financial advisory. Yeah. I mean, we believe
private wealth management is important. We wanted
to be in private wealth management for the reason
that... Yeah. As much as I wish everybody wanted
to invest in our fund, it's not the reality.
The reality is everybody has their own thoughts,
thought process, their own thinking. So... We
thought, okay, why don't we provide that service?
Because we obviously know that service very well,
you know, and be able to capture that market
too. Because if our clients that walk through
the door says, oh, you know, we're not interested
in your fund or your product, okay, well, we
can offer the private wealth management piece.
You know, we can do the asset allocation for
you. You can invest into a portfolio that either
you like or we can show you, whatever it may
be. We wanted to be also part of that. Being
part of that also means that there's a lot more
opportunities to be able to get in front of different
clients as well. There's a lot more opportunities
for us to explore more areas as well. And I think,
you know, for one individual family or person
that's high net worth, they're going to need
all of this. They will definitely need property,
property services, finance, financial services,
investment, investment services, lending, lending
services, you know, even from the family office
piece. even family office advisory, you know,
it's everything that we can think of a person
needs, want to be able to cover it. That being
said, want to make sure we can cover everything
well. You know, that's the most important part.
It's not saying, okay, we believe this is going
to help us. We're going to do a bit of that.
We're going to believe that's going to help us.
We're going to do a bit of that. No, we want
to make sure we are good at what we do in every
single part of it. That's what we're trying to
aim to. Yeah. The only one you didn't say was
accounting. Yes, we haven't found any accounts
that we think that can do this part well, but
maybe something down the track that we could
explore potentially. But yes, you're absolutely
right. Accounting is probably another one that
we could look at too. No, I like the idea I've
always had of essentially, it's just a family
at the end of the day. One thing that never sat
well with me is when I was at a particular firm,
I won't say which one. I remember a client came
in, oh, look, I want to buy a property. I got
like $4 million. I want to buy a property. And
one of the advisors turned around and he goes,
oh, I've got a great retail investment trust.
And I'm like, why did you say that? Is that because
you don't get remunerated by referring someone
to go buy a property, which may have been in
their better interest? Or is the retail investment
trust purely because since it's transactional,
it's not a fund and you can't get rid of it in
a fund, you can clip the ticket by sticking in
that asset. Like, you know, what's in their best
interest. So I think at the end of the day, what
resonates really well with myself is what is
in people's best interest and then essentially
having the capacity to essentially help that
family find what they're looking for. Absolutely.
I think doing what's right by the client. But,
you know, especially in this particular market
in the high net worth space, trust is everything.
But trust takes a long time to build. Five years,
10 years, 15 years, however long it is, it takes
a very, very long time. It can be broken, you
know, overnight. So, you know, that's why I never
think about we definitely have to do something
with a client as soon as they walk through the
door. As much as we want to make sure that we
can do something with them, it's not something
we can force because it just takes time and they
get to know us. They at least know what we do.
Over time, they'll do their own personal assessment
and judgment on us. And hopefully, eventually,
somewhere down the trail, we can do some business
together. If not, it's okay. And so what you've
just mentioned, that example, it's probably because
There's probably other reasons behind it. Right.
So yeah. Um, you know, so hopefully, hopefully,
you know, we, we can grow to a certain scale,
a certain space where everything can be hosted
internally through all of our own businesses.
It'll become an internal referral network. We
can have our own internal ecosystem and we can
build an initial ecosystem. It's a great thing.
How many in the team now? Uh, 15. 15. Yeah. Yeah.
Right. Yeah. Yeah, so I mean, we'll continue
to expand. So hopefully, in the coming new year,
the market picks up, meaning that we'll see the
rate starts coming down. That'll also help us
because obviously, it's not the best market right
now at the moment for a lot of fire managers.
Even the property fire managers, everybody is
getting hit quite bad, whether it's on the asset
values or whether on redemption notices. You
see a lot of that. you know, it's all over there
if I want not. So hopefully, you know, we start
seeing the rates come down, you know, and the
commercial property market improves, you know,
even though for the office buildings, hope everybody
will change from a hybrid working environment
to a full time working environment office. I
think that'll be a good thing. That'll help everything
out, you know, because we ourselves, we're part
of this market, but we're obviously in a particular
niche of the market from our commercial property
fund perspective. However, it's still consider
as commercial property market. So I want everything
in this particular market to do well. So, you
know, we can, we can, we can be part of that
too, you know, not in particular, just because
the office, office market is not doing well.
So you should, you should not invest in offices.
I mean, people still want to get into offices.
Of course they do. Yeah. I still see people buying
into offices now. What's the expression? Blood
on the street by property. No one wants to buy
when everything's going to pop, but that's actually
the best time. And I mean, if you're buying at
a time where everything's so high, then what's
the point? For me, how I think of it, if you're
cash stubble, you have the ability to borrow
through the banks, this is probably the right
time. You probably could pick up some prime location
assets at a good price. Because most of these
asset prices, a lot of them has actually devalued
quite a bit. Yeah, it's fascinating. Last question
I'd like to finish with is more than the last,
is what keeps you up at night and what gets you
out of bed in the morning? What keeps me up at
night? Work. I wake up middle of the night, probably
nearly every day, two, three o 'clock in the
morning. I'll sit up and just start thinking
about work, think about things I need to do.
Because every day there's a lot of things that
rush through my head. Sometimes when you're in
the office, everybody knocks on your door, you
slowly forget about things to do. Um, and I set
a to -do list in my head. I sometimes write it
up because it's just too many to -do lists, right?
But at night there's a lot of things that I feel
I just have to wake up and think about it and
start jotting it down and then execute it the
next day. So that keeps me up at night. Um, and
what was the other question? What gets you out
of bed in the morning? Work again. Got a hustle.
You know, that, that that's important. You think
about the things you're going to do during the
nighttime before you go to sleep. When you're
sleeping and as soon as you wake up, the first
thing you do is hustle and execute the things
you've thought about the night before or overnight.
And I think that's how it is. That's life. This
is my life. This is my baby. I want to make sure
we can continue to do well and deliver. We are
in a tough environment, but we'll get through
it. We'll find ways, different avenues, but focus
and continue to hopefully reach our goals. Hit
milestones. If anyone wants to learn more about
Initium or the family office, where do they go?
They can go on, so Initium .com .au. They can
find more about us in terms of the backgrounds
of ourselves individually and families. If it's
about the products in particular and services,
InitiumCapital .com .au, then you'll be able
to locate more information on us. And hopefully
I look forward to hearing from some of our listeners.
Yeah. Well, Bo, thanks for having you on. This
has been great. I really, really enjoyed that
and see you around. Fantastic. Thanks a lot,
Murdoch. Appreciate it. Take it easy, Bo. Thanks,
mate. Any reference to financial product does
not constitute advice or recommendation and before
any action you should seek proper advice from
your financial professional. Australian listeners
should head to www .moneysmart .gov .au to find
more information on obtaining financial advice.
To get in touch with York head to our website
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