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Nick Thompson, welcome to the rate of change with York Wealth Management.

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Thanks for having me.

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Pleasure to be here.

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Nick, many people know who you are in this wild world of finance, but some people may not
be familiar with yourself.

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So why don't we tell everyone a little bit about yourself and how you're going to finance.

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A little bit about myself.

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Yeah, I'm enough to have three kids.

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been in finance for quite some time now, probably longer than I care to put a number to.

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I've been here at Equasia for a

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about nine years before that I was on the investment banking side at a few places.

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I was at UBS, JP Morgan and a small Malaysian bank and I came across here to join some old
colleagues who started EquaJet.

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Before that many, many moons ago I started out life at AMP.

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I worked on their listed property trusts which got taken over in the sort of.

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early 2000s, which was interesting sort of introduction to your corporate career.

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But I've done a few things.

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So all up probably best part of 25 years or so in various forms of other property funds
management or broader funds management and investment banking.

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What's the biggest change that you've seen?

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Biggest change you've seen is, look, in a way,

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The circle sort of continues.

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So there's new ideas or repackaged ideas.

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Things move quicker nowadays.

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There's more access to pockets of capital.

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There's more international investors in things than there was in the past.

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And I think the other thing is there's more sort of investment opportunities for the
average punter out there in terms of be it either

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wholesale or sophisticated, you know, can get way more exposure to things like
international equities or private deals, private equity, private credit than, you know,

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sort of 20, 25 years ago, most people were invested in equities because that's basically
all there was for that they could get access to.

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So I think there's a broader range for people.

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It's more interesting.

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People are more in tune with it as well.

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Superannuation, you know, is well entrenched in our society in terms of

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people managing that for their own retirement, they were empowered by that versus, you
know, if you look back to your parents' generation, they didn't have super, they weren't

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worried about where the markets were going.

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They could also purchase a house for potentially that they could, what was it, two or
three times the income?

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I think what's the average now is this is 11, has it gone to 12 yet?

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It's probably, and it's two incomes now, it's not one.

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It is a two person game, buying a house in Sydney.

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so yes, sorry, it's actually become three person.

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It's you two plus your parents, the grandparents, bank and mom and dad.

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or we do, we'll get onto the portfolio, but we do quite a bit of lending to properties, to
residential.

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And yeah, there's lots of three generation households where, you know, there's
grandparents or somebody who were part of that, effectively part of the household.

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yeah, that's, you know, the rise of property prices is changing some demographics.

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It's changing how people live in terms of

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apartment accommodation and the like versus, you know, the sort of traditional Australian
dream of owning a quarter acre block.

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But the flip side for people is if you can get on the property later and it's a way for
people to create wealth and then invest that wealth for their own retirement.

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leisure and travel and that sort of stuff.

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it's, you know, we're always reasonably optimistic about the future here at Equator, even
though things are expensive.

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Yeah, leisure and travel.

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right, so just came back from holidays and you kind of your half your brains there, half
your brains back here, but a lot of fun.

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No, we're joking off air saying, I think from what I took from that is the biggest change
has probably been the access to assets and then the access to capital and it's kind of

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like just all.

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ramping up and evolving.

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I think we've been joking on lines that discuss it like fantasy football.

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Now it's essentially, it's essentially become fantasy football with asset managers, you
know, it's like take your pick everything's becoming faster, more accessible.

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You know, what do want to do?

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And then finally, who's the best that operates then make your own team, right?

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Yep, pick your own time and you can put together, you know, a wide variety of, of asset
classes that if you want to invest in, you know, from

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international equities through to local private credit, private equity, people, you know,
effectively can get can get access to now if you're a wholesale investor, as opposed to,

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you know, you don't have to be an institution or somebody operating out of New York to get
exposure to a to a Blackstone or a KKR or somebody like that.

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So there's a there's a wide range of choice for people.

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And, you know, that has resulted in in opportunities.

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for advisors to help people navigate that way through.

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It's very different investment opportunity and opportunity set than just having an
equities portfolio and maybe an investment property.

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Nowadays, there's yielding, you're probably one and half or 2 % by the time you take out
all the costs.

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So, I think that's an empowerment of people and that's reflective of not just in
investments.

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things like social media, things like being able to do things over the internet, make
people more empowered.

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I was away recently overseas.

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Where were you I was in the US and I was trying to buy something for my wife and I rang
her and she was, whilst I was at the store, she was on the store website saying, that's

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what I want.

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Like that's amazing as opposed to not that long ago, you you would have been

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sort of you would have been there yourself without being able to sort of have that
contact.

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So people are more empowered in a way it's more democratic that it's not just some special
opportunities for insiders or the wealthy.

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People can get access to pretty much whatever they like.

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And so fast as well.

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I remember when I first traveled, like first hit Europe when I was like 19, if you needed
to do any form of communication, it was completely cut off until you ended up at a, you

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know, cafe, random cafe.

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And you're like, you're spending 10 euro for like an hour.

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You're like, you're like, my god, I've got like 38, like your 300 emails to go through.

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I've looked at this in 21 days.

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People like, are you alive?

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Are you alive?

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What's happened to you?

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Yeah.

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But with whereas now you're, you know, you

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That's probably in a way a bit of the downside of it.

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You're, you're available 24 hours.

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It's just FaceTime.

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It's like, darling, what are you looking at?

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You sure you're buying the right one?

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Okay.

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Look, put me on video.

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Put me on video.

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Turn the camera.

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Not that one.

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I want the other one.

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The other one.

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But at least you get it right.

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At least you get it right.

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That is.

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positive driving force across, you know, multiple things and multiple industry, industry.

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So, and investments and financial services are no different.

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Absolutely.

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Now, before we get into finance, which we'll wax lyrical about, you're into you're into
fantasy as well.

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So I'm a premier league diehard can't help myself.

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It's just the generation we're brought up with.

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What's your poison?

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My poison is AFL fantasy.

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I probably spend much time according to my family doing that, but can be a bit addictive.

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And it's

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It's not wildly different from a financial services portfolio really.

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It really is and is it.

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You're essentially picking players in your team.

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In your team and you only got so much money to spend.

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It's a lot of fun.

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Yeah.

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Who's your picks for this year?

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will be interesting to see.

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Season's about to ramp up?

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You got to wait to see who's injured and who's not.

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I haven't spent that much time as yet.

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We'll see when it all gets a bit closer.

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So if anyone's wondering why we're waxing Lyrical about fantasy, I was joking before.

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Wasn't really joking.

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I was just saying my approach to all of this is practically fantasy football with our fund
managers.

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these days, you know, which goes back to the whole access and everything.

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It's, it's a great time which we live in.

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So back to Equasia, why don't we just give everyone a bit of color around exactly, know,
what the what the house does, you know, what funds are available, like, what's the

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investment philosophy?

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do do?

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Yeah, sort of the the 30 second one minute on us, probably start at the start, which is
usually the best place to begin.

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So 15 years ago,

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we were established, our two principal partners, there's about 20 of us, we're all owners
of the firm in various components, our two principal partners founded Equasia, they were

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running the Australian operations of the Dutch investment bank, ABN Amro, they left there,
started Equasia.

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We basically do two things within Equasia, corporate advisory, which is what we sort of...

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originally first set up for.

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So there we do M &A and IPO advice.

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Over the years, our clients have been people like News Corporation, Transurban, IPH, the
patent attorney business.

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So that business continues on and is a great business and we've got great clients.

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And our first funds that we did were probably about 13 or 14 years ago.

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So

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as well as the corporate advisor, was sort of its own separate business, we can tap into
some of the resources there when we need it.

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We have about 1.3, 1.4 billion dollars of funds under management in credit funds.

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So we did a couple of credit funds coming out of the sort of wreckage of the GFC, where
there was a couple of credit funds that had failed and we took them over and managed those

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out and made some really good returns for our investors.

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Out of that, we started our enhanced credit fund, which is

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I've been going for about 13 years.

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That is a fund that targets sort of cash plus three.

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We have a short term liquidity fund, which is sort of cash plus one and a half.

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And then I run our private investment fund where we, our target return is 10 % after fees
to investors.

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We're coming up on about seven years of running that.

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And just rough side, size wise, we're about $550 million.

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So all of our funds management is on

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is focused on credit.

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The vast majority of our credit investments are asset heavy.

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So the Enhanced Credit Fund invests in lot of mortgages and asset backed loans for things
like auto warehouses.

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And then on the private investment side, we invest in emerging companies and real estate
with a

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with a sort of bias towards hard asset backing.

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if usually first ranking mortgages either a piece of property or a company, as companies,
usually like them to have some sort of assets.

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So we don't sort of do cashflow or people business type lens.

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want some hard assets.

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So the origins of it, the credit side wasn't because I'm going to the origins come really
from the people.

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So one of our partners ran all the markets business at ABN Amro before that at Citigroup
in Australia and offshore.

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So was sort of the heritage of the people.

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And my colleague who's been managing the enhanced credit fund for 13 years, he's been
managing it the whole time.

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He was a credit trader and credit derivatives trader and did it.

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So what my question is, normally what happens, what I've found is this like, I normally
hear from a lot of, you know, other competitors, right?

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You know, they've seen essentially what happened in the GFC.

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And then essentially, the an opportunity was created, right?

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They didn't want to deal with it anymore.

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So you needed a middleman.

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And then essentially, you go get $100 million bank, you know, facility from the bank, and
then you're essentially middleman in the transaction, which makes a lot of sense.

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But did you say that how you got into the credit is because you ended up with a deal with
a deal.

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So so did that happen?

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So there was

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this predated my time, but there was a receiver auction of some failed credit funds.

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put together a small syndicate of family and friends and high net worths, bought that
credit fund, managed it out.

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I think the returns on that were about a 30 % IRR, sort of 2010.

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So was coming, know, late 2010 coming out of the wreckage of the GFC.

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Those investors then went into a second fund and from there we started an open-ended fund.

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So that's probably

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you know, something in terms of in terms of our funds, maybe a little bit different from
from some other people around town is we don't have any leverage in our funds.

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So all of our $1.3 billion is investors money.

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So there's no leverage overlay or anything on that.

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And we sort of haven't been traditional brokers of deals.

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We've always been an investor where we've raised money and then invested on behalf of
investors.

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So that was sort of the origin.

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And in a sort of strange way, each of the funds has almost sort of grown out of one or the
other.

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So our enhanced credit fund was doing quite well.

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was seeing individual standalone deals that they liked the deals, but they weren't
permitted under its mandate.

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So from that, we started the private investment fund.

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I think our first close was...

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about 10 or $15 million.

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So from that, we've grown over that period.

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So we sort of take our time when we seed something.

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But it's reacting to opportunities in the market and trying to marry up the capital with
the opportunities.

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All of our funds, and I'm sure all the people you speak to on the private credit side is
the same, know, is partly driven by the same thing, which are the banking regulations,

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which mean banks do less and less commercial style lending.

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I'd sort of broadly put it, and they're encouraged by their capital charges to do more
mortgages.

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So that has provided us with scope and clients who are looking for funding solutions.

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And there's been a reasonable opportunity set, which has continued to grow.

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So it's just been a natural evolution, essentially.

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a natural evolution and you sort of...

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you sort of tap into those opportunities as they come along.

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The good thing for us is, I think as I touched on, we're staff owned.

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you know, we have things like independent investment committee members and the like, but
we don't report into some corporate in Hong Kong or Zurich or New York or something.

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you know, we manage the business ourselves.

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So that gives you some flexibility to be able to

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to grow and start things and seed them and not be sort of panicked or in a blind rush to
complete things.

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So we've just grown very organically and hopefully grown with our investors.

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What's the expression?

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Show me how someone's remunerating.

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I'll show you how they behave.

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Behave, yeah.

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Yeah, I think that we've got a pretty simple structure here.

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We charge a management fee on our putting aside the corporate advisory stuff, which is
pretty standard.

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We charge a management fee.

216
00:16:45,150 --> 00:16:50,274
And as we're owners of the business, we're incentivised to all work together.

217
00:16:51,696 --> 00:16:58,501
it maybe avoids some of the nuances or difficulties.

218
00:16:58,962 --> 00:17:04,225
If people are on commission and things like that, it's sort of not catch and kill your
own.

219
00:17:04,654 --> 00:17:10,177
which sometimes doesn't engender the greatest sort of collaborative working environment.

220
00:17:10,177 --> 00:17:20,762
And the good thing is almost all of us work together somewhere else before Equasio.

221
00:17:20,762 --> 00:17:24,225
So we've all known each other for a long time.

222
00:17:25,586 --> 00:17:29,768
that's a good opportunity to be able to continue those relationships.

223
00:17:29,768 --> 00:17:32,960
So we're not, you know.

224
00:17:33,134 --> 00:17:35,074
Some of my colleagues have been here since the start.

225
00:17:35,074 --> 00:17:36,714
They've been here 15 years.

226
00:17:38,894 --> 00:17:43,294
It builds an environment where you work together and hopefully grow together.

227
00:17:43,714 --> 00:17:50,454
So the fund which you personally oversees the Equasia Private Investment Fund, right?

228
00:17:50,454 --> 00:17:52,354
So why don't we just dig into the mechanics.

229
00:17:52,514 --> 00:17:57,414
you've covered a little bit, but what exactly does it do?

230
00:17:57,414 --> 00:18:00,074
Why don't we start with what's the performance been, right?

231
00:18:00,074 --> 00:18:01,966
Yeah, I'll give you a rundown.

232
00:18:01,966 --> 00:18:04,466
hopefully what we do and performance.

233
00:18:04,666 --> 00:18:17,426
So last 12 months to December we did, after our fees to investors, we did about 14.6 %
return, which is good, which is very healthy and we're very pleased with.

234
00:18:18,045 --> 00:18:22,906
So we provide usually first rankings.

235
00:18:22,906 --> 00:18:28,186
So for example, at the moment, we've only got 1 % of the book in senior, but we provide
loans.

236
00:18:28,238 --> 00:18:30,958
to across four portfolio components.

237
00:18:30,958 --> 00:18:34,218
So one is real estate, which has always been the biggest component of the portfolio.

238
00:18:34,218 --> 00:18:35,398
That's about 70%.

239
00:18:35,398 --> 00:18:37,398
I'll come back to that in detail.

240
00:18:37,838 --> 00:18:42,678
Emerging companies, so that's where as a business, we have a first ranking mortgage.

241
00:18:43,798 --> 00:18:50,998
We help founders or investors or companies grow, take on an acquisition.

242
00:18:51,218 --> 00:18:55,898
Hopefully they grow and then we get refinanced out by a bank or a sale.

243
00:18:55,938 --> 00:18:57,134
And we can do...

244
00:18:57,134 --> 00:18:58,064
two other components.

245
00:18:58,064 --> 00:19:07,637
One, opportunistic credit is sometimes there's some mispriced securities out there or some
bridge financing, for example.

246
00:19:07,637 --> 00:19:09,848
And we can do convertible notes over the years.

247
00:19:09,848 --> 00:19:12,178
We've only done one or two of those.

248
00:19:13,439 --> 00:19:17,454
So they're the four components of the portfolio that we invest in.

249
00:19:17,454 --> 00:19:23,341
A good chunk of our book is related to real estate.

250
00:19:23,341 --> 00:19:26,286
Our typical real estate loan is a sort of

251
00:19:26,286 --> 00:19:33,366
18 month to 24 month loan at a loan to value ratio of about 60 to 65%.

252
00:19:33,366 --> 00:19:47,066
So we fund things like land subdivisions where we will have a borrower who has, say, sold
25 or 30 % of the lots in pre-sales to end mum and dads.

253
00:19:47,066 --> 00:19:52,306
We help them settle the land and help fund putting in the services.

254
00:19:52,366 --> 00:19:55,826
So roads, sewer, power, electricity,

255
00:19:55,918 --> 00:20:05,565
We don't fund the end housing construction, the home building, the end mom and dad
purchaser who's paid a 10 % deposit.

256
00:20:05,746 --> 00:20:19,537
When we deliver, we, a borrower delivers a clear block of land, they call the deposit, the
deposit's already been paid, they call for settlement, they settle the land, then the mom

257
00:20:19,537 --> 00:20:25,708
and dad engages with a home building company to build their four or five bedroom house.

258
00:20:25,708 --> 00:20:29,820
So a lot of that is in the suburbs of Sydney and Melbourne and Brisbane.

259
00:20:30,321 --> 00:20:33,102
We like those markets.

260
00:20:33,642 --> 00:20:43,747
Housing is expensive, but the supply is very hard with infrastructure councils and
government red tape.

261
00:20:44,088 --> 00:20:55,308
And there has been, over the last few years in particular post COVID, there's been very
healthy levels of migration, which has sort of forced up demand for housing either.

262
00:20:55,308 --> 00:20:58,890
by rental or for home purchases.

263
00:20:58,890 --> 00:21:01,773
So we've done quite a bit of that in the portfolio.

264
00:21:01,773 --> 00:21:06,946
We've done over the years, little bit of construction for apartments.

265
00:21:06,946 --> 00:21:10,408
We've got about two or three apartment projects left.

266
00:21:10,509 --> 00:21:12,980
We've really focused on one area.

267
00:21:12,980 --> 00:21:15,422
Mixed use or just apartments?

268
00:21:15,422 --> 00:21:20,436
Mainly just apartments, often a little bit of retail downstairs.

269
00:21:20,436 --> 00:21:24,238
But most of our apartment stuff that we've done is not sort of the

270
00:21:24,238 --> 00:21:27,998
10 or 15 level apartment, sort of two bedroom apartments.

271
00:21:27,998 --> 00:21:33,478
We sort of have tapped into a bit of a niche in terms of the downsize of market.

272
00:21:33,518 --> 00:21:38,358
So three or four levels, for example, they're going for so much money.

273
00:21:38,358 --> 00:21:38,978
Oh my God.

274
00:21:38,978 --> 00:21:40,297
some in Rose Bay.

275
00:21:40,297 --> 00:21:42,938
We've had them in Brighton and Melrose.

276
00:21:42,938 --> 00:21:45,078
Townhouses are going for like $3 million.

277
00:21:45,558 --> 00:21:46,158
Yeah.

278
00:21:46,158 --> 00:21:51,974
And look, that's, that the construction market has been very difficult because in terms of

279
00:21:52,054 --> 00:21:57,778
supply materials post COVID, then supply labour, construction costs are up a lot.

280
00:21:59,200 --> 00:22:11,580
That market we like, people are selling their family home, they're making a lifestyle
decision and they want a really nice three, sometimes four bedroom apartment, enough room

281
00:22:11,580 --> 00:22:12,971
for the grandkids.

282
00:22:13,612 --> 00:22:21,582
They're not as sensitive to if interest rates go up or down 25 basis points because
they've made a decision where they're

283
00:22:21,582 --> 00:22:24,302
they're moving there for the next stage of their life.

284
00:22:24,302 --> 00:22:26,402
So we've been able to tap into that for a bit.

285
00:22:26,402 --> 00:22:31,902
done a few of those, probably a bit less so at the moment.

286
00:22:32,462 --> 00:22:44,402
We've sort of been able to steer clear or navigate our way from, you know, we haven't done
that sort of three tower, 500 apartments.

287
00:22:44,522 --> 00:22:47,822
That's not where we can complete.

288
00:22:47,822 --> 00:22:49,082
No, I really like the space.

289
00:22:49,082 --> 00:22:51,702
I was chatting to another mate who's a developer, real estate agent.

290
00:22:51,702 --> 00:22:54,642
He was chatting to his mates that knows a bunch of developers.

291
00:22:55,582 --> 00:23:05,822
And to give it a rough number, say 30 of them which he knows, you know, North Shore, out
of the 30, 10 or 11 or 12 of them have actually turned their attention to exactly this

292
00:23:05,822 --> 00:23:07,222
particular market you're discussing.

293
00:23:07,222 --> 00:23:11,842
And what they're looking at predominantly is getting large blocks, putting townhouses on
them.

294
00:23:11,842 --> 00:23:15,782
So you still have access to essentially what the family can come in and attain in the
back.

295
00:23:15,782 --> 00:23:16,082
Right.

296
00:23:16,082 --> 00:23:17,390
But these things are going for like,

297
00:23:17,390 --> 00:23:27,494
$3 million and the profit margin in comparison said someone's downsizing say, you know,
grew up Roseville Chatswood, know, where they've Linfield and then the relocating to these

298
00:23:27,494 --> 00:23:30,015
lovely places that are half the size.

299
00:23:30,015 --> 00:23:32,255
But as you mentioned, they got the cash and they're to pay for it.

300
00:23:32,255 --> 00:23:33,726
It's happy for that.

301
00:23:33,726 --> 00:23:35,256
They help fund their retirement.

302
00:23:35,256 --> 00:23:39,948
So they take some cash off the table, but and also they, you know, invariably.

303
00:23:41,998 --> 00:23:44,009
close to, like it's where they live, right?

304
00:23:44,009 --> 00:23:45,750
They don't necessarily want to move away.

305
00:23:45,750 --> 00:23:57,365
You know, a funny one that was over the years, we funded one on the Gold Coast, which was
whole floor apartments, which if you said to us just top down, this is probably a bit

306
00:23:57,365 --> 00:23:59,165
reflective of sort of our philosophies.

307
00:23:59,165 --> 00:24:03,362
If you said top down, do you want to fund apartments on the Gold Coast?

308
00:24:03,362 --> 00:24:04,948
We're like, well, that's not for us.

309
00:24:04,948 --> 00:24:09,010
But this was a sort of project that was a bit specific.

310
00:24:09,010 --> 00:24:09,870
were,

311
00:24:10,956 --> 00:24:20,776
right on the beach, we went through all the pre-sales contracts, we actually knew some of
the purchases that were executives in listed companies.

312
00:24:20,776 --> 00:24:28,943
And so that was one we funded and we got a really great return, got about 14 and half
percent return from a senior loan.

313
00:24:28,944 --> 00:24:32,006
And so...

314
00:24:33,486 --> 00:24:35,807
there's different drivers for different markets.

315
00:24:35,807 --> 00:24:39,478
And for us, we're a nice size fund.

316
00:24:39,478 --> 00:24:48,032
We always like to get bigger, there's some broadly competitors of ours who've got eight,
10, $20 billion portfolios.

317
00:24:48,032 --> 00:24:51,373
We don't have that size of portfolio.

318
00:24:51,373 --> 00:25:02,558
So we can be not only selective, but pretty sort of nimble and target the things that we
like because we haven't got

319
00:25:03,022 --> 00:25:06,822
amount of money that we have to redeploy all the time.

320
00:25:07,482 --> 00:25:09,762
So these opportunities come along.

321
00:25:09,762 --> 00:25:11,882
We like those opportunities.

322
00:25:13,302 --> 00:25:16,982
We've done quite a bit in industrial over the years.

323
00:25:16,982 --> 00:25:29,642
We were involved in a syndicate for a land purchase of a very large parcel of land out
near the new airport where our borough ended up selling that to a superfund.

324
00:25:29,642 --> 00:25:31,302
That was a really good deal.

325
00:25:31,602 --> 00:25:32,430
liked the

326
00:25:32,430 --> 00:25:39,210
the drivers of industrial, work from home or Amazon style delivery.

327
00:25:39,210 --> 00:25:41,230
you say industrial, what type of industrial?

328
00:25:41,310 --> 00:25:48,750
So this was land that was gonna be developed into, it was a very large parcel of land, all
that was 300 hectares.

329
00:25:49,450 --> 00:25:55,526
Part of that will, over time will be developed into data centers, which are, you

330
00:25:57,070 --> 00:26:01,638
incredibly large and getting larger and general distribution.

331
00:26:05,352 --> 00:26:09,285
more and more of our goods are getting delivered to us.

332
00:26:09,285 --> 00:26:16,169
They have to be taken off a ship or a plane broken down into smaller components and then
shipped to you.

333
00:26:16,169 --> 00:26:18,211
That's my holy grail of industrial.

334
00:26:18,211 --> 00:26:20,132
Essentially those are what do call them?

335
00:26:20,132 --> 00:26:22,073
The distribution warehouses.

336
00:26:22,073 --> 00:26:29,388
So the two that I see that are phenomenal, correct if I'm wrong, is distribution
warehouses and light industrial.

337
00:26:29,454 --> 00:26:41,014
capacity for essentially some like my family's I'm news out right so it's always a running
joke you can't get a job in there so I'll be can bring one so now from the m1 all the way

338
00:26:41,014 --> 00:26:50,614
up practically crepe crepe made it swears Jesus you name it these light industrial things
are popping up everywhere they're going for what 550 grand to about 750 800,000 you got

339
00:26:50,614 --> 00:26:54,830
yourself a walk up to roll the doors either side you know I could I could have my

340
00:26:54,830 --> 00:27:01,310
practice there, could have someone making surfboards, you could have a dude selling
Pokemon cards, it's irrelevant, but they're phenomenal.

341
00:27:01,310 --> 00:27:05,210
And they're flying off the shelves and the land's coming difficult to find now.

342
00:27:06,730 --> 00:27:16,770
So you've got drivers like that, and then you've got things at the bigger end in terms of
larger distribution centers for the Woolies and Coles and those people.

343
00:27:16,770 --> 00:27:17,470
Amazon.

344
00:27:17,730 --> 00:27:21,730
Amazon's who have, you know, they have very large space requirements.

345
00:27:24,014 --> 00:27:33,308
This is sort of, we've been refinanced out of that loan, the people who are gonna be the
end users there were the likes of the DHLs and Amazons of the world.

346
00:27:33,308 --> 00:27:40,731
And then you've got data centers which are relatively, in a way relatively new.

347
00:27:40,731 --> 00:27:53,526
They are big space users, big energy users, and they wanna be well located in terms of
access to transport or in particular power.

348
00:27:54,678 --> 00:28:01,421
they, you know, their margins on their business have seen things like air trunk have been
sold for multiple billions of dollars.

349
00:28:01,601 --> 00:28:14,807
Them buying the land to be able to establish a new centre is helping drive up the price as
well because they need the space and they're sort of building capacity for things like,

350
00:28:14,807 --> 00:28:20,669
you know, when AI continues to grow, they're going to be very big users of space.

351
00:28:20,929 --> 00:28:22,910
we try and sort of tap into some

352
00:28:22,970 --> 00:28:24,430
some things like that.

353
00:28:25,311 --> 00:28:38,734
And underlying, if we lend at a reasonable loan to value ratio of 60 to 65%, that gives
you a bit of headroom.

354
00:28:39,195 --> 00:28:46,517
Because if you're involved in a component where our borrower's doing some development, we
do a lot of work with them.

355
00:28:46,517 --> 00:28:50,754
They have timelines, they have plans, things.

356
00:28:50,754 --> 00:28:53,436
don't always go exactly to time.

357
00:28:53,436 --> 00:28:55,987
They either take longer or there's twists and turns.

358
00:28:55,987 --> 00:29:00,040
So you've got a bit of a headroom there to protect yourself.

359
00:29:00,781 --> 00:29:02,642
But so far so good.

360
00:29:02,642 --> 00:29:15,214
We've done in our fund, is now $550 million roughly of investors' money, over the seven
years, we have invested in about 1.4.

361
00:29:15,214 --> 00:29:19,794
billion of loans that have either been repaid or the loans in the portfolio now.

362
00:29:19,794 --> 00:29:28,874
So all up we've done about 81, 82 loans that have been have been cycled through the
through the fund.

363
00:29:28,874 --> 00:29:30,794
What's the size of the loans?

364
00:29:31,194 --> 00:29:39,554
Typical size for us is sort of about that 20 to $40 million that you know, we think that's
bit of a sweet spot for us given our size.

365
00:29:39,554 --> 00:29:45,102
If it's if it's a loan that's under $5 million, that's often done by sort of

366
00:29:45,102 --> 00:29:49,262
family and friends, or, you know, sort of people's individual networks.

367
00:29:49,322 --> 00:29:53,141
It's a big loan that's over a hundred, $150 million.

368
00:29:53,141 --> 00:29:59,742
You often bump into bigger credit funds, banks, some hedge funds.

369
00:29:59,742 --> 00:30:02,222
So for us, we like that, that size rises.

370
00:30:02,222 --> 00:30:06,942
Now we have done bigger and smaller, but that's, that's sort of our target market is
around that.

371
00:30:06,942 --> 00:30:09,474
with the mechanics, is it purely

372
00:30:09,474 --> 00:30:14,976
the money which you're using from the fund from investors or do you have a bank warehouse
facility sitting in the back?

373
00:30:14,976 --> 00:30:17,367
We have no bank warehouse facility.

374
00:30:17,367 --> 00:30:18,618
We have no leverage.

375
00:30:18,618 --> 00:30:21,379
we just, it's just investors money.

376
00:30:22,279 --> 00:30:36,145
So we think that gives us extra control in terms of there's no leverage or bank provider
that we have to comply comply covenants with.

377
00:30:36,725 --> 00:30:38,286
If there is

378
00:30:38,478 --> 00:30:41,878
alone that gets repaid, that money gets repaid to our investors.

379
00:30:41,878 --> 00:30:43,658
The return goes to our investors.

380
00:30:43,658 --> 00:30:48,018
We're not paying interest to some other provider.

381
00:30:48,398 --> 00:30:50,058
Just a simple question is just for my benefit.

382
00:30:50,058 --> 00:30:52,378
think I know the answer, but maybe people aren't familiar with this.

383
00:30:52,378 --> 00:30:59,318
If you've got a bank warehouse facilities in the back compared to how you're running
things and you say that essentially it's like first mortgage, you need to do your first

384
00:30:59,318 --> 00:31:00,578
one on it.

385
00:31:01,238 --> 00:31:08,018
If with the warehouse facility, does that mean that essentially, you know, if everything
goes sideways,

386
00:31:08,738 --> 00:31:12,880
the bank can essentially put the fund manager under in order to take the assets.

387
00:31:12,880 --> 00:31:13,921
Does that make sense?

388
00:31:13,921 --> 00:31:25,417
Well, probably depends in detail on how structured structure, put it this way, if you've
got just, I'll talk for us and you know, so if you've got a hundred dollar loan, we've

389
00:31:25,417 --> 00:31:27,208
invested a hundred dollars in it.

390
00:31:27,208 --> 00:31:35,773
If you've got a hundred dollar loan and you've got a sort of a warehouse facility, maybe
they've put the first 40 in and you've put 60 in.

391
00:31:35,773 --> 00:31:38,764
So extreme example.

392
00:31:38,764 --> 00:31:50,089
You know, if you, if things go badly and, and we have to sell the property or the company
and we get $60 back, we would give that $60 to our investors.

393
00:31:50,089 --> 00:31:54,034
Um, and they would have incurred a bit of a loss.

394
00:31:54,034 --> 00:31:56,910
Um, if you get in the same example,

395
00:31:56,910 --> 00:32:02,330
you get the $60 back, well, the credit provider is giving you 40, they get all their
money, they get all their money back.

396
00:32:02,330 --> 00:32:04,650
And then essentially, the investors are screwed.

397
00:32:04,650 --> 00:32:09,230
And essentially, the funds, yeah, so as well, is in a bit of trouble.

398
00:32:09,230 --> 00:32:16,870
that's, that's how I thought it was, I was just short term, that debt is probably at a
lower cost.

399
00:32:16,870 --> 00:32:19,130
So it can enhance your returns.

400
00:32:19,270 --> 00:32:22,230
But there is a there is a price to be paid for that.

401
00:32:22,230 --> 00:32:23,398
And you know,

402
00:32:25,432 --> 00:32:30,353
Thankfully, this is not a visual medium, but as you can see, I've got a bit of gray hair.

403
00:32:30,353 --> 00:32:32,544
We've all got a bit of gray hair around here.

404
00:32:32,904 --> 00:32:43,367
So, you know, the leverage in, we don't use any leverage and that's not something that
we've sort of ever used.

405
00:32:44,367 --> 00:32:54,550
You know, we have over the years been in second ranking or mezzanine positions where we've
gone, you know, behind a bank or another credit fund or.

406
00:32:54,560 --> 00:33:00,214
Sometimes you've had a blend between a senior position and a mezzanine position to enhance
your returns.

407
00:33:00,214 --> 00:33:03,650
So we do that, but there's no leverage within our funds.

408
00:33:03,650 --> 00:33:16,185
So we control our destiny for our investors and we answer to our investors, not to some
credit provider or warehouse provider as well.

409
00:33:16,466 --> 00:33:22,702
One actually thing before I forget on how the performance has worked out, because I had a
client on the phone with you guys as well.

410
00:33:22,702 --> 00:33:24,222
just to discussing how this works.

411
00:33:24,222 --> 00:33:29,442
So if you look at the performance on the monthly is paying say 1 % as an average, right?

412
00:33:29,442 --> 00:33:31,302
But then you've done 14.

413
00:33:31,302 --> 00:33:33,182
So we were discussing it off air.

414
00:33:33,182 --> 00:33:37,462
Where does the extra couple of points come from?

415
00:33:37,582 --> 00:33:41,202
the way our funds are structured.

416
00:33:43,050 --> 00:33:57,054
in not every loan, but in most loans, our borrowers pay an interest rate, they might pay a
line fee and they pay what is known as an upfront fee for the deal sort of coming

417
00:33:57,054 --> 00:33:58,034
together.

418
00:33:59,114 --> 00:34:12,206
There are different models for different private credit funds, but where we are able to
negotiate an upfront fee or the like from our borrowers, if that gets paid, that money

419
00:34:12,206 --> 00:34:15,626
Some managers take some of that for the work that they've done.

420
00:34:15,626 --> 00:34:22,146
We put the upfront fee back into the return for investors.

421
00:34:23,206 --> 00:34:31,706
In some cases, we are able to exit fees or penalties or some default interest.

422
00:34:31,706 --> 00:34:34,126
All of that goes into the return as well.

423
00:34:34,126 --> 00:34:36,846
There are different models where some of that will go to the manager.

424
00:34:37,406 --> 00:34:41,026
So, you know, in our 14.6%, we had...

425
00:34:41,230 --> 00:34:45,990
probably one and a half to 2 % of that return was from some upfront fees.

426
00:34:45,990 --> 00:34:50,750
We had a couple of quirky things that happened over the course of 2024.

427
00:34:51,750 --> 00:34:55,590
We were in a reasonable, quite a big loan for the portfolio.

428
00:34:56,030 --> 00:34:57,850
It had two pieces of security.

429
00:34:57,850 --> 00:34:58,810
sold one of that.

430
00:34:58,810 --> 00:35:04,950
We rolled our debt against the other piece of land.

431
00:35:05,310 --> 00:35:10,070
We were able to negotiate quite a healthy upfront that enhanced the return.

432
00:35:10,070 --> 00:35:11,478
The other thing was

433
00:35:11,478 --> 00:35:14,691
our money was not repaid to us and then had to be reinvested.

434
00:35:14,691 --> 00:35:17,102
It was state invested the whole time.

435
00:35:17,363 --> 00:35:28,071
We had another one where we had an opportunistic credit deal, which was a borrower who has
been a borrower of mine and also the enhanced credit fund.

436
00:35:28,071 --> 00:35:29,432
know them well.

437
00:35:29,753 --> 00:35:34,246
They were sort of after some, speaking, a sort of a some bridge financing.

438
00:35:34,246 --> 00:35:38,359
We were able to negotiate quite a nice upfront.

439
00:35:38,400 --> 00:35:41,422
That was for a seven month loan.

440
00:35:41,422 --> 00:35:46,022
that effectively got for our investors about a 19 % internal rate of return.

441
00:35:46,242 --> 00:35:49,322
They don't come along every day, those opportunities.

442
00:35:49,402 --> 00:35:58,562
So there's a sort of couple of quirky things when they're in terms of upfront fees and a
little bit of extension fees, but that's what goes into the returns.

443
00:35:58,562 --> 00:36:04,282
So on a monthly basis, the in-place stuff in the portfolio does about one to 1.1.

444
00:36:04,922 --> 00:36:08,902
Our return is enhanced by some of those upfront fees.

445
00:36:08,902 --> 00:36:10,782
So we had a few months where we did

446
00:36:10,926 --> 00:36:15,826
120 basis points or 145 that that that enhance the return.

447
00:36:15,826 --> 00:36:24,786
That's important to go through because when I was looking at the the numbers, you know,
for historically, not to toot your horn, but you're doing bloody well.

448
00:36:24,786 --> 00:36:29,006
I think you currently top of the charts, you know, if we're talking about music reference,
you top of the charts.

449
00:36:29,006 --> 00:36:34,006
But I was trying to work out, know, you know, where does the extra points come from?

450
00:36:34,006 --> 00:36:36,686
But essentially, what you're saying is you're passing on.

451
00:36:36,686 --> 00:36:38,146
We're passing on.

452
00:36:38,146 --> 00:36:40,286
those those

453
00:36:40,642 --> 00:36:46,398
upfront fees that the borrowers pay or any extension fees and line fees.

454
00:36:47,950 --> 00:36:56,030
So we've, but to be clear, we have a target rate of return of 10 % for investors.

455
00:36:56,030 --> 00:37:00,630
So in the almost seven years since inception, we've been about 10.4%.

456
00:37:00,630 --> 00:37:08,810
So that's after the management fees and our management fee structure is pretty
straightforward.

457
00:37:08,810 --> 00:37:17,802
We have a base management fee of 1 % and then we get 20 % of our performance over the 10%.

458
00:37:17,802 --> 00:37:20,236
So the other thing is.

459
00:37:22,650 --> 00:37:28,332
in a strange way, the pricing on our on our loans hasn't changed that much.

460
00:37:29,432 --> 00:37:36,314
But you know, for a good chunk of the period of the life of the fund that was, you know,
during COVID, where base interest rates were zero.

461
00:37:36,314 --> 00:37:41,635
So there's a few years there where we probably did nine, nine and a half percent.

462
00:37:41,635 --> 00:37:45,346
So you know, as a margin, we were getting 900 over.

463
00:37:45,346 --> 00:37:48,337
RBA cash rate was nine is huge.

464
00:37:49,597 --> 00:37:51,822
And, and the cash rate

465
00:37:51,822 --> 00:37:56,402
now is 4.3 maybe going down, who knows?

466
00:37:56,902 --> 00:38:00,562
we've done 14.6%.

467
00:38:00,562 --> 00:38:10,782
So the margin is not that wildly different, but the starting point for the base rate is
substantially I'm glad you brought up the historic as well.

468
00:38:10,782 --> 00:38:12,962
What's changed in the past five years?

469
00:38:12,962 --> 00:38:17,462
Because the five year average has been what, 10 and a bit percent, and now we've done 14
for this year.

470
00:38:17,462 --> 00:38:19,502
So what's really changed?

471
00:38:21,154 --> 00:38:27,378
we had some opportunities that came to us, some of the up fronts and a few things sort of
drove that.

472
00:38:27,378 --> 00:38:33,082
So the base portfolio is probably producing you at a top line rate about 13%.

473
00:38:33,082 --> 00:38:36,045
So it's been topped up a bit from that.

474
00:38:36,045 --> 00:38:41,909
It's sort of been trending that way, but like I said, since inception, our returns 10.4%.

475
00:38:41,909 --> 00:38:49,253
So it's, you know, we're in the business of forecasting.

476
00:38:49,812 --> 00:39:03,145
out but you know the portfolio should the in-place deals that we're seeing at the moment
are for senior loans at around that sort of 12 to 14 percent mark that's what we're

477
00:39:03,145 --> 00:39:04,035
seeing.

478
00:39:04,837 --> 00:39:09,861
Will that you know if they if they start to reduce interest rates would that come down a
bit?

479
00:39:09,861 --> 00:39:14,445
Yeah probably it's not perfectly linear that you click your fingers

480
00:39:15,406 --> 00:39:21,726
Our book is about 60, 57 % floating, 43 % fixed rates.

481
00:39:21,726 --> 00:39:32,706
So it's not like they will replace automatically, but we tend to follow with a little bit
of a lag where base rates go.

482
00:39:32,946 --> 00:39:38,806
For example, my colleague who runs our enhanced fund, his stuff is all floating rates.

483
00:39:38,806 --> 00:39:43,374
So that reprices at the end of each month.

484
00:39:43,374 --> 00:39:44,914
if there's an interest rate change.

485
00:39:44,914 --> 00:39:49,754
because that's what I was wondering is you mentioned some of the lines you like doing what
18 months to two years.

486
00:39:49,754 --> 00:39:56,334
Yeah, so I was wondering if there was a lag on lower rates from historical stuff, a little
bit of a lag that's starting to work its way out.

487
00:39:56,334 --> 00:40:02,674
But then as you mentioned, you got fixed and floating as well as well as just trying to
work out you know, where Yeah, there's components.

488
00:40:02,674 --> 00:40:10,086
And the other thing is, by nature, and I suppose the benefit away of lending relatively
short is

489
00:40:11,470 --> 00:40:19,830
the average remaining life of the portfolio of our in-place loans is about 0.84 of a year.

490
00:40:19,830 --> 00:40:21,330
So we've always got money coming back.

491
00:40:21,330 --> 00:40:27,190
So over the course of 2024, about 60 % of the book got repaid and reinvested.

492
00:40:27,190 --> 00:40:32,770
So one of the things for us is to try and line up new deals so we don't have drag.

493
00:40:33,390 --> 00:40:39,438
And whenever you're reinvesting, effectively you're of retouching the market as to what...

494
00:40:39,438 --> 00:40:41,518
market conditions are for pricing.

495
00:40:41,878 --> 00:40:47,758
you know, we've got a little bit more cash than we would ordinarily like.

496
00:40:47,758 --> 00:40:52,218
We like to run the book at about five to 7 % cash portfolio.

497
00:40:52,218 --> 00:40:54,698
It's probably around the 10 % mark.

498
00:40:54,698 --> 00:40:57,938
We've got a few things that'll be repaying in the first quarter.

499
00:40:57,938 --> 00:41:03,058
for us, about 55 million cash, you know, looking for a home currently.

500
00:41:03,058 --> 00:41:06,958
Yeah, well, a little bit of that builds up.

501
00:41:06,958 --> 00:41:09,286
We obviously pay distributions and the like.

502
00:41:09,486 --> 00:41:14,328
probably important thing to just touch on in terms of the nature of the fund.

503
00:41:14,328 --> 00:41:21,411
So for our investors, we accept applications on a monthly basis.

504
00:41:21,411 --> 00:41:29,354
We pay distributions and redemptions on a quarterly basis.

505
00:41:30,395 --> 00:41:34,577
that's one of the other advantages of lending short is we've got money coming back.

506
00:41:34,577 --> 00:41:37,118
So on average, like I said,

507
00:41:38,158 --> 00:41:41,403
book has about 0.84 of a year to run.

508
00:41:41,403 --> 00:41:54,461
if we were to, God forbid, if we were to stop everything today, those loans would repay
over the sort of course of a year or so, a less than a year, and we could return that

509
00:41:54,461 --> 00:41:55,722
money to invest.

510
00:41:56,578 --> 00:42:03,943
Whilst we're on this point, I was chatting to a colleague before regarding one of the
issues a lot of advisors are having with platforms.

511
00:42:03,943 --> 00:42:11,909
So platforms, if people aren't familiar with it, is essentially like your login portal,
which gives you access to all these funds, which is fantastic because it's just one place.

512
00:42:11,909 --> 00:42:18,903
But the main benefit of some of these platforms is they essentially, you guys see just the
platform name coming through, not the client.

513
00:42:18,903 --> 00:42:21,986
So what's great about that is say you got a million dollar minimum, right?

514
00:42:21,986 --> 00:42:23,196
Hypothetically.

515
00:42:23,197 --> 00:42:25,217
What's the minimum for this one?

516
00:42:26,370 --> 00:42:28,992
minimum, look, we have a minimum of about $50,000.

517
00:42:28,992 --> 00:42:33,695
And then you can tick the box for reinvestment or top up.

518
00:42:33,695 --> 00:42:36,636
So the top up component can be less than that.

519
00:42:36,636 --> 00:42:39,989
So the reinvestment is essentially what we're discussing, which is a problem on platforms.

520
00:42:39,989 --> 00:42:44,892
So if anyone's listening on a platform right now, we'd love to fix this across the board
across the board.

521
00:42:44,892 --> 00:42:52,078
Because essentially, if just to play it out, what's happening is as follows is we're
getting beautiful returns from

522
00:42:52,078 --> 00:42:53,838
you know, your fund or others, right?

523
00:42:53,838 --> 00:43:04,958
And then what's happening is that income is being paid into our accounts, potentially a
delay anywhere from two weeks up until like 45 days or longer, right?

524
00:43:04,958 --> 00:43:06,698
Or maybe longer if it's quarterly, right?

525
00:43:06,698 --> 00:43:09,178
You know, up to 90 days or 120.

526
00:43:09,178 --> 00:43:13,498
And then we're losing potentially like a number of weeks of the income.

527
00:43:13,498 --> 00:43:14,518
Then we receive the cash.

528
00:43:14,518 --> 00:43:15,638
Then we have to reallocate.

529
00:43:15,638 --> 00:43:18,182
Then we have to wait for the window to go back in.

530
00:43:18,348 --> 00:43:27,043
just don't understand why it's so difficult for these platforms to potentially create, as
we're discussing with Tim, another dealer code for the fund.

531
00:43:27,043 --> 00:43:34,027
It's just like, you know, with CBA, so we can just decide, we want DVP, or DRP, different
areas, best man plan.

532
00:43:34,027 --> 00:43:39,050
Why the hell can't we just do that and then tick the box and then we can get compound
interest instead of receiving the cash all the time?

533
00:43:39,050 --> 00:43:40,911
It's driving me up the goddamn wall.

534
00:43:40,911 --> 00:43:46,254
So to be clear, you can tick the box for DRP with the fund, but...

535
00:43:46,254 --> 00:43:47,434
but you're right.

536
00:43:47,434 --> 00:43:48,674
does.

537
00:43:48,674 --> 00:43:55,434
No, obviously if you go to obviously if you go direct, but what's happening is with, with
the platforms, it is clunky.

538
00:43:55,434 --> 00:43:55,914
Effectively.

539
00:43:55,914 --> 00:43:59,754
We, we pay the money out and then it gets reallocated.

540
00:43:59,754 --> 00:44:07,054
And as you say, depending on the fund and depending on the timeframe, there's, there's a
sort of lag there that you get that cash back.

541
00:44:07,054 --> 00:44:14,514
And if you might want to put it back to work, takes a little while greater minds than I.

542
00:44:14,958 --> 00:44:21,858
to solve that in terms of how the platforms adjust to that or can control that.

543
00:44:21,858 --> 00:44:24,504
Is there any thought process about how to fix that?

544
00:44:24,705 --> 00:44:26,416
We've had some thoughts, yes.

545
00:44:26,416 --> 00:44:27,487
What is the thoughts?

546
00:44:27,487 --> 00:44:28,858
Oh, happily.

547
00:44:28,858 --> 00:44:30,359
I'm generally interested, right?

548
00:44:30,359 --> 00:44:34,591
Because there's a lot of people, because remember, a lot of people that listen to this,
some people go direct, right?

549
00:44:34,591 --> 00:44:35,552
Absolutely, right.

550
00:44:35,552 --> 00:44:38,358
And but the problem with going direct, have to do with the paperwork.

551
00:44:38,358 --> 00:44:45,130
And God forbid if there's a crash, whatever it we've seen it before with the GFC,
scrambling to get 20 different funds out in paperwork is a massive headache.

552
00:44:45,130 --> 00:44:48,251
So the platforms are phenomenal for easy use and access.

553
00:44:48,251 --> 00:44:49,311
They're amazing.

554
00:44:49,311 --> 00:44:54,912
I've just identified one little area we need to fix and I'd love to hear your thoughts.

555
00:44:54,912 --> 00:45:01,734
And then I'm the one that's going to go knock, knock, hey, mate, how do we, because
essentially what I'm noticing is essentially they listen to advisors and the clients and

556
00:45:01,734 --> 00:45:04,265
the money components to make a fix instead of the product.

557
00:45:04,265 --> 00:45:06,666
So I'm just trying to, yeah, what's the solution?

558
00:45:09,198 --> 00:45:15,951
It really comes down to the individual client's liquidity profile, I think, because there
must be some mechanics.

559
00:45:15,951 --> 00:45:29,827
know Tim and my colleagues have met with them in terms of, as you say, tick the box for a
different class, a different class of unit that then merges into the ordinary units, but

560
00:45:29,827 --> 00:45:31,747
there must be a way.

561
00:45:31,747 --> 00:45:38,786
But it does seem to be very difficult that effectively the cash has to be paid out and
then reinvested as opposed to just

562
00:45:38,786 --> 00:45:40,187
just retained.

563
00:45:40,667 --> 00:45:45,170
But I'm not an expert in how the platforms work.

564
00:45:45,571 --> 00:45:48,012
It's driving me up the wall.

565
00:45:48,993 --> 00:45:53,396
So with your payout terms, with the platform, how many days are we actually losing you
reckon?

566
00:45:54,177 --> 00:45:55,658
So we pay...

567
00:45:58,665 --> 00:45:59,726
quarterly.

568
00:46:01,986 --> 00:46:16,226
So distributions for, you know, for the last quarter that finished being the end of the
end of the year, 31 December, we paid that distribution in about the 19th of January.

569
00:46:16,226 --> 00:46:19,426
So there's a little bit of lag, have to, you know, agree all the numbers.

570
00:46:19,426 --> 00:46:25,266
So it's usually about anywhere between 14 to 21 days after that.

571
00:46:25,266 --> 00:46:27,246
Now you can then reinvest that

572
00:46:27,246 --> 00:46:29,386
with us because we're monthly.

573
00:46:29,386 --> 00:46:29,846
know, I know.

574
00:46:29,846 --> 00:46:31,206
But I want everyone to come through me.

575
00:46:31,206 --> 00:46:32,206
Obviously, I'm just joking.

576
00:46:32,206 --> 00:46:33,866
I've been completely cheeky here.

577
00:46:33,866 --> 00:46:37,366
But the reason the reason why we're having these conversations, it was like, mate, it's
your business.

578
00:46:37,366 --> 00:46:38,346
Why are you discussing this?

579
00:46:38,346 --> 00:46:39,446
Why would you do this?

580
00:46:39,446 --> 00:46:47,746
Because at the end of the day, the whole point of this is to shine transparency and solve
problems to make things more efficient and better for the investors and overall and make

581
00:46:47,746 --> 00:46:48,766
it easier.

582
00:46:48,786 --> 00:46:49,646
Correct.

583
00:46:50,006 --> 00:46:52,666
It's in their it's in their best interest across the board.

584
00:46:52,666 --> 00:46:54,266
But I'm just trying to ascertain.

585
00:46:54,266 --> 00:46:57,006
Is it just too hard for the these funds?

586
00:46:57,134 --> 00:46:58,497
Was it too difficult?

587
00:46:58,497 --> 00:47:04,466
I think it's too difficult because effectively.

588
00:47:06,446 --> 00:47:08,186
depends on the underlying investor.

589
00:47:08,186 --> 00:47:19,286
you know, they may want to, they may want that income to live off or make other
investments or do other other things with so I think there's a component there between the

590
00:47:19,286 --> 00:47:22,426
relationship between the advisor and the underlying investor.

591
00:47:22,426 --> 00:47:26,106
So just but it does seem to be pretty difficult.

592
00:47:26,106 --> 00:47:27,346
just some bad math, right?

593
00:47:27,346 --> 00:47:30,286
That's 21 days, four times a year.

594
00:47:30,646 --> 00:47:31,526
Yeah, yeah.

595
00:47:31,526 --> 00:47:33,838
21 days, four times a year, right?

596
00:47:33,838 --> 00:47:36,558
And if it's paying 12%, come on, you're better than the math component.

597
00:47:36,558 --> 00:47:38,698
I'm going to the strategy that Tommy.

598
00:47:38,698 --> 00:47:40,258
So essentially, what's that?

599
00:47:40,258 --> 00:47:43,218
That's 84 days, 84 days.

600
00:47:43,218 --> 00:47:45,018
Have you 360 or what?

601
00:47:45,018 --> 00:47:46,310
Over 12%.

602
00:47:49,646 --> 00:47:50,466
a second.

603
00:47:50,466 --> 00:47:55,646
No, we're looking at about 2.4 2.5 % loss.

604
00:48:03,618 --> 00:48:04,939
Jesus Christ.

605
00:48:05,099 --> 00:48:12,025
So we still, with the money that we're in, so, you know, sticking to million dollars,
we're still receiving that amount of But I'm just saying like the thought of compound

606
00:48:12,025 --> 00:48:15,958
interest, know, I'll solve this problem.

607
00:48:15,958 --> 00:48:17,430
Don't you worry everyone out there.

608
00:48:17,430 --> 00:48:22,264
Any advisors out there, come on, let's get a class action to get this crew and get and fix
this problem.

609
00:48:22,264 --> 00:48:24,376
I'm all for it.

610
00:48:24,376 --> 00:48:26,377
And when you do solve it, let us know.

611
00:48:26,377 --> 00:48:29,659
Yeah, I think every fund manager will be very, very happy about it.

612
00:48:32,770 --> 00:48:34,041
Yeah, no, very, very interesting.

613
00:48:34,041 --> 00:48:36,593
With the mechanics, is there anything else we haven't covered?

614
00:48:38,015 --> 00:48:48,495
No, the only thing that probably my internal legal always remind me of is our underlying
loans are illiquid.

615
00:48:48,495 --> 00:48:54,471
you know, we don't own ASX listed shares that I could sell at the drop of a hat.

616
00:48:54,471 --> 00:48:58,094
So, you know, in the extreme, if there was.

617
00:48:59,896 --> 00:49:05,749
COVID style or GFC, we've not had to do this.

618
00:49:05,810 --> 00:49:16,375
But if everybody, not unlike the Commonwealth Bank, if everybody wanted to get their money
out on the same day, we would have to wait for the loans to mature and repay it.

619
00:49:17,516 --> 00:49:23,040
Like I said, we haven't had to have that difficulty and confront that as yet.

620
00:49:23,040 --> 00:49:27,412
Hence the reason we always have a bit of cash and a bit of liquidity in the portfolio.

621
00:49:27,854 --> 00:49:28,734
makes a lot of sense.

622
00:49:28,734 --> 00:49:32,413
So let's get into the fun stuff, macro economics.

623
00:49:32,654 --> 00:49:34,734
My god, the regime change.

624
00:49:34,734 --> 00:49:38,294
You know, I've listened to it again, way too much Rogan as everyone knows.

625
00:49:38,294 --> 00:49:41,474
And he keeps referring to like, you know, like the days of our lives.

626
00:49:41,474 --> 00:49:42,714
It's like, what's new?

627
00:49:42,714 --> 00:49:43,834
What's the latest episode?

628
00:49:43,834 --> 00:49:45,274
And this is our world.

629
00:49:47,694 --> 00:49:50,394
Oh, my god, it's been a gripping TV show.

630
00:49:50,394 --> 00:49:52,194
It has been a great year.

631
00:49:52,634 --> 00:49:57,198
The returning president has been there for less than a month.

632
00:49:57,198 --> 00:50:00,958
think since he's been sworn in, but and there's been a lot going on.

633
00:50:01,398 --> 00:50:06,118
the you know, we're not macro forecasters.

634
00:50:06,118 --> 00:50:06,518
know.

635
00:50:06,518 --> 00:50:08,258
I suppose where I was going with this.

636
00:50:08,378 --> 00:50:12,078
Yeah, well, what was going along this lines is, you know, two things is what's your
thoughts.

637
00:50:12,078 --> 00:50:16,338
And then secondly, you know, how do these potentially changes impact you guys?

638
00:50:16,338 --> 00:50:19,258
Because you know, as the expression goes, us sneezes, we catch a cold.

639
00:50:19,498 --> 00:50:20,258
Yeah.

640
00:50:21,638 --> 00:50:24,318
So starting with the US,

641
00:50:24,696 --> 00:50:29,888
very prepared to say, don't know what's going to happen from one day to the next.

642
00:50:30,109 --> 00:50:33,361
you know, clearly there's been the imposition of tariffs.

643
00:50:33,361 --> 00:50:39,434
There seems to be some big, you know, big tax cut program coming.

644
00:50:39,494 --> 00:50:46,858
The best thing I heard somebody say about Donald Trump in terms of politically is you
should listen to him.

645
00:50:46,858 --> 00:50:49,279
Don't take him literally, but take him seriously.

646
00:50:49,279 --> 00:50:53,701
you know, whether it exactly plays out what he wants to do.

647
00:50:54,286 --> 00:51:01,686
But that's, you his intent is clearly to get things like manufacturing back to the US as
much as possible.

648
00:51:01,686 --> 00:51:05,246
Now, whether he's successful on that in the long term, who knows?

649
00:51:05,926 --> 00:51:14,226
So, but you his focus is, ironically, even though there's tariffs that are going to affect
everybody, it's very much domestically focused.

650
00:51:14,226 --> 00:51:19,346
He's trying to look after the people who supported him and voted him in.

651
00:51:19,826 --> 00:51:21,316
So that will...

652
00:51:21,358 --> 00:51:31,281
be a bit of a wild ride and will probably impact some things like commodities and, know,
drill baby drill, you know, what happens to the oil price and gas and those sorts of

653
00:51:31,281 --> 00:51:31,411
things.

654
00:51:31,411 --> 00:51:32,882
But I think that will play out.

655
00:51:32,882 --> 00:51:40,672
You know, we don't sort of muck around in commodities or mining or anything like that in
terms of our lending.

656
00:51:41,513 --> 00:51:45,616
Domestically, the economy is patchy.

657
00:51:47,738 --> 00:51:48,738
What's the old?

658
00:51:48,738 --> 00:51:51,901
song line, the rich are getting richer, the poor get the picture.

659
00:51:51,922 --> 00:51:55,425
You know, it's tough for young people to get into the housing market.

660
00:51:58,478 --> 00:52:06,598
It appears that there'll be some sort of interest rate cut this month that appears to be
where the market is predicting things.

661
00:52:07,618 --> 00:52:13,018
I have different views on that from different colleagues, but that appears where it's
heading.

662
00:52:13,898 --> 00:52:28,014
The interesting thing has been what's the rate of change and just the nature from when we
went from zero to 4.3 % over a fairly compressed period.

663
00:52:28,014 --> 00:52:33,999
The Australian economy ironically has of handled that pretty well, but it is patchy and
it's soft.

664
00:52:33,999 --> 00:52:45,399
And then there's other components like energy costs and general inflation that has been
difficult for businesses and in particular small businesses.

665
00:52:45,399 --> 00:52:48,711
we're cautious on things.

666
00:52:48,731 --> 00:52:52,874
For us, we have a reasonable amount of property exposure.

667
00:52:52,894 --> 00:52:56,998
If we're lending, a lot of our stuff

668
00:52:56,998 --> 00:53:09,685
is against land in the suburbs of northwest of Sydney, southwest of Sydney, a in Melbourne
in the west and in the north.

669
00:53:09,685 --> 00:53:12,626
We've been refinanced on a couple of things down there recently.

670
00:53:13,707 --> 00:53:21,231
Those markets, there's continued drivers and demands in terms of household formation and
population growth.

671
00:53:21,231 --> 00:53:23,713
So that sort of helps underpin you.

672
00:53:23,713 --> 00:53:26,794
And we really don't...

673
00:53:26,924 --> 00:53:33,116
you know, we need our borrowers to either sell the projects or deliver the projects.

674
00:53:33,757 --> 00:53:37,018
And they need to be able to do that at current prices.

675
00:53:37,018 --> 00:53:42,040
if the price for the underlying house or land goes up, that's great.

676
00:53:42,040 --> 00:53:42,981
They make more profit.

677
00:53:42,981 --> 00:53:43,451
That's great.

678
00:53:43,451 --> 00:53:46,862
But you know, we're after getting our investment return.

679
00:53:46,862 --> 00:53:49,943
We don't necessarily need that price to go up.

680
00:53:51,104 --> 00:53:53,405
So, you know, we're cautious on things.

681
00:53:53,405 --> 00:53:54,836
I think it's patchy.

682
00:53:54,836 --> 00:53:55,916
Anybody in

683
00:53:55,916 --> 00:54:01,259
in business or has got sort of more exposure to underlying consumer demand.

684
00:54:01,259 --> 00:54:08,032
That's been relatively tough and you'd think that might stay subdued for a little while.

685
00:54:09,974 --> 00:54:23,231
Then you've got the other complexity of for whatever reason, we have an election in May
and that people usually sit on their hands a bit coming into that to see what's gonna come

686
00:54:23,231 --> 00:54:25,382
out the other side in terms of policy.

687
00:54:25,582 --> 00:54:28,722
that's a bit of a dampener in terms of activity.

688
00:54:28,722 --> 00:54:31,502
So we're cautious about things.

689
00:54:32,342 --> 00:54:45,562
I've been droning onto my investors for quite some time about this, but over probably the
course of the last two years, we have pivoted our book slightly.

690
00:54:45,562 --> 00:54:52,334
So if you go back to 2020, 2021, we probably had...

691
00:54:52,334 --> 00:54:59,214
in subordinated positions, so second ranking mezzanine loans, were about 25 or 30 % of our
portfolio.

692
00:54:59,214 --> 00:55:09,774
We thought it was a right way around trade in terms of asset values are increasing, we
were getting a premium and we liked where that position was in terms of the capital

693
00:55:09,774 --> 00:55:10,754
structure.

694
00:55:11,394 --> 00:55:16,354
We have 1 % of our portfolio in subordinated positions at the moment.

695
00:55:16,354 --> 00:55:21,602
We have reinvested that money out of subordinated as it's been repaid into senior loans.

696
00:55:21,602 --> 00:55:32,268
we want to be first ranking mortgages so that if something goes wrong, you can enforce,
sell the asset or rework the asset or recapitalise it.

697
00:55:32,268 --> 00:55:43,194
So we think risk reward within our portfolio, even though we've been doing quite a nice
return, like I said, a typical loan at the moment, you can get anywhere on a first ranking

698
00:55:43,194 --> 00:55:46,035
mortgage, 12 to 14 % return.

699
00:55:46,716 --> 00:55:50,286
We think that's a better return risk reward than

700
00:55:50,286 --> 00:55:59,606
getting say 15 or 17 % in a mezzanine position, just where the market is, we would rather
have that first ranking position.

701
00:55:59,606 --> 00:56:02,926
So that's how we're finding things.

702
00:56:03,566 --> 00:56:12,326
Things will come out of things like the election, there'll be stimulus and expenditure and
the like, whether that's for good or for ill.

703
00:56:12,746 --> 00:56:19,506
So there's a few forces at play where people are sort of taking a little bit of wait and
see approach.

704
00:56:21,710 --> 00:56:32,073
Flip side is we also see it when we like it, when our borrowers, we have a lot of repeat
customers or people that we've led to in the past.

705
00:56:32,073 --> 00:56:40,635
We always like it when people we know need money or are looking to undertake things and we
can deploy it relatively quickly.

706
00:56:41,196 --> 00:56:49,498
We don't answer into an investment committee in Hong Kong or somewhere where all my
independent investment committee members

707
00:56:50,176 --> 00:56:51,447
within 10 minutes of the office.

708
00:56:51,447 --> 00:56:55,449
So if we have to have, you know, have a chat on something quickly, we can all get
together.

709
00:56:55,449 --> 00:57:03,073
So we've got some flexibility to be able to deploy things and deploy funds relatively
quickly.

710
00:57:03,934 --> 00:57:05,315
Yeah, that's good to know.

711
00:57:05,315 --> 00:57:15,471
The other thing I love chatting to lenders, especially in the property space about is you
guys say where all the loans are coming from, and essentially what you know, John rest

712
00:57:15,471 --> 00:57:17,066
projects and etc, etc.

713
00:57:17,066 --> 00:57:17,878
So

714
00:57:17,878 --> 00:57:28,385
I'm very interested to hear what you're hearing on the street regarding you know, I
suppose what's what was once great, that's essentially becoming a weak area.

715
00:57:28,385 --> 00:57:30,396
And then secondly, essentially, where's the boom?

716
00:57:30,396 --> 00:57:36,229
Because if you're looking at the city market, it kind of feels like a lot of the profits
unless the specific areas are starting to become more difficult.

717
00:57:36,229 --> 00:57:40,092
Meanwhile, the boom up in Queensland is just ripping.

718
00:57:40,092 --> 00:57:42,553
So I'm just curious on what you're saying.

719
00:57:42,553 --> 00:57:43,573
Yeah.

720
00:57:45,262 --> 00:57:52,368
That's probably not a bad summation, So, Sydney is expensive, the land is expensive.

721
00:57:52,809 --> 00:57:55,551
Construction costs over the last two or three years have gone up.

722
00:57:55,551 --> 00:58:00,455
Not that we do that much construction, but they've gone up significantly.

723
00:58:00,455 --> 00:58:08,222
So the impact of that is it's harder for developers to stack a site up because they bought
the land at a certain price.

724
00:58:08,222 --> 00:58:10,704
The construction is a big component of it's gone up.

725
00:58:10,704 --> 00:58:13,654
That impacts your land value or your...

726
00:58:13,654 --> 00:58:18,998
or you need growth in the underlying, you know, apartment price or whatever to be able to
make a profit.

727
00:58:19,138 --> 00:58:23,962
You've seen them pivot to things like townhouses, which are less construction intensive.

728
00:58:23,962 --> 00:58:26,303
That's sort of why we like the land.

729
00:58:26,584 --> 00:58:29,946
Over the years, we've done quite a bit in Queensland.

730
00:58:29,946 --> 00:58:40,334
We haven't got much exposure there at the moment because it's, yes, it's been booming and
growing, but it's also coming into some of the same things where...

731
00:58:40,494 --> 00:58:43,534
construction costs are basically the same in Queensland.

732
00:58:44,014 --> 00:58:58,094
So if you've got same construction costs in Brisbane versus Sydney and prices there are 30
% below the Sydney market, you either need a much lower land value or you also can't stack

733
00:58:58,094 --> 00:58:59,174
up developments.

734
00:58:59,314 --> 00:59:05,274
Then you've got the other added overlay there of the Olympics are coming.

735
00:59:05,734 --> 00:59:09,774
there's a ramp up in sort of infrastructure spending.

736
00:59:09,774 --> 00:59:14,198
They have a big program of hospital refurbishment.

737
00:59:14,198 --> 00:59:21,984
you got sort of forces on labour supply there, which in turn are making things more
expensive.

738
00:59:21,984 --> 00:59:26,478
So it's a harder market for us to get in and get into.

739
00:59:26,478 --> 00:59:36,135
The good thing in terms of sourcing our deals, like I said, we have our own networks,
there's brokers that bring you deals.

740
00:59:37,056 --> 00:59:39,658
We've put on...

741
00:59:40,343 --> 00:59:48,908
an origination, some colleagues of mine who we've done a lot of deals with over the years,
they had their own business, they've effectively folded in with us.

742
00:59:49,209 --> 00:59:53,171
So they are an origination function for us.

743
00:59:53,171 --> 00:59:56,193
So, you know, they're doing a great job.

744
00:59:56,193 --> 01:00:05,870
And then, you know, we get repeat customers who have funded in the past, or we can roll
from one project to the next with them.

745
01:00:05,870 --> 01:00:08,582
there's a good pipeline of things.

746
01:00:08,582 --> 01:00:09,702
You've just got to

747
01:00:09,870 --> 01:00:11,590
you know, work your way through it.

748
01:00:11,590 --> 01:00:25,770
And for us, you know, reinvesting money from expiring loans is obviously important because
not dissimilar to your discussion on the platforms and the DRP, you know, we want to be

749
01:00:25,770 --> 01:00:34,330
able to recycle our money from one project into the next and have as little down lag and
drag on the performance as possible.

750
01:00:34,710 --> 01:00:36,630
Yeah, I couldn't agree with you more.

751
01:00:36,990 --> 01:00:39,310
It's just interesting this entire space.

752
01:00:39,310 --> 01:00:49,230
And the other question I for you as well is how does the private credit or the private
lending space in Australia compare to international?

753
01:00:49,230 --> 01:00:52,170
Because this topic actually comes up quite a bit.

754
01:00:52,170 --> 01:01:02,430
And specifically, you take listed managers and people that I'm familiar with, they're
looking at this thing going, when you bullet down a brass tax, from my understanding,

755
01:01:02,430 --> 01:01:06,810
please correct me wrong, Australia's probably got the best laws and regulations to
protect.

756
01:01:06,880 --> 01:01:10,063
investors in the private credit space in Australia compared to the world?

757
01:01:10,063 --> 01:01:11,030
Is that accurate?

758
01:01:11,030 --> 01:01:11,944
what's your opinion?

759
01:01:11,944 --> 01:01:22,203
got well developed consumer protection, know, investment management requirements for for
investors.

760
01:01:23,905 --> 01:01:33,073
If you compare it to different markets, obviously, in particular, the US, their private
credit market is larger than ours.

761
01:01:33,073 --> 01:01:35,334
They've always probably had a

762
01:01:36,066 --> 01:01:40,829
a larger capital markets banking component rather than just bank finance.

763
01:01:40,829 --> 01:01:44,950
Australia has been very much traditionally a bank market.

764
01:01:46,352 --> 01:01:55,296
The funds that we see in terms of private credit in the US, they probably do more lending
to private equity businesses.

765
01:01:55,677 --> 01:02:06,282
Back to the earlier topic that we touched on in terms of leverage, they often have more
leverage within their funds, sometimes substantially more.

766
01:02:06,290 --> 01:02:09,731
and some of those funds are exchange traded.

767
01:02:09,731 --> 01:02:15,953
So, you know, the price may fluctuate for the underlying investors.

768
01:02:16,613 --> 01:02:24,515
So they're probably larger and more diverse, have more inherent leverage in them.

769
01:02:25,895 --> 01:02:35,548
The difference, I suppose, for us is probably we have a more, I'd say this broadly in the
Australian market, we have a more

770
01:02:36,216 --> 01:02:43,610
property and hard asset focused rather than, you there are different strategies in terms
of private credit in Australia.

771
01:02:43,730 --> 01:02:53,976
Quite a few who invest to lend to private equity sponsored businesses, but they're
probably, you know, more I'd argue that are probably a bit similar to us people like

772
01:02:53,976 --> 01:03:00,259
Metrix and Qualitas and Max Capon that they have a reasonable amount of property within
their portfolio.

773
01:03:00,660 --> 01:03:02,881
That's an interesting space.

774
01:03:03,662 --> 01:03:04,462
Regarding

775
01:03:04,462 --> 01:03:06,362
We have to always cover the risks.

776
01:03:06,922 --> 01:03:10,662
What's the biggest risk upcoming that you guys face?

777
01:03:11,062 --> 01:03:18,682
Our biggest risk is always, in a way, time and delivery of things because our rates are
relatively high, right?

778
01:03:18,682 --> 01:03:21,962
So our borrowers want to pay us back as quick as possible.

779
01:03:24,062 --> 01:03:31,802
And we have, you know, a couple of, there's always a couple that you're putting some more
work into.

780
01:03:32,046 --> 01:03:34,926
We have a few people who are going through sale processes.

781
01:03:35,366 --> 01:03:37,106
There's a lot of diligence been done.

782
01:03:37,106 --> 01:03:41,026
Looks like it's headed in the right direction, but you're not done until you're done.

783
01:03:41,406 --> 01:03:55,986
So that's the component for us is, when you lend relatively short, you're in contact with
your borrowers and there's a plan that they are executing their way through.

784
01:03:56,166 --> 01:04:01,112
So it's just to make them, make sure that they get that way through and

785
01:04:01,112 --> 01:04:03,304
get through their processes.

786
01:04:04,187 --> 01:04:11,718
And the other component for some of the property things that we lend to is just

787
01:04:13,920 --> 01:04:22,163
if you need rezoning or if you need some component like that, there's a timetable that you
work through, but that is not within your control.

788
01:04:22,163 --> 01:04:24,373
DA is not in your control.

789
01:04:24,373 --> 01:04:26,324
It's up to the council which you're dealing with.

790
01:04:26,324 --> 01:04:26,994
Yeah.

791
01:04:26,994 --> 01:04:32,466
And that is a reasonable estimate.

792
01:04:32,466 --> 01:04:38,444
When you go into something that is a reasonable estimate and everybody, you know, agrees
and signs off on it.

793
01:04:38,444 --> 01:04:39,918
But like I said, it's

794
01:04:39,918 --> 01:04:44,058
it's not something that you can make happen if you've got a regulatory overlay.

795
01:04:44,058 --> 01:04:48,098
So that's a component that you sort of work your way through.

796
01:04:48,938 --> 01:04:55,638
I hope you have enough sort of leeway and maybe a little bit of slack in your timetable.

797
01:04:56,297 --> 01:04:59,118
And we think councils do a great job.

798
01:04:59,118 --> 01:05:02,598
They could maybe do it a little bit quicker, would be helpful.

799
01:05:02,658 --> 01:05:05,958
Efficiency of a council.

800
01:05:05,958 --> 01:05:07,330
Yeah, no, well.

801
01:05:07,330 --> 01:05:14,676
Well, my wife's Greg, so try dealing with the Greek embassy who trying to get the kids
passports, dual passports.

802
01:05:14,676 --> 01:05:17,818
I think the process is still going on two or three years later.

803
01:05:19,020 --> 01:05:23,483
It's a little bit more efficient than some other, you know, embassies around the world.

804
01:05:23,483 --> 01:05:25,034
That would be difficult.

805
01:05:25,034 --> 01:05:26,175
There's no doubt about that.

806
01:05:26,175 --> 01:05:37,164
And, you know, probably to come back to one of your earlier points about, you know, the
macro environment, one of the amazing things I think that people are probably

807
01:05:38,975 --> 01:05:52,345
whether you like Trump or not is the Elon Musk led, you know, sort of doge stuff in terms
of government efficiency, but that might be his biggest export or legacy is people want

808
01:05:52,745 --> 01:05:58,710
things like approval authorities and government expenditure to be more efficient and work
for them.

809
01:05:58,710 --> 01:06:01,592
It shouldn't take you two years to get a passport no matter where it is.

810
01:06:01,592 --> 01:06:05,122
The other thing which I actually love what he's doing is

811
01:06:05,122 --> 01:06:06,352
like we run our own businesses, right?

812
01:06:06,352 --> 01:06:11,864
So we're to kind of do what we want with an extent, you know, essentially, we're beholden
to our investors, right?

813
01:06:11,864 --> 01:06:18,345
And what I love about Elon is, as Elon is doing these presentations in the Oval Office,
he's got his kid on his shoulders.

814
01:06:18,766 --> 01:06:20,486
I love that, right?

815
01:06:20,486 --> 01:06:23,864
You know, a lot of a lot of families back in the day, thank God for technology, right?

816
01:06:23,864 --> 01:06:25,338
You know, we can have couldn't have that.

817
01:06:25,338 --> 01:06:26,888
We both have kids, right?

818
01:06:26,888 --> 01:06:32,890
So it's so good to actually be able to be there in the thick of it, instead of you're
leaving at six, you're back at seven.

819
01:06:32,890 --> 01:06:34,760
And it's like, you know, really say that.

820
01:06:35,094 --> 01:06:42,667
So I thought that was so cool that he's just under bringing like the family and he's just
these little kids just run it around and doing laps.

821
01:06:42,667 --> 01:06:48,480
Meanwhile, he's given like he's addressing the entire world on like huge topics regarding
the Doge.

822
01:06:48,480 --> 01:06:50,521
I just was like, wow, that's awesome.

823
01:06:50,521 --> 01:06:52,641
And more accepted by people.

824
01:06:52,782 --> 01:06:54,354
I love how it's more accepted.

825
01:06:54,354 --> 01:07:03,046
In a way, one of the good byproducts of COVID was you had a lot of zoom meetings and so
you got to meet people's dogs or kids or whoever wanted you in the room.

826
01:07:03,302 --> 01:07:07,023
Some of the bloopers on major TV stations that have were amazing.

827
01:07:07,023 --> 01:07:08,043
Yes.

828
01:07:08,103 --> 01:07:10,654
So people got used to it in a way.

829
01:07:10,654 --> 01:07:15,365
So it's reflective of the nature of change.

830
01:07:15,365 --> 01:07:17,966
Yeah, it's been fantastic.

831
01:07:17,966 --> 01:07:22,547
Is there anything else that we haven't Don't think so.

832
01:07:22,847 --> 01:07:32,974
From our point of view, it probably sounds a bit boring, but we've been running this fund
and running our other stuff for sort of

833
01:07:32,974 --> 01:07:34,555
13 or 14 years.

834
01:07:34,555 --> 01:07:40,660
So, you know, we're not we're not starting a Bitcoin fund or anything like that.

835
01:07:40,660 --> 01:07:45,533
It's it's business as usual for us, navigating the ups and downs of things.

836
01:07:45,533 --> 01:07:52,288
And we you brought up Bitcoin, a guy which I follow Cardone, was a great card and cracker.

837
01:07:52,288 --> 01:07:53,749
I remember his first name.

838
01:07:54,810 --> 01:07:59,093
He just launched the first ever Bitcoin into property fund in the States.

839
01:07:59,093 --> 01:08:00,536
Did you see that Grant Cardone?

840
01:08:00,536 --> 01:08:01,197
Grant Cardone.

841
01:08:01,197 --> 01:08:02,237
Have you heard about this?

842
01:08:02,237 --> 01:08:03,549
I haven't heard about that.

843
01:08:03,549 --> 01:08:07,372
No, no, I thought I'd bring it up as a gig was the first one that's ever happened.

844
01:08:07,372 --> 01:08:12,675
he holds so Bitcoin can come in is my understanding, right?

845
01:08:13,116 --> 01:08:18,070
You can the cash components held as Bitcoin, but then he converts it.

846
01:08:18,070 --> 01:08:27,288
So it's an internal hedge, internal currency hedge, and then uses the Bitcoin to
essentially purchase property inside of a think Southern unit trust.

847
01:08:27,288 --> 01:08:28,628
Okay.

848
01:08:29,510 --> 01:08:30,490
Thoughts?

849
01:08:31,315 --> 01:08:32,595
Not for me.

850
01:08:32,835 --> 01:08:35,537
Not for me as an investor or a manager.

851
01:08:35,537 --> 01:08:37,088
Yeah, we tried.

852
01:08:37,088 --> 01:08:38,018
No, no, I'm not.

853
01:08:38,018 --> 01:08:38,208
not.

854
01:08:38,208 --> 01:08:39,379
pushing.

855
01:08:39,379 --> 01:08:40,714
I was just like I heard it.

856
01:08:40,714 --> 01:08:42,200
I was like it was the first of its kind.

857
01:08:42,200 --> 01:08:44,308
And I was like, how fascinating.

858
01:08:44,308 --> 01:08:45,602
That's where things are going.

859
01:08:45,602 --> 01:08:50,875
Yeah, it might be one of those things that in five years time, we're all doing but thank
you.

860
01:08:50,875 --> 01:08:54,417
Japan's talking about holding XRP and uses illegal exchange as well.

861
01:08:54,417 --> 01:08:59,530
So all these wild things are starting to happen that becoming more normalized.

862
01:08:59,530 --> 01:09:00,248
Yeah, they are.

863
01:09:00,248 --> 01:09:10,084
things that not that long ago you would say what central bank would be be mucking around,
but they're, they're going to invest in digital currency.

864
01:09:12,346 --> 01:09:18,569
we're just going to keep doing what we're doing and then they do what you do and do it
well.

865
01:09:19,370 --> 01:09:24,694
That's hard enough without trying to understand the vagaries of Bitcoin into property.

866
01:09:24,694 --> 01:09:25,730
Absolutely.

867
01:09:25,730 --> 01:09:27,824
Well, Nick, I've really enjoyed this conversation.

868
01:09:27,824 --> 01:09:30,820
And thank you very much for coming on the rate of change with your wealth management.

869
01:09:30,820 --> 01:09:32,223
I really appreciate your time.

870
01:09:32,223 --> 01:09:33,263
Thank you.

871
01:09:33,305 --> 01:09:34,426
Have a good day.