10th November 2022
Dear Investors,
We are pleased to provide this investor update with respect to the ASCF Private Fund.
Since our last quarterly update, the fund has continued to perform strongly, and we would like to take this opportunity to provide you with detailed information on each of the investments in the fund as at 30th September 2022.
Key Fund Information
Funds Under Management as at 30th September 2022: $32,632,346.58
Unit Price as of 30th September 2022 – $1
Income Distribution for October 2022: Paid
Financial Statements
We are pleased to advise that the financial statements for the ASCF Private Fund and its wholly owned sub-fund Australian Mortgage Finance Services Fund for the financial year ending 30th June 2022 have been completed.
A copy of the full-year financials for ASCF Private Fund is available for viewing and download by clicking here.
A copy of the full-year financials for the Australian Mortgage Finance Services Fund is available for viewing and download by clicking here.
Fund Investments
ASCF Private Fund, via its wholly-owned sub-fund Australian Mortgage Finance Services Fund (AMFS), has undertaken several investments under its mandate since inception, and listed below is the current list of investments as at the 30th of September 2022.
ASCF High Yield $22,125,297.45 (refer note 1.)
ASCF Managed Investments Pty Ltd C Class Notes $3,000,000 (refer note 2.)
ASCF Managed Investments Pty Ltd C Class Notes $4,040,000 (refer note 3.)
Direct Loan Investments $3,420,669.29 (refer note 4.)
Cash at Bank ASCF Private $275,628.44
Cash at Bank AMFS $193,216.30
Note 1. ASCF High Yield
AMFS currently has $22,125,297.45 invested in ASCF High Yield Fund, a retail fund managed by Australian Secure Capital Fund Ltd. AMFS, as a wholesale investor, receives a preferential rate of 8.60% per annum paid monthly from the fund due to the amount invested.
All interest payments have been made on time and in full by ASCF High Yield to AMFS at the prescribed rate on the due dates.
The audited financials for ASCF High Yield Fund for the financial year ended 30th June 2022 have been completed and are available for viewing or download by clicking here.
For further information concerning ASCF High Yield Fund, please refer to the Product
Disclosure Statement by clicking here or visit our website ascf.com.au where you will be able to view our monthly updates on each of our retail funds including ASCF High Yield.
Note 2. ASCF Managed Investments Pty Ltd C Class Notes
ASCF Managed Investments Pty Ltd (ASCFMI) is a part of the ASCF Group of Companies and issued a $35m bond in September 2018 by issuing A, B and C Class Notes which were fully subscribed.
A copy of the IM for ASCF Managed Investments Pty Ltd is available by clicking here.
ASCF Private, via its sub-fund AMFS, acquired the C Class notes on the 14th of September 2021 for a consideration of $3,000,000 at par value. These notes currently earn 15% per annum, payable monthly by the Mortgage Capital Australia Trust, which acts as the service entity to the ASCF Group. This transaction was foreshadowed in the ASCF Private Information Memorandum under clause 3.2(b).
Since the completion of the transaction, all interest payments have been made on time and in full by the Mortgage Capital Australia Trust to AMFS at the prescribed rate on the due dates.
Note 3. ASCF Managed Investments Pty Ltd C Class Notes
On the 7th December 2021, ASCF Managed Investments Pty Ltd issued additional C Class notes totalling $4,040,000. On the same day, it redeemed the B Class notes then on issue totalling $4,000,000.
These notes were issued on the same terms as the existing C class notes. The notes were acquired by AMFS and earned interest of 15% per annum payable monthly by the Mortgage Capital Australia Trust.
Since the completion of the transaction, all interest payments have been made on time and in full by the Mortgage Capital Australia Trust to AMFS at the prescribed rate on the due dates.
The audited financials for ASCF Managed Investments Pty Ltd for the financial year ended 30th June 2022 have been completed and are available for viewing or download by clicking here.
The loan book for ASCF Managed Investments Pty Ltd continues to track well and aligns with the prior year’s performance.
ASCF Managed Investments Pty Ltd is required to undertake quarterly audit reports to ensure it is not in breach of any of its note covenants. The audits are undertaken by Grant Thornton and are due 45 days after the end of each quarter. Please click here to view the quarterly audit reports for the prior fiscal year. The audit report for the quarter that ended 30th September 2022 is currently being undertaken and a copy will be provided in our next update.
Note 4. Direct Loan Investments
AMFS does not intend to originate new loans at this point, but rather acquire via assignment loans that are in default from the ASCF retail funds and ASCF Managed Investments Pty Ltd at reasonably conservative loan-to-valuation ratios.
The benefit of acquiring defaulting loans is that the interest rate applicable to these loans is much higher than the standard rate charged to borrowers who pay their interest on time.
These loans, therefore, offer a high internal rate of return on the capital invested in the loan presuming the full loan value including all loan interest and fees are recovered.
Listed below are the details of the direct loan investments made by AMFS to date.
Loan No. 1
| Loan Assignment Date | 11th March 2022 |
| Loan security | 1st registered mortgage |
| Current Loan | $2,070,076.16 |
| Valuation | $4,000,000 |
| Estimated current LVR | 51.75% |
| Standard loan interest rate | 15% p.a. |
| Default loan interest rate | 30% p.a. |
| Property details | 10 lot residential subdivision Old Beach, Tasmania. |
On the 11th of March 2022, AMFS made its first direct loan investment by accepting an assignment of a defaulting loan from ASCF Managed Investments Pty Ltd for a total consideration of $1,534,611.49.
The assignment granted AMFS 1st mortgage rights over a Development Approved 10 lot subdivision in Tasmania, which the borrower never completed.
AMFS has subsequently paid for all the civil works associated with the subdivision and all works have now been completed and the plan of subdivision has been lodged with the title’s office in Tasmania.
The balance now owing on the loan including accrued interest at the standard interest rate applicable to the loan is $2,070,076.16. This includes the costs associated with all the subdivision works.
Each lot is expected to sell for between $350,000 to $400,000 on completion and upon the issue of the titles marketing of the lots will commence. Please click here to view a short marketing video of the subdivision.
At this stage we believe the full amount owing under the loan will be repaid in full and that we will also recover the majority of the default interest owed on the loan.
Loan No. 2
| Loan Assignment Date | 1st June 2022 |
| Loan security | 2nd registered mortgage |
| Current Loan | $209,738.31 |
| Valuation | $1,300,000 |
| Estimated current LVR | 38.09% (including existing 1st mortgage) |
| Standard loan interest rate | 18% p.a. |
| Default loan interest rate | 36% p.a. |
| Property details | 2.64 ha vacant land Avoca Beach, NSW |
This property was sold on the 6th of October by the borrower under our supervision for $1,745,198 with settlement due on the 11th of February 2023. The amount owing to the 1st mortgagee was $455,083.23 at the inception of the loan. We will recover the full amount of the loan including interest at the standard rate plus the majority of our default interest.
Loan No. 3
| Loan Assignment Date | 27th June 2022 |
| Loan security | 1st registered mortgage |
| Current Loan | $1,140,854.82 |
| Valuation | $1,530,000 |
| Estimated current LVR | 82.67% |
| Standard loan interest rate | 18% p.a. |
| Default loan interest rate | 36% p.a. |
| Property details | Residential house Forest Hill, Victoria |
This property was sold on the 15th of October by the borrower under our supervision for $1,380,000 with settlement due on the 11th of November 2022. We will recover the full amount of the loan including interest at the standard rate plus the majority of our default interest.
We will continue to provide additional updates concerning the ASCF Private Fund every quarter, but should you have any queries or questions in the interim, please do not hesitate to contact me directly.
Regards,
Filippo Sciacca
Director
Investor Relations, Asset Management & Compliance – Australian Secure Capital Fund Ltd