Introducing the Zagga Opportunities Fund – Series 1

The Zagga Opportunities Fund – Series 1 is the first of our opportunistic closed-end funds and has been established to provide prospective investors
with an opportunity to invest in the growing opportunities of the commercial real estate (CRE) debt market through private mortgage secured loans.

About Series 1

Eligible Investors

Wholesale Clients as defined under s761G of the Corporations Act.

Purpose

To provide Investors an opportunity to invest in a specifically curated selection of current Zagga-facilitated, first-mortgage secured loans which have been provided to credit-worthy Borrowers specifically for construction projects. The Underlying Loans that form the portfolio in Series 1 must meet all of the following requirements:
• construction works being greater than 70% complete against total costs of the development, certified by an independent, external Quantity Surveyor
• Practical Completion dates, as provided by external Quantity Surveyors, are forecasted to be within four months.

Minimum Subscription Amount1

$250,000 per Investor entity, subject to the discretion of the Investment Manager to accept lesser amounts.

Investment Term

Minimum Term is six months from the Commencement Date, with an estimated term of 12 months for full repayment of principal.
New loans to ZILT will not be made by the Trustee in relation to Series 1 after the Minimum Term, after which Investor principal will be repaid wholly or partly on a pro-rata basis as Underlying Loans are repaid. Should the Investment Term exceed 12 months, any remaining capital will earn the Premium Return until the full principal is repaid.

Target Return

The Trust's Investment Objective is to achieve a Target Return of the RBA's Official Cash Rate plus a margin of 5.65% to 7.15% p.a. (net of fees and expenses).

Note: returns are subject to NRWT where applicable

Commencement Date

The commencement date will be the earlier of:
• the fifth business day from the date of a formal notice issued by the Trustee calling for funds from Investors; and
• 12 September 2023.

Income Distribution

• Interest is accrued daily and paid monthly in arrear
• Distributions will occur within five Business Days of each month
• Distributions will be paid to the nominated bank account of an Investor
• Investors may not elect to reinvest their distributions

1. The Trustee may alter the minimum subscription amounts specified at any time without prior notice to Investors.

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Series 1 will invest in property assets across residential, commercial and industrial sectors

Below is a high-level summary of the type of loan transactions in which Series 1 may invest.

Caulfield VIC

Loan Purpose

To construct a mixed-use development consisting of nine residential units and one commercial space

LVR

64.99%

Project Status

Project Works are 95% completed against cost with the QS forecast date for practical completion being within the next month.

Miranda NSW

Loan Purpose

To construct eight townhouses with basement parking and strata subdivision

LVR

66.82%

Project Status

Total construction works completed at 89% of total cost. QS forecast practical completion date is within the next month.

Sans Souci NSW

Loan Purpose

Construction facility for 38 residential apartments and four commercial spaces

LVR

60.95%

Project Status

Main works are completed. Currently awaiting final certifications and compliance inspections to be conducted.

Sutherland NSW

Loan Purpose

For the development of 21 townhouses


LVR

67.34%

Project Status

Practical Completion expected to be reached within the month. Occupation Certificate will be issued shortly after.

Warrawong NSW

Loan Purpose

To construct a service station, retail convenience store and fast-food outlet

LVR

70%

Project Status

Main works are completed. We expect Practical Completion to be reached within the month. Occupation Certificate will be issued shortly after.

Wynnum West QLD

Loan Purpose

To construct 18 three-bedroom townhouses


LVR

65%

Project Status

Total construction works completed at 88% against cost as certified in the latest QS Report. QS forecast completion date is within the next two months. 

Note: These current loan transactions meet the Investment Criteria for Series 1, as detailed in the Information Memorandum. They may not represent the actual Underlying Loans; the Investment Manager will select the initial Underlying Loans at Fund Commencement Date.

We are not looking to outperform the market​

We present risk-mitigated CRED opportunities that consistently deliver steady income which,
when compounded over many years, constitute highly attractive returns.

Research Rating and Report

Zagga, a fully licensed boutique, non-bank lender and investment manager, has confirmed that independent research house, SQM Research (SQM) has awarded a 4-star ‘Superior’ (Investment Grade) rating for the Zagga Investments Lending Trust (ZILT), for the third year running.

The rating contained in this document is issued by SQM Research Pty Ltd ABN 93 122 592 036 AFSL 421913. SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale clients, utilising a proprietary review and star rating system. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. The rating may be subject to change at any time. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment scheme.

SQM Booklet

Why Zagga?

We are an established Australian boutique CRED specialist and investment manager.

We have a proven track record and maintained strong momentum
and above-system growth since inception in 2017.

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Our Experience.

Your Investment.

Incorporated in 2016, the Zagga team, consisting of close to 20 people, has over 200 years’ combined experience covering the areas of:

  • Treasury and Finance Distribution,
  • Marketing and Business Development,
  • Credit and Operations

Our Management and Board comprises highly experienced individuals with extensive expertise across CRED.

We’re helping our borrowers bring projects to fruition whilst also providing investors with attractive returns.
Visit our full website to find out more.

FAQs

Have questions on how it all works? Have a read through the FAQs below, and if your question isn’t answered, 

we’d love to speak to you, so please get in touch.

Questions?
Look here.

Banking sector structures and regulatory intervention over the past 10 years have created a funding gap as the major banks have been unable to meet the needs of quality borrowers.

The major banks tend to have more rigid lending criteria due to:

  1. Australian Prudential Regulation Authority (APRA) regulation that restricts their ability to provide flexibility on their loan terms, and therefore may not always be able to meet a borrower’s specific requirements.
  2. Basel III regulatory framework reforms (which required banks to maintain certain leverage ratios and keep certain levels of reserve capital on hand). This resulted in Australian major banks withdrawing further from commercial real estate (CRE) debt as they focused on other parts of their funding operations (e.g. residential mortgages). Whilst major banks are still funding CRE transactions, it has been far more suppressed and on more restrictive terms.

This tightening by major banks means quality bank clients are seeking alternative funding solutions as they require offer more flexible lending criteria, faster turnaround times, and bespoke solutions.

At Zagga, we pride ourselves on our ability to provide tailored solutions to meet the unique needs of each borrower and deliver a commercial, flexible, and responsive outcome, whilst always maintaining our rigorous and thorough assessment of the loan.

Download our Capability Statement here.

Market dynamics indicate that the Australian CRED market is on a growth trajectory. The Australian CRED market is estimated at $450bn and growing at c.2 – 5%p.a. underpinned by attractive fundamentals centred on urbanization and population expansion.

The two key driving forces behind Australian CRED growth are:

  1. Further regulatory pressures on the major banks leading to structural dislocation in their lending capacity and practices. This is projected to reduce major banks’ share of CRED from the current ~80% to ~60% by 2025 due to their inability to provide best service to their clients.
  2. Population growth underpinning continued demand for housing as well as industrial growth as new, larger facilities are being built to accommodate the growth of e-commerce.


Zagga’s latest white paper
explains how commercial real estate debt (CRED) can tap into the current market conditions.

 

Similar to our Investor base, our roster of Borrowers has grown steadily through personal relationships and word of mouth, with our track record allowing this to continue to occur organically.

Over 40% of Zagga’s loans come from repeat borrowers.

Zagga may also originate loans from commercial brokers, accountants, lawyers, quantity surveyors, and consultants within the property industry.

Each loan we fund is supported by a clear and achievable ‘exit strategy’, typically including at least one or two alternative exits.

Given the largest allocation of our portfolio relates to residential construction, a number of our facilities are self-liquidating, meaning at completion we are either cleared by sales on the project, or a refinance from a major banking institution.

In other circumstances, the loan may have a clear exit strategy in place, such as, a cash event from an external matter, or an uplift in planning due to development approval that takes out our facility.

We always want to ensure we are working on worst case scenarios in order to be comfortable going into any new transactions.

Past performance is not a reliable indicator of future performance and investments are subject to investment risk, fees and costs. Returns are not guaranteed.
Prospective investors wishing to invest in Series 1 should fully consider the Series 1 IM and Series 1 Subscription Agreement, available from this webpage, before applying to invest.

Zagga Market Pty Limited (Australian Credit Licence 490904) ACN 611 662 401 acts as the Servicer of loans acting on behalf of the credit provider, Zagga Investments Pty Limited (AFSL 492354) ACN 615 154 786, trustee of the Zagga Investments Lending Trust.