Investment Strategy

Balmain’s investment strategy is to construct and actively manage a diversified, granular portfolio of mid-sized ($5-$10M) Australian and New Zealand secured commercial real estate loans. The strategy aims to generate an attractive net return over 90 day bank bills whilst providing underlying capital stability.

Balmain believes that a granular investment portfolio will deliver better risk-weighted returns than a portfolio of a small number of large loans and that this strategy will deliver the following benefits:

  • Enhanced portfolio diversity by geography, security type, borrower, investment category and industry sector
  • Limited competition as access to mid-sized loans requires significant distribution capacity
  • Higher average margins and greater resilience to margin pressure given limited competition
  • Quality borrowers that generally provide additional corporate and personal guarantees
  • Less complex securities that require less capital and are easier to manage on default
  • Lower loss given default rates and outstanding balances that are easier to recover