Lion Private
Equity Fund
For investors seeking fixed-income from low-correlation real estate assets within Australia.
What is
the LPE Fund?
The Lion Private Equity Trust (“the Fund”) provides its investors with exposure to a diversified portfolio of real estate-focused credit investments in a mutual fund structure. The Fund is designed to provide investors stable quarterly (or biannual) distributions and an attractive risk-adjusted return.
By focusing on real estate borrowers (specifically property development and property management), the Fund also allows investors to expose their portfolio to low-correlation investments in the alternative asset class universe.
The Fund features three distinct Asset Classes, each of which utilises different debt instruments with different balances of risk and return. These debt instruments include, but are not limited to: mortgages, mezzanine funding, and commercial loans.
For investors who want the diversification benefits of Australian property markets without the downsides that come with direct ownership or exposure, the Lion Private Equity Fund provides an alternative solution.
Fund Highlights
| Structure | Australian wholesale unit trust |
| Distributions | Quarterly, Biannually |
| Investment Term | 36 months |
| Eligibility | Wholesale Investors Only |
| Minimum Investment | $200,000 |
| Founding Member Applications Due | October 31st, 2020 |
| Fees | Trustee Fee: 0.03%-0.10% Management Fee: 0.25% of GAV Admin Fee: $25,000-$35,000 Subscription Fee: 1% of application monies Promoter Fee: 1% of GAV |
| Performance Bonus | 20% of any profit past targeted return |
your investment options
Fund target
portfolio
Interest Rates
| First Mortgages | 8-15% p.a. |
| Second Mortgages | 14-27% p.a. |
| Mezzanine Funding | 16-30% p.a. |
| Commercial Loans | 6-7% p.a. |
| Construction Loans | 9-14% p.a. |
Class A: Lion Income
Senior Debt First Mortgages & Commercial Loans for Real Estate & Rent Roll Acqusition
Targeted Return: 8% per annum
In Class A, the funds we loan are utilised by the borrower to acquire a property development site or a rent roll. All capital from this Class is loaned as senior debt, either as a first mortgage or a commercial loan with collateral. This means that LPE is the first lien to be repaid in the event of a default or liquidation. Loans are issued with interest rates between 6.5% and 15% per year with monthly repayments in accordance with the lending criteria of Class A.
First mortgages and loans for rent rolls have been grouped together as they provide the most reliable sources of income. A borrower with only a first mortgage is not under excessive financial pressure, and a rent roll is an income-producing asset with solid cash flow. The monthly repayments combined with our first lien position mean that Class A is the most stable and secure investment option within the LPE Fund.
This security, combined with the quarterly distributions to investors, means that Class A is an ideal option for investors seeking a reliable source of passive income.
Targeted Portfolio
Interest Rates
| First Mortgages | 8-15% p.a. |
| Commercial Loans | 6-7% p.a. |
Example 1
Background: A borrower applies for a loan to acquire two side-by-side lots equaling 1,200m² in the inner suburbs of Melbourne, valued at approximately $2.8 million. The borrower intends to demolish the existing dwellings and raise four luxury townhouses with an estimated GRV of $12 million.
Security: First Mortgage
LVR: 70%
Loan Amount: $1,960,000
Term: 36 months
Interest Rate: 10% p.a.
Example 2
Background: A Brisbane-based real estate agency with an established property management business has requested a loan to purchase a rent roll from a competitor in a neighbouring suburb. The rent roll has 186 active leases, a 2.9x multiplier applied to its gross annual income, and a purchase price of $980,000.
Security: Director guarantees secured with collateral
LVR: 80%
Loan Amount: $784,000
Term: 36 months
Interest Rate: 10% p.a.
Class B: Lion Accelerate
Subordinate Debt Second Mortgages & Mezzanine Funding for Real Estate Refinancing
Targeted Return: 16% per annum
In Class B, the funds we loan are utilised by the borrower to refinance an existing property development site. All capital from this Class is loaned as subordinate debt, either as a second mortgage or mezzanine funding. Loans are issued with interest rates between 14% and 30% per year with monthly repayments.
Second mortgages and mezzanine funding have been grouped together in this Class as they provide higher returns than Class A, but they also have a higher element of risk since they are not first lien. In the event of a default or liquidation, the borrower may be unable to fully repay the loan to LPE and capital loss may occur. The Fund mitigates this risk through the provision of personal guarantees by the borrower as outlined in the Fund’s lending requirements and criteria.
The high returns and quarterly distributions to investors mean that Class B is suitable for investors with a higher risk threshold who want to grow their wealth as fast as possible.
Targeted Portfolio
Interest Rates
| Second Mortgages | 14-27% p.a. |
| Mezzanine Funding | 16-30% p.a. |
Example 1
Background: A borrower is requesting a loan to secure a development site in a prime inner city location. Urgent funding to settle is required whilst their overseas partner arranges for funds to be transferred.
Security: Second Mortgage
LVR: 80%
Loan Amount: $1,100,000
Term: 3 months
Interest Rate: 28% p.a.
Example 2
Background: A borrower is requesting a loan to refinance an existing debt on a property development. The borrower is currently waiting on settlement of stock they have sold to provide liquidity within the coming weeks but urgent funding to settle the refinance is required in the meantime.
Security: Unregistered second mortgage with provision of caveat and personal guarantees
LVR: 80%
Loan Amount: $1,600,000
Term: 3 months
Interest Rate: 27% p.a.
Class C: Lion Growth
First Mortgages & Second Mortgages for Real Estate Construction Financing
Targeted Return: 9% per annum
In Class C, the funds we loan are utilised by the borrower to fund the construction of a property development project. All capital from this Class is loaned as either a first mortgage or second mortgage. Loans are issued with interest rates between 9% and 14% per year with interest capitalisation due upon completion of the loan term.
Loans for the purposes of construction funding are in a separate class since these loans incorporate interest capitalisation and do not require monthly repayments. As a result, distributions to investors are made on an annual basis.
Class C is suitable for investors who are seeking a higher return than Class A, but less risk than Class B.
Targeted Portfolio
Interest Rates
| First Mortgages | 8-15% p.a. |
| Second Mortgages | 14-27% p.a. |
Example 1
Background: A property developer has requested a construction loan for 20 townhouses in the northern suburbs of Brisbane. The site has an unencumbered land value of $4,000,000 and a GRV of $18,000,000.
Security: First Mortgage
LVR: 65%
Loan Amount: $10,000,000
Term: 36 months
Interest Rate: 14% p.a.
Example 2
Background: A property developer has requested a construction loan for 26 townhouses in the southeastern suburbs of Melbourne. The site has an unencumbered land value of $4,450,000 and a GRV of $19,230,000.
Security: First Mortgage
LVR: 65%
Loan Amount: $6,000,000
Term: 36 months
Interest Rate: 14% p.a.