Qantas Super has invested in a real estate opportunistic debt fund via investment manager Benefit Street Partners (BSP).
The manager lends to real estate in the United States, from offices to hotels, retail space, and multi-family residential property. These loans are then essentially packaged up and sold in tranches to other parties through what’s called a collateralised loan obligation. Each tranche sold to investors may also have a different risk and return profile.
If you’re thinking that sounds a bit like The Big Short, Qantas Super investment manager Chris Grogan explained that, rather than distressed assets, BSP is looking for quality real estate investments. Quality real estate investments mean they are not highly leveraged – that is, there’s not too much debt versus equity – are in markets with strong or growing demand for tenants or residents, and where loans have strong lender protections, known as covenants.