Elkstone Alternatives June 2020
Our alternative debt opportunities are delivering for investors, with two loans fully repaid in June. The first, a 12 month term loan was repaid within 6 months. As a result of the make-whole provision, investors received a full 12 month’s interest, providing a 32% IRR. The second a short term loan, was repaid within four months, providing a 40% IRR. We’ve included an article this month which shows the uptick in activity during the pandemic and how some providers in The US are responding to it.
Pádraig Owens is a Director of the Alternatives team at Elkstone.
In June we completed drawdown of a secured loan to an existing borrower with whom we have a good track record. This is a 12 month senior loan, secured on two residential properties (65% LTV), paying an 8% quarterly coupon to investors.
The above demonstrates an appetite from both our borrowers and investors as we emerge from the impact of COVID-19. Early indications are suggesting that this appetite mirrors what is happening in the wider alternative debt market, demonstrating a trend where alternative lenders and venture debt providers are servicing the market that traditional lenders are vacating.
As outlined in last month’s update, the period after a downturn usually provides very good risk-reward opportunities for investors, who are willing to offer debt solutions as good lending opportunities are rejected by traditional sources of funding.
Article of interest
This month’s feature article describes the uptick in activity during the pandemic and how some providers in The US are responding to it – read more here.