Why We Play the Long Game in Private Lending.

As a result of last month’s article, where we touched on how we are different from others in the private credit market and addressed the scrutiny some other funds are facing at the moment, we received a wave of positive feedback from our investors — Many of you were reassured to hear that GPS continues to do things strategically backed with 30+ years of experience in the industry.

Given the recent turbulence in global markets, including the impact of Trump’s tariffs and ongoing share market fluctuations, high volatility remains a key factor in today’s economic outlook.

Despite these uncertainties, we believe believe investing through private lenders (such as GPS) in Registered First Mortgages for residential construction in South East QLD remains an investment class that is still worth considering.

But — and it’s an important “but” — not all private lending is created equal.

That is why we say we are here for the long game.

We are not lured by trendy market swings, and we hold firm in what we believe benefits our investors by staying disciplined and continuing due diligence, based on 30 years of experience, to provide the best possible service to our investors.

Back during the GFC and COVID, a lot of deals came across our tables that looked shiny and offered an opportunity to charge a higher lending rate that could support an increase in GPS’s investor distribution rate, but we passed on these opportunities as they would have contradicted our primary principle – don’t lose investors hard earned capital going after just any old deal that is offered.

We know that finding the perfect balance is in building strong and long-term relationships with borrowers and builders, and only funding those projects that are in line with GPS’s proven lending parameters even if that means saying no.

Remember, that where there is a high investor rate, generally there will be a higher lending risk. Conducting some due diligence, and analysing the background of who is offering these returns and their track record, will help you make a fully informed decision.

To help you cut through the complexity, we’ve put together some tips on investing in residential construction to highlight the key things to look for when assessing any private investment opportunity.

1. Research on the Fund’s Track Record: Understand how long the business has been in the game and how they have dealt with major storms like COVID, inflation or even the GFC (if they have been around that long). This should give you information on how successfully the fund has been paying the promised distribution to investors.
2. Do Due Diligence:
   • • Start with whether the fund has the appropriate licence from ASIC.
   • • Check the fund’s website and any communication materials like newsletters and blogs to understand how transparent they have been in sharing the information with the investors.
   • • Consult the fund’s Target Market Determination document – this will tell you if your goals align with the fund’s goals.
3. Don’t skip the Fund PDS, IM’s and or SPDS’s:
   • This is where you can get the details about the overall fund performance and the project details, borrower and builder, and their relationship with the company (if it’s a Contributory Mortgage Fund).
   • Look for key funding information such as the average LVR, liquidity details and funding plans. This will allow you to see how the fund is, and will be managed. This can help with knowing the risk mitigation and how the fund plans to oversee any defaults or downturns.
4. Is the fund leveraged? Does the fund have borrowings to other parties that will be prepaid in preference to investors funds. Do these skew the offering to investors and complicate the return of investor funds?

One thing is for certain, markets will rise and fall. However, doing your homework and choosing a fund that has always been disciplined and is built on long-term relationships like us (GPS), is what we think will help you stay in the course amid the unstable landscape.

*Past performance is not a reliable indicator of future performance.

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Questions? We’re always on hand to chat!