Amid strong demand, Metrics is broadening access to its real estate debt strategy established in 2017, with a proven track record.¹

But for Metrics Credit Partners Managing Partner, Andrew Lockhart, there are higher priorities than simply bringing product to market.

“We are focused on protecting and preserving investor capital while delivering sustainable income”, says Lockhart. With Metrics the only non-back corporate lender among Australia’s top 20 corporate lenders overall, such scale affords Metrics the ability to keep to its focus as well as provide new opportunities for investors.

The newly minted Metrics Real Estate Income Fund aims to widen access to retail investors whilst leveraging the philosophy and strategy behind the Metrics Real Estate Debt Fund – which has been around since 2017 but has only been available to wholesale and institutional investors.

With the strategy now accessible to a broader audience, I sat down with Lockhart to revisit the investment philosophy and the features, benefits, and risks of the new vehicle.

“You sit at the senior part of the capital structure, you’re secured, and there are covenants imposed on the borrower,” Lockhart explains. These covenants, which include leverage limits and interest cover ratios, ensure a disciplined approach to risk. Furthermore, the average loan-to-valuation ratio (LVR) of less than 65% lessons the risk to investor capital even in market downturns.

With over 120 positions and a fund size approaching $4 billion, the underlying Metrics Real Estate Debt Fund provides diversification across residential, industrial, and hotel investments. The short-duration nature of the portfolio (maturities of less than 12 months) also allows for active risk management and flexibility.

“We’ve invested substantially in direct origination capability. We want people with strong skill sets, relationships, and networks in the market,” Lockhart says.

This strategy positions Metrics as a relevant and trusted financing partner for sophisticated borrowers according to Lockhart, who adds that “being large in scale allows us to be relevant to larger, more sophisticated borrowers”.

By maintaining strong client relationships and offering customised financing solutions, Metrics ensures a steady pipeline of high-quality investments.

“Our business is built around risk management – who we do business with, the reputation risk, and the capital structure risks we are exposed to with any individual borrower,” Lockhart explains. Metrics employs a team of over 170 professionals, including legal, financial, and due diligence specialists, to assess and monitor each transaction.

Unlike public markets, private credit offers access to detailed, confidential borrower information, allowing for ongoing risk assessment.

“It’s not like we’re just waiting for the half-year report to come out on an ASX-listed company. We have intimate knowledge of the business or project and access to real-time information,” Lockhart notes.
If issues arise, Metrics takes proactive steps to mitigate risk. “If a borrower faces challenges, we work with them to come up with solutions – whether that’s additional equity injection, asset sales, or restructuring,” he says.

In cases where more decisive action is needed, the team has the expertise to manage workouts or restructures efficiently, lessoning the risk to investor capital.

Lockhart highlights the importance of this accessibility:

“Since 2017, we’ve demonstrated a proven track record with a well-diversified, scalable fund. Now is the right time to broaden access to a wider range of investors.”