Active stewardship. Investor alignment.
PRIVATE CREDIT FAQ.
What is private credit?
Private credit is an asset class comprising privately originated and negotiated debt investments, typically provided outside public debt markets and traditional bank lending channels. Returns are generated primarily through contractual interest payments and fees.
Importantly, private credit does not inherently mean property-backed, floating-rate, first mortgage or high-yield. These are features of specific private credit investments, strategies or funds, rather than defining characteristics of the asset class itself.
What is the difference between private credit and private equity?
Private credit involves lending capital to businesses or other borrowers in return for contractual interest payments and the repayment of principal. Private equity involves investing capital in exchange for an ownership stake in a business, with returns typically dependent on the growth and eventual value of that business.
The key distinction is that private credit investors are lenders rather than owners. Credit generally ranks ahead of equity in the capital structure, while equity investors typically assume greater risk in exchange for greater participation in the potential upside of the business.
How does the Capspace Private Credit Fund work?
The Capspace Private Credit Fund is a pooled, property-backed private credit fund that invests in a diversified portfolio of secured loans. Rather than investor capital being allocated to a single borrower or transaction, it is pooled and deployed across multiple loans and underlying security assets. The Fund applies disciplined credit assessment, prudent loan structuring and active portfolio management, with a focus on managing risk and generating regular income.
Who can invest in the Capspace Private Credit Fund?
The Capspace Private Credit Fund is available to wholesale investors and Family Offices.
The Fund is designed for investors seeking regular income and portfolio diversification through exposure to a professionally managed, property-backed private credit portfolio, with an investment approach focused on the preservation of capital and disciplined risk management.
We invite prospective investors to review the Fund’s Information Memorandum and seek appropriate professional advice to determine whether an investment in the Fund is appropriate for their individual circumstances.
How does Capspace assess borrowers?
Capspace applies institutional credit disciplines to every lending opportunity. Assessment considers the borrower and their capacity to service the loan, the quality and value of the underlying security, Loan-to-Value Ratio (LVR), loan purpose, structure and a clearly defined exit strategy. Importantly, security properties are independently valued on an ‘as is’ basis.
What security supports Capspace loans?
Capspace lending is secured by Australian property through first and second registered mortgages, with each security property assessed against defined property and suburb ratings to evaluate the quality, location, marketability and underlying strength of the security.
How does Capspace seek to protect investor capital?
The preservation of capital starts before capital is deployed. Capspace applies a disciplined, multi-layered approach to credit assessment and risk management, incorporating rigorous borrower selection, prudent leverage, independent ‘as is’ property valuations and clearly defined exit strategies.
At the individual loan level, lending is secured by Australian property through first or second registered mortgages, with additional protections potentially including security over business assets, Director guarantees and other structural risk-management measures.
At the portfolio level, investor capital is diversified across multiple secured loans rather than concentrated in a single borrower or transaction, with each loan actively monitored throughout its life. Capspace also does not provide construction finance, limiting exposure to construction and development completion risk.
Together, these measures are designed to protect investor capital and support portfolio resilience throughout the credit cycle.
What returns does the Capspace Private Credit Fund target?
Since the company’s inception, he Capspace Private Credit Fund has delivered targeted returns of 8–10% p.a., with distributions paid monthly.
How liquid is an investment with Capspace?
The Capspace Private Credit Fund is designed as an income-focused investment with a minimum investment term of 12 months. Following this period, investors may request a withdrawal by providing a minimum of 60 days’ notice, subject to the Fund’s applicable withdrawal and liquidity provisions. Please refer the Fund’s Information Memorandum for full details of the applicable withdrawal terms and conditions.
What is the minimum investment in the Capspace Private Credit Fund?
The Fund has a minimum initial investment of $100,000. Please refer the Fund’s Information Memorandum for eligibility requirements and the latest investment terms.
What fees apply to an investment in the Capspace Private Credit Fund?
Capspace does not charge investors any fees, including establishment, ongoing management, redemption or exit fees.
Why do investors include private credit in a portfolio?
Private credit can appeal to investors seeking an additional source of income and diversification within a broader investment portfolio. Returns are primarily generated through interest income from lending rather than movements in listed markets, providing a differentiated source of returns that can contribute to greater portfolio resilience across varying market conditions.
What is Capspace’s approach to managing investor capital?
Capital stewardship is the foundation of Capspace’s credit philosophy and investment governance framework, establishing the disciplines through which investor capital is assessed, allocated, managed and returned. The approach prioritises preservation of capital, disciplined deployment and the generation of appropriate risk-adjusted returns across the credit cycle.
At origination, each lending opportunity is subject to rigorous credit assessment across borrower quality, serviceability, leverage, security position, asset quality, property and location fundamentals, and clearly defined repayment and exit pathways. Capital is deployed only where the underlying risk profile, security structure and expected return meet Capspace’s credit parameters.
Following deployment, each exposure is subject to active oversight throughout the loan term, with ongoing monitoring of borrower performance, security position and emerging credit risks. Where circumstances change, Capspace applies proactive credit management and, where required, recovery strategies focused on protecting the Fund’s position and maximising the realisation of available security.
At the Fund level, these principles extend to portfolio construction, diversification, concentration management and liquidity. Individual credit decisions are therefore considered not only on their standalone merits, but within the context of their contribution to the risk and return characteristics of the broader portfolio. This framework establishes a consistent and disciplined approach to the stewardship of investor capital across the full credit lifecycle, from origination and deployment through to ongoing management, repayment and, where necessary, recovery.
