Investing in business and property success
Over the reporting period, the Fund has invested in loans to a broad range business owners and property investors. 28 loans have been made in the 12 month period and we have been pleased with the quality of the portfolio.
See below for some examples.
Client Scenario: Simplified project funding
Why did this client need our funding: Funding needed to complete a small residential townhouse project. This client felt their bank was tying them up in excessive red tape, so they approached Merx for a solution.
Amount: $1,500,000
Industry: Property development
Location: Auckland
LVR: 55% on completion
Type of security: First mortgage on the new townhouse development and second mortgage security on the broader portfolio.
Path to repayment: Refinance once the investment units are complete and rented.
Why Merx: The client’s bank were looking to impose the same conditions you’d expect for funding a $50 million project, i.e., pre-sales, full quantity surveyor review and monitoring, etc. We provided a more pragmatic approach – Simplified Project Funding – advancing funds on a progressive basis so this experienced property owner could get moving.
Client Scenario: First-mortgage funding
Why did this client need our funding: Purchasing a property with development potential. This client planned to reposition and redevelop the property with the addition of new units, before reselling it for a good profit margin. Their mainstream lender was reluctant to rely on sale of the property for loan servicing and repayment.
Amount: $1,040,000
Industry: Property development
Location: South Auckland
LVR: 80%
Type of security: First mortgage on the client’s property.
Path to repayment: Completion and sale of the project.
Why Merx: Following our assessment, we recognised the potential of the client’s project and stepped in with a tailored solution. We decided to help with a first-mortgage loan at 80% of the purchase price.
Client Scenario: Business expansion
Why did this client need our funding: Funding needed to expand the presence of a retail business. They identified strategic locations that promised a good influx of foot traffic and an opportunity to reach new markets. However, despite their clear plans and a track record of success in their existing location, the bank was hesitant to support them.
Amount: $150,000
Industry: Retail business
Location: Auckland
LVR: 70%
Type of security: Business assets and second mortgage over residential property.
Path to repayment: Increased business cashflow to repay the loan over time.
Why Merx: Recognising the potential in their plans and the good trading base they already have, we stepped in to bridge the gap by providing a tailored solution, enabling the business owner to secure new locations and roll out the expansion.
Client Scenario: Asset import finance
Why did this client need our funding: A construction service provider was considering upgrading their machinery by importing new drilling equipment. Despite having a clear vision of how this equipment could elevate their business, their bank would only provide funding once the machine was already in New Zealand and operational.
Amount: $420,000
Industry: Construction service provider
Location: Bay of Plenty
LVR: 75%
Type of security: Second mortgage over the client’s house.
Path to repayment: Refinance of asset once landed in New Zealand and operational.
Why Merx: Spotting the potential for this business owner to further grow their business, we offered an outside-the-box solution. We provided a loan based on the value of the incoming machine, backed by a second mortgage over the client’s local property. This helped bridge the two-month gap required for the machine’s arrival and setup, after which they were able to refinance with their bank as planned. Thanks to the new equipment, they have enjoyed a 30% increase in their annual revenues.
Client Scenario: Business purchase funding
Why did this client need our funding: Acquiring a business, supported by client’s family trust. But despite having a history of income generation and a plan to fund the purchase through the sale of commercial properties, their bank hesitated due to the venture being a new business, and thus, outside their comfort zone. Caught up in a lengthy approval process, this client reached out to Merx for a faster outcome.
Amount: $200,000
Industry: Commercial property investment
Location: Auckland
LVR: 35%
Type of security: First mortgage over commercial property
Path to repayment: Generate steady cashflow through new business operations then refinance into main bank.
Why Merx: We assessed and recognised a promising opportunity. Thanks to the quality of their plan and a very low LVR, we confirmed a $200k loan within just a day, and the client was able to access the funds by the end of the week, keeping their business purchase plans on track.
Note: This article is intended to provide general information and does not constitute financial advice. We recommend you speak with a financial adviser for advice tailored to your individual circumstances. Potential investors with Merx must qualify as Wholesale Investors as that term is defined in sections 3(2)(a) – (c) or 3(3)(a) of Schedule 1 of the Financial Markets Conduct Act (“FMCA”). The Trust is not suitable for retail investors.
40.89
%
Returns Since Inception
As at 30 September 2024. Returns based on an actual company investor account with net returns re-invested monthly. Past performance is not a guarantee of future performance. The fund was established 30 June 2022 and made its first investments in September 2022.
Comments from Merx Investors
I have enjoyed investing with Merx and learnt a lot through the process too. Merx have been very transparent with what they do and the communication has been consistent. Wouldn’t be a testimonial without mentioning the returns too, thanks for those. Looking forward to being a part of the journey for years to come.
Luke
There's a lot to be said for a fund where the managers invest alongside their investors. It's a real partnership where the interests of investors are prioritised. The returns to date have been great, the unit structure gives me the flexibility I want, and I've been really impressed with the communication.
Aaron
I've been impressed by how Merx looks after their investors - from how the fund is structured for redemption, reinvestment, and tax efficiency - to the communication and care in understanding my investment goals. It makes a difference - investing alongside managers who are also invested in the fund.
John
Aligned Interests
Aligned interests is a core principle of the Merx Wholesale 1 PIE Fund. As the Trust’s management team, we personally invest alongside our investor partners. We have the same risks and potential returns as our investors.
Aligned Interests
Aligned interests is a core principle of the Merx Wholesale 1 PIE Fund. As the Trust’s management team, we personally invest alongside our investor partners. We have the same risks and potential returns as our investors.
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