Zagga remains well-positioned to deliver superior performance in the medium term, with established and diverse project locations and counterparties; deep expertise across sectors in our chosen middle market with structural growth tailwinds; patient, adjacent growth across our Fund offerings; ongoing investment in our platforms for investors and advisers; a strong and conservative investment strategy; and a proven risk management framework and culture.
Over the past quarter, our investment strategy has remained firmly focused on quality and discipline, even as market dynamics have become increasingly competitive. We continue to centre our approach on securing prime-grade transactions with strong counterparties while selectively blending in opportunities that support our target risk-adjusted returns.
We also continue to comfortably exceed all regulatory minimum requirements. Maintaining this strong foundation enables us to respond effectively to changing market conditions and to deliver confidence to our investors.
In this update, we share an overview of the current market environment and highlight how we are adapting to changing conditions while remaining focused conservative and prudent risk management:
Competitive market dynamics
The market for high-quality, well-sponsored transactions remains highly competitive, resulting in tighter margins. Our strategy has been to balance these core prime-grade opportunities with carefully selected deals that offer enhanced returns, supporting our overall Fund objectives.
Market activity improving
Recent interest rate cuts are translating into renewed property sales activity. For example, NSW auction clearance rates have reached their highest levels in a year (around 70%), signalling improved buyer sentiment and stronger transaction flow.
Strong pipeline for FY26
We expect to seed a record volume of quality transactions through the Funds in July, with lending opportunities secured in premium Sydney locations including Double Bay, Bondi, Potts Point, and Petersham. This pipeline underscores our commitment to sourcing high-quality transactions that meet our disciplined investment criteria.
Project feasibilities
Luxury residential continues to represent the most feasible segment, supported by sustained demand and resilient pricing. However, feasibility for commercial assets is beginning to improve as the interest rate cycle turns, creating new opportunities for well-structured transactions.
Portfolio management
June saw the maturity of several loans as part of the planned run-off of our aged book. This ongoing recycling of capital is essential to maintaining a diversified, high-quality portfolio aligned with market conditions. We will continue to be disciplined in assessing opportunities to deploy capital—including any capital generated from announced transactions expected to be completed by the end of the 2025 calendar year—to generate appropriate risk-adjusted returns for our investors.
Loan-to-Value Ratio (LVR) strategy
Any changes in the Fund’s weighted average LVR reflect our deliberate focus on prime-grade sponsors and assets. This remains core to our risk management approach and our strategy to deliver stable, risk-adjusted returns for investors.
We continue to maintain a cautious stance, with a conservative approach to capital, funding, and liquidity. This positions us well to respond to the current environment and to protect investor capital while seeking compelling opportunities.
