The Zagga Investments Lending Trust retains SUPERIOR rating by SQM Research

  • The Zagga Investments Lending Trust awarded 4-star, SUPERIOR rating for the fourth consecutive year.
  • Key factors are deep levels of investment experience, strength of company tenure and cross-functional expertise of the team.
Media release – Monday, 25 March 2024

Zagga, a fully ASIC-licensed, Australian boutique investment manager and non-bank lender, has confirmed that independent research house, SQM Research (SQM), has awarded a 4-star ‘Superior’ (Investment Grade) rating for the Zagga Investments Lending Trust (ZILT), for the fourth consecutive year.

Zagga has originated over $1.5 billion in private commercial real estate debt transactions, and has repaid 125 transactions for circa $850 million in investment capital, since its inception in June 2017. Zagga’s objective is to generate stable, fixed income style, investment returns through funding high-quality, mortgage secured, loan transactions focussing primarily on the Commercial Real Estate Debt sector on the eastern seaboard of Australia.

To date, Zagga has returned 100% of all investor capital.

Zagga’s transaction structure is centred on ZILT, an open-ended, discretionary trust. The objective of the Trust is to deliver a fixed annuity return to the investor at a significantly better rate than for cash/near-cash without a commensurate increase in risk. SQM considers the strength of the Trust to include the quality and performance of the book, and the sophistication of the software platform that enables fractionation of investment risk. ZILT is not a commingled fund where all investors have exposure to identical holdings in a portfolio at a particular point in time. Portfolio holdings are unique for each investor, which reflects the investor’s personal investment.

The Trust offers different investment options, including the flagship Zagga Feeder Fund, the Zagga Wealth Fund, and more recently the Zagga CRED Fund, a wholesale, unitised fund available on multiple external platforms for financial advisers.

Zagga deploys a fractional investment structure and proprietary technology platform to originate and fund transactions. The underlying assets are short to medium-term (up to 24 months) senior loans to strong borrowers, all mortgage secured by high quality Australian real estate. Zagga has experienced significant growth since 2020 as savvy investors sought out the defensive attributes of private credit opportunities to protect their investment income, preserve capital and provide that much-needed hedge against inflation. Since then, new business has increased by more than 650%, fuelled by larger transaction sizes, strong counterparties and repeat borrowers and a growth in demand by local and offshore investors turning to alternatives in the face of ongoing market uncertainty.

SQM considers ZILT to be of a high investment grade.

In SQM’s view, the Fund has an appreciable potential to outperform over the medium-to-long term. Historical performance has tended to be meaningful and management is of a high calibre.

The SQM rating recognises and reaffirms the deep experience and cross-functional expertise across the team based in Sydney and more recently, Singapore. Additionally, the practice of constant communication and the broad-based inclusion of team members in decision-making has been cited as a vital ingredient to the success of Zagga’s credit decisioning and investment management process.

Alan Greenstein, CEO and Founder of Zagga, said: “We are delighted to again receive this ‘superior’ rating by SQM Research. To receive it every year over four consecutive years is a testament to the dedication, knowledge and expertise of our team. To have the rating confirmed across a period of tremendous upheaval caused by COVID, rising interest rates and inflation says much about our team’s ability to select, assess, fund and manage loan investment opportunities and to deliver value for our investors, borrowers and stakeholders.”

He added that Zagga’s “experience, transparency, integrity, reliability and loan assessment capability are the foundation stones” of its business and a key differentiator between Zagga and the many players in Australia’s CRED space.

“In the sector within which we operate, trust, integrity, and transparency serve as the pillars upon which lasting partnerships are created. These principles guide our business practices, ensuring that we remain steadfast in our commitment to always putting our investors first.

Being an 'investor-first' business isn't just rhetoric; it's a guiding principle that informs every decision we make. We prioritise the interests of our investors above all else, ensuring that their needs and concerns are always at the forefront of our minds.”

Please note that research reports are intended for financial advisers and wholesale clients only.

About Zagga

Zagga is an Australian boutique investment manager and non-bank lender incorporated in 2016. Our objective is to generate stable, fixed income style, investment returns through funding high-quality loan transactions focussing primarily on the Commercial Real Estate Debt sector.

Our base of investors includes high net worth individuals, family offices and institutional funders, from Japan, South Africa, Singapore, China and Australia. Led by high-calibre individuals, our team has over 200 years’ combined experience in credit, property and investment management.

To date, we have returned 100% of all investor capital.

The rating contained in this document is issued by SQM Research Pty Ltd ABN 93 122 592 036 AFSL 421913. SQM Research is an investment research firm that undertakes research on investment products exclusively for its wholesale clients, utilising a proprietary review and star rating system. The SQM Research star rating system is of a general nature and does not take into account the particular circumstances or needs of any specific person. The rating may be subject to change at any time. Only licensed financial advisers may use the SQM Research star rating system in determining whether an investment is appropriate to a person’s particular circumstances or needs. You should read the product disclosure statement and consult a licensed financial adviser before making an investment decision in relation to this investment product. SQM Research receives a fee from the Fund Manager for the research and rating of the managed investment scheme.

This article is for information purposes only. It does not take into account your objectives, financial situation or needs. Any opinion expressed in this article are of the author and is subject to change without notice. Readers are reminded to exercise caution and use their own judgment when interpreting and applying the information contained in this article.

Stay Connected

Slower growth confirmed as the housing shortage intensifies

The Australian economy has continued to track at a low growth rate with inflation continuing to ease. As a result of these trends, the RBA has moved to a clear neutral bias dropping the ‘next move is likely to be up’ comments at its March meeting.

Credit, investment and property risk outlook

NSW continues to grapple with a significant housing shortage. Economic forecasts project a substantial increase in population over the next five years, further exacerbating the current housing situation… Looking forward, we remain buoyed by the market opportunity for us to fund many future projects.

CEO’s Update: March 2024

As we step into the second quarter of 2024, it’s imperative to reflect on the economic landscape that shaped the preceding months. In Australia, the first quarter of 2024 was marked by a blend of optimism and caution, as various sectors navigated through both challenges and opportunities. Among the focal points of discussion was the state of commercial real estate debt (CRED), a critical component influencing the overall economic outlook.