The interest rate environment has kept us all on our toes. We began the year watching the Reserve Bank cut rates three times—25 basis points each—as inflation appeared to be coming under control. Yet as we close out December, the Governor’s final press conference for the year struck a notably different tone: no rate cuts on the horizon, and indeed, the next move may well be up.

For Ark and our investors, this dynamic presents both challenges and opportunities. The underlying strength in the economy that would prompt rate rises is generally positive, driving activity and creating investment opportunities particularly when interest rates remain reasonable by historical standards. Importantly, any increases flow directly through to our investors given all of Ark’s debt facilities are pegged to the RBA cash rate.

Time will tell how this plays out, but we remain confident in our approach and the markets where we’re operating.

Much of 2025 has been dominated by ASIC’s comprehensive review of Australia’s private credit sector, culminating in the release of their final report in November. This review has shone a necessary spotlight on governance, transparency, and risk management practices across our industry.

At Ark, we’ve welcomed this scrutiny. We’ve always been cognisant of the importance of full disclosure and transparency, and we’ve adopted what ASIC characterises as ‘best practice’—providing complete disclosure of all fees earned by the manager. Comprehensive reporting on conflicts, both actual and potential, has always been something we have been conscious of, however we have recognised opportunities for improvement and are implementing those now.

The report’s findings on valuations, particularly for construction lending, require careful consideration. These practices are based on long-established principles used by banks and non-bank lenders. Nevertheless, we’ve taken the opportunity to review our current approach, which already includes regular independent valuations of projects, to ensure we continue to meet evolving best practice standards. We’re considering enhancements such as quarterly portfolio valuations to provide even greater transparency to our investors.

ASIC Chair Joe Longo noted that “Private credit, done well, has a valuable role to play in the Australian economy.” We agree wholeheartedly, and we’re committed to being part of the solution as the sector matures and professionalises. The Australian private credit market has grown to an estimated $200 billion in assets under management, and with that scale comes greater responsibility to investors and the broader financial system.In addition, we also strengthened our operational foundations, improving our systems, data processes and governance to support scale and stability as we grow.

While we’ve been busy growing and improving our operations, we haven’t been immune to the challenging conditions in some of our key markets. Melbourne, in particular, continues to struggle with low confidence and capital flight.

Unfortunately, Victoria continues to suffer from plummeting confidence in the State’s leadership and governance. Victoria’s mounting public debt, construction sector corruption, and ideologically driven policy decisions have created an environment where investors are pricing in risk premiums that we typically associate with developing markets. Ironically, Melbourne’s current relative affordability in housing compared to Brisbane and Adelaide isn’t a sign of careful planning—it’s a symptom of evaporated confidence.

That said, we are seeing green shoots of recovery. Activity is picking up, albeit slowly, and there are signs that the worst may be behind us. However, any meaningful recovery will take time and will require political will to restore confidence and tackle the structural issues that have undermined Victoria’s competitive position.

Despite the challenges in Melbourne, we remain encouraged by the opportunities we’re seeing in other markets. South-east Queensland and Adelaide continue to demonstrate strong fundamentals, driven by population growth, undersupply in housing, and improving business confidence. Our decision to establish a physical presence in Queensland positions us well to capitalise on these opportunities.

We’re also continuing to see favourable conditions in the residential and industrial land sectors. The structural undersupply of housing across Australia continues to create robust demand, supported by solid population growth that also drives demand in other sectors such as industrial.

In 2026, our investors can expect to see more investment opportunities in medium-density residential development, including both debt and equity positions. We’re becoming increasingly comfortable that the risk profile is improving as construction costs stabilise, revenue projections become more reliable, and ongoing demand remains strong due to Australia’s chronic housing undersupply.

As we enter our eleventh year of operation, we do so with confidence in our strategy, pride in our achievements, and gratitude for the trust our investors and partners continue to place in us. The challenges of 2025 have made us sharper, more focused, and more determined to deliver exceptional outcomes.

Here’s to 2026—may it bring clarity, opportunity, and continued growth for all of us.

If you’re an investor, borrower or strategic partner who values forward-thinking leadership, now is the right time to connect.

Let’s talk about where you want to go and how we can help you get there.