Navigate the Noise of Private Credit

For over a decade, we have employed a distinctive approach to market analysis that focuses not on market timing but on identifying directional changes across different regions and sectors.

The crucial question isn’t whether market conditions are good or bad but whether they’re improving or deteriorating. This methodology drives the firm’s investment decisions across its portfolio of residential, commercial and industrial assets.

The Ark approach examines multiple market factors, including cost of capital trends, supply-demand dynamics, government policy settings, demographics, consumer confidence and obsolescence risks. This analysis is supported by both on-the-ground market intelligence through the firm’s Origination team and a formal research partnership with Urbis, producing bi-annual market outlooks that inform investment decisions.

One notable example of Ark’s methodology in action has been the firm’s strategic avoidance of large-scale built form construction projects for the past four years. This decision was driven by analysis of post-pandemic factors including disrupted global supply chains, government stimulus through housing construction incentives, increased government infrastructure spending, significant wage increases, inflation and rising interest rates. 

These factors led to considerable construction cost escalation with two critical impacts: existing projects under construction suffered major cost blowouts and program delays, threatening financial viability, while new major projects became unviable, putting significant downward pressure on land values. In Melbourne alone, land values for major development sites have fallen by 20-30% over the last 12-18 months. 

Ark identified these risks early through its market analysis approach. This allowed us to pivot our investment strategy toward land and land subdivision opportunities where fundamentals remained strong. 

Our analysis has also identified divergent opportunities across Australian residential markets, with Southeast Queensland, Adelaide and Perth showing strong growth patterns while Sydney remained flat and Melbourne experienced headwinds. 

Despite Melbourne’s positive fundamentals including population growth and restricted supply, the market has faced challenges from government policy, taxation settings and declining consumer confidence. Meanwhile, Southeast Queensland has benefited from affordability advantages, strong economic fundamentals and momentum building ahead of the 2032 Olympics. 

Over the last four years, our focus on quality residential land investments in Brisbane, Adelaide and Western Australia has delivered consistent results, with investments generally performing on or ahead of schedule and meeting or exceeding targeted returns. 

Ark’s risk management framework provides additional safeguards through: 

• A multi-layered approval process through separate investment and credit committees with independent members and no overlapping membership 

• A Risk and Compliance Committee with a majority of independent members, including the Chair 

• Monthly reviews of every investment through an Investment Management Committee, identifying issues as they emerge. 

This governance structure ensures the disciplined execution of the firm’s investment strategy across all market conditions. 

A distinctive aspect of our approach is how we leverage our team’s deep experience in property investment and development. While some competing fund managers highlight similar experience—particularly their ability to manage developments when debt positions convert to equity investments—we believe they miss a crucial point. 

The real value of experience isn’t in managing problematic investments after they’ve gone wrong but in preventing those failures in the first place. This preventative approach has helped us avoid failed investments so that investors can have confidence when they invest in a debt facility it will remain as debt and wont covert to equity. 

Our Bedrock Mortgage Fund is really a proxy for our investment strategy. It invests in a diversified portfolio of mortgages and continues to deliver net returns exceeding 11.0% p.a. from a portfolio with an average LVR of 62.7%. As of February 2025, the portfolio consists of 25 investments diversified across our favoured markets, heavily weighted toward residential land and civil construction loans.

These results reflect the effectiveness of the firm’s methodology-driven approach in identifying opportunities that others miss while avoiding sector-specific risks.

As market conditions continue to evolve, we remain committed to our systematic approach to market analysis. We focus on directional changes rather than absolute conditions, combined with strong governance structures and a preventative mindset to deliver consistent returns for investors in an environment where many private credit managers face challenges. 

For investors seeking to cut through the noise surrounding private credit, Ark offers a compelling alternative—one built on strategic methodology, not marketing. Avoid the noise and get in touch today.