What makes this fund unique relative to other private credit funds?
Unlike most traditional private credit funds available to high-net-worth investors today, greater than 90% of the Strategic Credit Fund’s investments are backed or collateralized by multifamily properties geographically diversified throughout the United States. Whereas, most other private credit funds’ investments are either backed by other types of real estate assets (such as office properties) or middle-market businesses’ assets that are not related to real estate.
Business lending can involve a significantly different set of risks than those associated with multifamily real estate lending. When lending to businesses, the risks generally come down to the ability of the business to maintain or grow its cash flows and the nature of the specific collateral, which could be anything from intellectual property to revenue receivables, manufacturing equipment, the business’s inventory…etc. Whereas, multifamily real estate is a marketable, resilient, and tangible asset class considered to be a “necessary asset”, as everyone will always need a place to live.
Because of factors such as those referenced above, we believe that multifamily real estate loan collateral provides investors with an overall more attractive risk-profile than a traditional private credit fund, while maintaining the ability to achieve substantially similar returns.