With six years of track record in the rearview mirror, the sixth real estate debt fund of the specialized manager Ameris Capital is entering a new stage. Taking advantage of market trends and aiming to expand its investor base, the Chilean investment boutique decided to convert the vehicle into a semi-liquid fund.
The vehicle in question, called Ameris Deuda Inmobiliaria VI – or ADI 6, as it is known at the firm – invests in financing real estate developers that require capital to carry out their projects under various structures. This includes preferred equity, mezzanine capital, cash flow advances, or any other structure with solid guarantees, as described to Funds Society by the firm’s partner, Martín Figueroa.
The fund, explains the executive, “had its contributions limited because the market conditions necessary to increase its assets were not present.” This led the manager to start reinvesting resources in new projects as previous ones matured. “Being a fund with a portfolio of 15 projects, in which it invests with different maturity dates and periodic cash flows, we were able to structure it to provide liquidity to investors,” he explains.
The key moment for the vehicle’s conversion came at the end of May this year, when the manager convened the fund’s investors – through an extraordinary shareholders’ meeting – to vote on extending the strategy’s term by four years and changing the regulations to provide liquidity. With the approval of the shareholders, these changes took effect on July 1st.
What prompted this decision? “The products demanded by investors have been changing, and we as an AGF must adapt to what investors demand. Today, interest rates are high, so the opportunity cost for investors is higher. If we don’t adapt, they will prefer other alternatives that, although yielding slightly less, offer liquidity,” he notes.
After over a decade of offering private debt investment alternatives, initially only to institutional and select private investors, Ameris is looking to expand the investor base for these strategies.
The Strategy
The ADI 6 vehicle aims to generate returns by supporting an industry that has been particularly impacted in recent years: real estate.
Its investment thesis, Figueroa explains, is based on the real estate market and its companies being in a state of stress, making it difficult for them to secure the necessary capital to develop their projects. “We want to help them continue developing their business in exchange for solid guarantees,” adds the Ameris partner.
Currently, the portfolio comprises 15 projects diversified across different geographical areas of Chile. “These are apartments that we believe will be sold without any issues because they are simple projects in good locations,” he explains.
The backdrop to this operation is a growing appetite for private debt funds, now that interest rates – and consequently, the returns on time deposits – have been declining. “Private debt was in high demand a few years ago, then it fell out of favor when deposits were paying 1% per month, and now that it has normalized, it is becoming attractive again,” Figueroa explains.
In this context, private debt is an area that Ameris Capital is keen to continue developing, not only for its role in the market and country’s development but also because “it is an asset that should be in every investment portfolio, just as it is in more developed countries,” according to the executive.