With origins dating back to 1925, Australian Securities Limited will be celebrating 100 years of origins in financial services this year, a milestone that we are extremely proud of. We plan on marking this momentous achievement toward the end of 2025 and we look forward to including our stakeholders who have been part of making us into the company we are today.
Wars, depressions, recessions, stock market booms and crashes, industrial revolutions, financial meltdowns, disease, medical breakthroughs, even a man on the moon, the foundations of our funds has been through it all and we will be around to see what the next hundred years holds.
Prior to 1966, the funds were used for lending money out and investing money in, pounds, shillings and pence. The funds origins have helped so many borrowers with loans to assist them to achieve their financial goals whilst providing investment returns to our loyal investors, old and new, some of whom are now ASL fourth generation investors today.
Interest rate outlook & Australian Securities Term Fund
The recent rate cut of 0.25% gives borrowers a slight reprieve, however we don’t think RBA Governor Michelle Bullock will be fast to move rates down. We expect the RBA to cut again possibly in September 2025. This is of course assuming economic conditions remain constant. A recession, stockmarket crash, or unexpected inflation could all change this, up or down, among other unexpected events.
Investors can benefit by locking in fixed interest rates to safeguard their income against expected interest rate cuts during this period. It also helps with maintaining purchasing power against inflation. The Australian Securities Term Fund (ASTF) is a great alternative for cash compared to high interest-bearing bank accounts, given that typically around 50% of the fund is invested
Strong Returns in Commercial Property.
The Australian Securities Property Fund (ASPF) has achieved a strong result with the sale of 4/100 Station Street, Nunawading, delivering a 9.45% p.a. capital return and an average rental yield of 9.1% p.a.—a great outcome in a challenging market.
With signs of market stabilisation, we’re actively assessing new commercial property opportunities that could deliver strong medium to long-term returns. As value begins to emerge, now could be an opportune time to invest in industrial property before potential interest rate cuts impact capitalisation rates. We’re also closely monitoring key sector trends, particularly in undersupplied property segments, and will keep you updated. Stay tuned for more insights and opportunities!
Understanding ‘As Is’ vs ‘As If Complete’ Property Valuations in Private Lending
One of the biggest challenges in private lending is the misunderstanding of ‘As Is’ versus ‘As If’ property valuations. Many investor losses occur when loans are extended based on an ‘As If Complete’ valuation, which estimates the property’s future value after development is completed.
Key Differences:
- ‘As Is’ Valuation: Reflects the current market value of a property.
- ‘As If Complete’ Valuation: Estimates the future value based on completed construction or improvements to be made to the property.
Example Scenario:
A block of land in Melbourne valued at $1 million ‘As Is’ could support a $600,000 loan with relatively low risk. Even if the market drops 20%, investor capital remains largely protected.
However, if a developer plans to build four townhouses on that land and a valuer estimates an ‘As If Complete’ valuation of $4 million, a lender might approve a $2 million loan. If the developer fails to complete the project, the actual property value may be far less than $4 million, putting investor capital at serious risk.
Market Risks & Due Diligence
Recent cases, such as the Public Hospitality Group in Sydney, have shown how ‘As If Complete’ valuations can fall short when it’s time to sell, leading to significant investor losses.
At ASL, we closely assess ‘as if complete’ valuations to ensure the proposed works are feasible. To protect all parties involved with the project, ASL holds the funds to complete the proposed works to achieve that ‘as if complete’ complete value.
Key questions to ask before investing:
✔ Does the valuer have adequate insurance?
✔ What is the lender’s valuation policy?
✔ Who controls the funds to complete the proposed works?
Final Thoughts
Higher returns often mean higher risk—especially when lending against future property values. If you’re unsure, research, ask questions, and understand the risks.
At ASL, we are always available to discuss how we price returns and manage investment risks.
Call Australian Securities on 1300 275 275 and talk to our investment team.
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