Updated: 24 hours ago
New to real estate private credit? Start with our overview, Real estate private credit: an income strategy worth understanding.
What real estate private credit adds alongside investments such as shares, term deposits and unlisted property.
Every part of a diversified investment portfolio has a job. Take three common holdings. Shares are there for growth. Term deposits are there for security and a known return. Unlisted property is there for regular income and long-term value. Real estate private credit adds something different to that mix: income that moves with interest rates, another way to earn from property and a shorter investment horizon than direct property investment.
Another way to earn from property
Property ownership is generally a long-term investment. Its returns come from rent and from growth in value over time.
Lending against property through real estate private credit offers something different: regular income that doesn't depend on property values rising and isn't affected by the costs of owning and running a property. The Oyster Credit Fund provides access to this type of income through first-mortgage loans over residential and commercial property.
In a diversified portfolio, the two work together. Ownership provides rent and the potential for long-term growth. Lending provides income that behaves differently, so the portfolio isn't relying on property in just one way.
Income that moves with interest rates
Interest rates affect almost every investment in a portfolio, though not in the same way. When rates rise, some investments come under pressure and others stand still. Higher borrowing costs can weigh on returns from property and businesses, while a fixed rate stays where it was set.
Real estate private credit can respond differently. Where lending is at a floating rate, the interest borrowers pay moves with market interest rates, and so does the income paid to investors.
The Oyster Credit Fund provides access to this type of income. It targets a floating return, paid monthly, calculated by adding a fixed 4.5% margin to the 30-day Bank Bill Benchmark Rate (BKBM), New Zealand's primary wholesale floating rate benchmark. The margin stays the same and the benchmark moves, so the return rises and falls with interest rates.
In a diversified portfolio, that makes it a useful balance. When higher rates are putting pressure on other investments, income that rises with rates can help offset it. When rates fall, the reverse applies: income from private credit falls, while other investments may benefit.
A shorter investment horizon
Every investment asks for a different commitment of time. Listed shares can be bought and sold on any trading day. Commercial property is usually held for many years to see its full benefit.
Real estate private credit sits between the two. The loans are short-term, so the timeframe can be shorter than owning property.
In the Oyster Credit Fund, investors don’t hold individual loans. They invest in the fund, which holds an open-ended portfolio of short-term loans. Loans have initial terms of up to 18 months, and any extension needs investment committee approval.
The investment term is set by the fund’s own terms, not by any one loan. Investments are held for an initial 12 months, after which investors can apply to withdraw with six months’ written notice. Withdrawals are subject to the fund’s terms and available liquidity.
In a diversified portfolio, that makes real estate private credit a medium-term holding. It suits money that isn’t needed in the near term but doesn’t have to be committed for many years.
Fit is only part of the picture
Knowing where an investment fits in a portfolio is one part of the decision. Real estate private credit has a clear role: income that moves with interest rates, earned by lending against property.
Knowing what sits behind it matters just as much. That means who manages the fund, how its loans are chosen and secured, and how risk is managed. Our article, Not all private credit is the same: questions to ask before you invest[Link], is a good place to start.
The Oyster Credit Fund is now open to wholesale investors. To learn more, contact the Oyster Property Group investor team at investor@oystergroup.co.nz.
WHOLESALE DISCLOSURES
Investors must qualify as a wholesale investor under the Financial Markets Conduct Act 2013, with a minimum investment of NZ$250,000.
Any offer to invest in the Oyster Credit Fund is made solely under, and subject to, the Information Memorandum, including the risks, terms and conditions described in that document. Prospective investors should read the Information Memorandum in full before making any investment decision.
References to investment returns or capital outcomes are indicative only and not guaranteed. See the Information Memorandum for further detail.
