Challenger Financial Services Group said its Howard Mortgage Fund would fully resume its commercial lending activities to boost returns, after unitholders supported a proposed restructure of the fund.
The fund will start evaluating commercial lending proposals with a view to deploying around $200 million in senior secured loans over the next 12 months, Challenger's joint chief executive of funds management Rob Adams said.
"We will now be the first mortgage trust to fully resume commercial lending in a market where spreads remain significantly elevated, so we hope to quickly restore the premium to cash rates traditionally enjoyed by Howard investors over its first 24 years of operation," he said.
Challenger said yesterday that the fund's 80,000 unitholders "overwhelmingly supported" the proposal to restructure the fund to provide greater certainty, improved returns and increased liquidity.
"It's a relief that our investors strongly supported the proposal because it wasn't easy to design a solution to accommodate their differing needs. Some wanted liquidity while others were content to remain fully invested," Adams said.
The fund's responsible entity, Challenger Managed Investments, has also made $850 million of the fund's net assets available for withdrawal by unitholders.
Adams said $150 million has been set aside for the 30,000 unitholders with account balances of $10,000 or less.
"These investors may immediately access 100 per cent of their capital, while a $700 million special pool has also been made available to all other unitholders," Adams said.
"In addition to these one-off liquidity events, improvements will be made to the permanent liquidity arrangements for the fund.
"The current cap on individual redemption applications will be lifted, permitting investors to apply to withdraw up to 100 per cent of their capital each quarter with pro-rata scale back to apply if applications exceed 10 per cent of fund capital in any quarter."
