Diamond Capital Management (Switzerland) Ltd.

White Oak II Fund - April Update

Real Estate backed bridge/senior loans - Rationale
Real Estate backed bridge/senior loans as an asset class is an excellent diversifier within the Private Debt or Real Estate portion of a portfolio. It is a semi-liquid alternative investment, with a predictable cash flow, very low volatility and strong downside protection. The diversification argument lies in the underlying collateral, which in our case is residential real estate as opposed to the corporate profitability that usually underlies public or private corporate debt.
The White Oak II fund is our third fund in the US, providing senior bridge loans to predominantly residential real estate (Value Add) in the US. With currently over 55 loans, spread across New York, Florida, Connecticut, Georgia, Texas, Massachusetts etc. we have a diversified portfolio with an average LTV of ca. 58% and an average duration of ca. 6.8 months. Due to the short maturities of the loans (av. 1 year), we can provide a quarterly liquidity in the fund.
White Oak II Fund - Monthly Review - April:
The White Oak II performed as expected and ended up the month of April with a return of +0.93%, and +3.39% YTD. US interest rate expectations, a key driver for the housing markets, were roughly flat for the month of April as inflation remained slightly above the Feds targets.
The White Oak II fund continues to grow in size as we develop more markets and improve our diversification. We originated a record amount of $16m in new loans and had repayments of $4.4m during April. Most of these new loans were scheduled to close earlier in the year but were delayed to April. We do not expect to hit this deployment rate in the near future. The largest loan originated was used to refinance a very lucrative residential unit in Aventura, Florida where the sponsor  needed  to close in a very short period. By completing a quick due diligence and closing within two weeks, we were able to secure this loan with comfortable lending ratios. This is a good example of our value add to borrowers – Our ability to make fast decisions and to close quickly, but without compromising on our process.
As of May 1st, about 80% of our portfolio consists of loans secured by residential real estate projects. We do lend against all types of real estate assets but are more conservative in our lending ratios when the underlying collateral is not residential. For example, in February 2024, we originated one loan of $2m secured by land in a very lucrative neighborhood in Atlanta where our external appraisal supports a value for this land of $4-5m.