Centuria Bass freezes private credit fund redemptions

Centuria Bass has temporarily paused redemptions and applications to two of its private credit funds, the Centuria Bass Credit Fund and the Bass Property Credit Fund, over increased redemption requests driven by concerns on borrower Bathla Group, a Sydney-based property constructor and developer.

Centuria Bass said the decision has been taken to ensure all investors are treated fairly and equitably and is consistent with the obligations under the fund's governing documents and its duty to act in the best interests of all investors.

The Centuria Bass Credit Fund invests in a portfolio of commercial real estate debt diversified across a mix of geographies, terms, sub-sectors and spread across borrowers. The Bass Property Credit Fund invests in property backed first and second mortgages and provides investors with a lower-risk, stable yield investment, backed by diversified underlying real estate security.

"It is anticipated that these measures will remain in place for between two to six months, although the timeframe remains subject to review by the trustee (Centuria Bass Financial Services)," Centuria Bass spokesperson said.

Centuria Bass said the fund remains operational and continues to generate income from underlying investments, with monthly distributions expected to be paid in the ordinary course, subject to underlying fund liquidity.

"The portfolio is underpinned by a diversified pool of first mortgage loans secured against real estate assets located across established and high-growth metropolitan corridors," the spokesperson said.

"Centuria Bass continues to actively manage the portfolio, engage with borrowers and pursue strategies to support the continued operation and growth of the fund over time for the benefit of all investors."

SQM Research recently dropped Centuria Bass Credit Fund from a high-investment grade (4.0-star) to a non-investment grade (3.25-star) rating without disclosing the reasoning behind the decision.

Centuria Capital Group (CNI) responded to media reports suggesting its exposure to the Bathla Group raised questions over its governance, following the downgrade.

"Two are construction loan facilities. One construction loan facility has ongoing construction exposure and that project is substantially complete. The remaining loans are residual stock loans or land loans. All these loan facilities continue to accrue interest," Centuria said in an ASX announcement.

"While CNI is not a unitholder of CBCF, CNI has provided a direct $4.5 million loan facility to a Bathla Group entity. This is the only balance sheet exposure of CNI to the Bathla Group."

Morningstar also predicted the property debt fund will be pulled from major investment platforms and unlikely receive new inflows.