Not all collateral risks are created equal. In this edition Mick Wright-Smith unpacks why enterprise value – grounded in real M&A transactions and resilient cash flows – can be just as robust as property security, particularly for investors seeking diversified income beyond a single bet on real estate cycles.
“Collateral plays a central role in private credit, shaping how risk is allocated between borrowers and lenders and influencing pricing, structure, and recovery outcomes. In corporate direct lending, the most important collateral underpinning the loan is not a piece of equipment or a warehouse. It is the enterprise value (EV) of the borrower company. Whereas in property lending, the collateral focus is on the asset value of the real estate.”