Watching her mother work two jobs taught Pengana’s Amy Pham the importance of resilience and cashflow, two priceless assets in any market cycle.
Pengana Capital portfolio manager Amy Pham was seven years old when she was living in a refugee camp after fleeing war-torn Vietnam to avoid persecution from the communist regime.
Pham says the fresh collapse of several US banks should serve as a reminder that the sharp rise in interest rates does not only affect consumer confidence and mortgage rates but also the cost of capital and liquidity., particularly in sub-sectors that are exposed to a higher risk of asset devaluation,” such as offices.She says this is not a repeat of the GFC. Average gearing for the sector remains low at 27 per cent, and the source of debt is a lot more diversified.
Higher rates mean that the property sector could be looking at a significantly higher cost of debt. Pham says the repricing in the bond market is largely done now that inflation is slowing. “In a sector or in a portfolio where they’re not able to grow their rents and whilst their cost of debt is continuously increasing, you have a problem.”
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