Sundaram Alternates Closes RE Credit Fund II with 17% IRR
Sundaram Alternates (SA) has successfully closed its second real estate credit fund, Sundaram Alternative Opportunities Series, High Yield Secured RE Debt Fund II (SA RE Credit Fund II). The fund's disciplined investment approach and unique underwriting methodology have led to consistent returns, even during challenging market conditions.
The fund, directed by Karthik Athreya, has reported zero capital losses during challenging cycles between 2019 and 2023, including the COVID-19 pandemic. Its strategy involved diversifying capital allocation, pursuing risk-adjusted underwriting, and backing de-risked brownfield projects with consistent sponsor commitments of more than 15%.
The current SA RE credit portfolio generates an annual cash yield of 15-16% and has maintained uninterrupted quarterly income distributions since inception. The fund delivered a gross investor IRR of 17% after exiting its portfolio investments, totaling approximately Rs 435 crore. To date, SA has deployed over Rs 4,200 crore across 74 deals with contracted IRRs of 19%.
SA RE Credit Fund II invested 100% of its portfolio in fully secured, high-yielding debentures issued by Indian real estate developers, focusing on key South Indian micro markets. The successful exit of SA RE Credit Fund II adds to Sundaram Alternates' track record in real estate credit, with 38 full exits and more than 10 partial exits totaling approximately Rs 2,600 crore over eight years.
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