Metrics Credit Partners, one of Australia’s largest private credit lenders, has suspended investor withdrawals from its Wholesale Investment Trust and MCP Real Estate Debt Fund, while also imposing a 90-day lending pause to most clients. The measures follow a significant $170 million writedown disclosed on Monday across three of Metrics’ ASX-listed retail funds, with further losses anticipated.
The writedown has prompted ratings agencies Lonsec and Zenith, which had previously rated five out of Metrics’ six funds as “recommend” or equivalent, to place the funds under review for potential downgrades. Such a move could affect these funds’ inclusion on retail investment platforms, potentially reducing inflows available for lending. Metrics manages approximately $35 billion in assets, with a heavy concentration in real estate debt. Pinnacle Investments, holding a 35 percent stake in Metrics, reiterated its support for the firm and its management team despite the recent developments.
Metrics revealed on August 31 that its auditor, KPMG, had not yet signed off on preliminary accounts for the three traded funds, attributing the delay initially to the death of the audit signing partner. However, the discrepancy of $170 million between Metrics’ valuation and KPMG’s assessment sparked investor concern. During early September, Metrics informed its real estate private credit clients of the temporary halt in lending, which represents its primary revenue stream. The firm also sought to raise $500 million quietly in the debt market amid these challenges.
The broader private credit sector has faced increased scrutiny following the collapse of western Sydney homebuilder Baltha, an event that has led other lenders to freeze investor funds. Metrics has stated it has no exposure to Baltha. Nonetheless, the recent increase by the Reserve Bank of Australia in the cash rate to a 15-year high has heightened risks for developers and their financiers.
Further complexities have emerged around Metrics’ portfolio. Among its problematic exposures are debts exceeding $300 million owed by the Mustaca family, which has struggled since the COVID-19 pandemic with its cinema chain and property developments. Metrics has appointed receivers over several Mustaca businesses, including most locations of the Wahlburgers chain, shutting down three of four stores it took control of. Unfinished residential projects, such as an apartment complex in Sydney’s northern beaches with many unsold units, also form part of Metrics’ distressed holdings.
Metrics is additionally connected to several other troubled assets. Founder and global CEO Andrew Lockhart has a substantial stake in the Moxy hotel development on Pitt Street, Sydney, which has faced delays exceeding 12 months and significant cost overruns due to archaeological finds and brand-related redesigns. Metrics now owns Rockpool Bar & Grill through debt holder defaults; the hospitality business remains unprofitable under Hunter Street Hospitality.
In late August, Metrics conducted an investor briefing coordinated by Barrenjoey management during which Lockhart cited the structural complexity of over 30 underlying funds feeding into the main listed trusts as a factor complicating audit processes. Pinnacle Investments has seen its stock value decline by over 18 percent, or roughly $700 million, since Metrics’ preliminary announcement.
Questions remain about regulatory oversight of private credit funds, with uncertainty as to whether the Australian Securities and Investments Commission (ASIC) currently has sufficient expertise to thoroughly investigate the sector, which has traditionally operated with limited supervision. Metrics’ opaque fund structures make it difficult to identify the precise locations of underperforming debt, adding to concerns among investors and market observers.