Our business prides itself on its strong focus on risk management based on a disciplined approach to project and financial risk analysis, market analysis, due diligence, financial modeling, documentation and project delivery. Much of our success can be attributed to the extensive due diligence and analysis undertaken for every transaction in which we have been involved. hawse have developed significant expertise in each of these areas. Each transaction undergoes rigorous scrutiny and requires approval by the Investment Committee prior to commitment of funding. With combined experience spanning several decades investing in and advising on property transactions, the four members of the Investment Committee are well placed to assess risk and make informed investment decisions. Each is actively involved with our business on a day-to-day basis, ensuring continuous exposure to the range of transactions being considered, as well as the property market generally. Our approach to transactions specifically contemplates the sharing of risk between project proponents and equity investors. Typically, we invest a minimum of 5 to 10% of total equity required in each of the transactions in which hawse have an interest. In instances where capital contributions are unequal, we will seek to align the various parties’ interests and equalise risk through a combination of methods we have devised and employed by in past transactions. These include:
- Structured return profiles (for example, priority returns up to an agreed IRR hurdle);
- Performance hurdles and milestones;
- Underwriting of minimum agreed site values;
- Layering capital contributions; and prioritised loans.
The strongest indicator of risk management is our own commitment of equity funding for each transaction. The Investment Committee considers, and where appropriate approves, asset acquisitions and transactions. The Investment Committee, which comprises all four of the business’ directors, is ultimately responsible for determining the size and basis of our investment. It is the responsibility of our executive team to monitor leverage, manage liquidity, review asset valuations, research and assess investment opportunities and to engage external experts where required to ensure all possible risks are identified, investigated and managed.
Our Compliance Arrangements also contain a Risk Management policy which is engrained in the culture of our business.