Centuria Bass Credit woes pose wider risk

Morningstar is concerned that issues regarding the Centuria Bass Credit Fund could prompt a wave of redemptions, spilling over into Centuria’s broader property funds management business. The Centuria Bass Credit Fund was established as part of a joint venture partnership with real estate debt fund provider Bass Capital in 2021.

Its exposure to heavily-leveraged real estate property developer Bathla Group has led to media speculation about Centuria Bass Credit’s relationship with Bathla. This led research house SQM Research to downgrade the CBCF fund to non-investment grade due to concerns about its overextended credit.

The downgraded rating could make it difficult for advisers to hold the fund on their approved products lists (APLs) as these typically require a fund to hold a recommended or above rating. Centuria Capital Group has $22 billion in assets under management (AUM) – around a third of rival Charter Hall – but only $2.5 billion of this is within Centuria Bass Credit.

Morningstar equity analyst Yingqi Tan said: “We cut our fair value estimate for no-moat Centuria Capital Group by 8 per cent to $2.10. Given the non-investment-grade rating, CBCF is likely to be pulled from major investment platforms and unlikely to receive new inflows.

Worse still, it could trigger waves of redemptions not only in CBCF but also across the broader Bass platform. While the real estate finance division is a relatively small part of Centuria’s total AUM, concerns over Centuria’s governance could spill over to the main property funds management business, weakening prospective clients’ confidence and, in turn, its ability to attract new capital.”

However, limited redemption windows, tax impacts and transaction costs make it unlikely that mass redemptions will occur within a short period of time as property assets can take years to sell. This is not always the case, however, as its Centuria Healthcare Property Fund experienced a liquidity event in August 2025 when it saw outflows representing around a third of its AUM.

They are likely to experience fee pressures as their investor base skews towards retail and high-net-worth (HNW) clients. “While Centuria has been able to charge higher fees to its retail and high-net-worth clients, fee compression is likely in the future, a trend that is already evident among institutional client-focused fund managers.

Performance and transactions fees are also likely to be depressed in the near future, as we emerge from a commercial property downturn.” The situation highlights the potential risks associated with real estate investing, particularly when it involves heavily-leveraged property developers like Bathla Group.

In the context of the broader financial market, the issues surrounding Centuria Bass Credit serve as a reminder of the importance of prudent risk management and governance in investment decisions. As investors and financial institutions manage complex market conditions, they must carefully consider the potential consequences of their investments and the impact on their overall portfolio.