AMD has a versatile approach to the capital structure, by always assessing the best and most efficient way to enter into a transaction

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Equity investments, in public and private markets, remain AMD’s main focus, on the back of a careful and systematic investment selection process.

However, in today's markets, where valuations are on the higher end of historical averages, debt represents a very valuable alternative/complement to equity with a well-balanced/conservative risk profile as part of an overall investment strategy

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At this stage of the cycle and depending on the assets, debt can also represent a safer, well-remunerated alternative and sometimes better priced, with a potential to gain control ultimately

 

Debt opportunities can be seized in private markets through mezzanine, or uni-tranche lending, as well as in public markets through preferred or Mortgage REITS

 

Overall, debt investments are a good complement to equity positions, as they provide a stable cushion, supported by income and which can achieve equity-like net returns:

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• Risk-adjusted return: debt is now clearly the best risk-adjusted return position in the stack

• Finance below construction cost: ability to lend at levels below construction costs, offer a very sound and appealing risk profile in case of default or market downturn

• Tax treatment & net returns: debt now offers higher net returns than equity as tax treatment of debt is very favourable and offers a significant uplift vs equity taxation, creating better net returns going forward

• Paid to wait: select best-in-class assets, receive coupons whilst waiting for market adjustments

• Discounted way to access Equity: in the event of a default, ability to seize ownership of good assets at significant discounts