The $1.2 billion flagship fund run by Regal Partners’ private credit subsidiary Merricks Capital has recorded its first monthly negative return in almost five years, after being weighed down by troubled loans including one financing a huge office development in Sydney’s CBD.

Merricks, which manages $2.9 billion across its funds, arranged a $465 million syndicated loan for the proposed 55-storey building known as Halo, on the corner of Pitt and Hunter streets. The project, being developed by Milligan Group, was valued at $1.8 billion if built and fully leased.