MA Financial closes funds deal in $2b malls play
Investment manager MA Financial has boosted its assets under management to $12 billion after absorbing boutique syndicator IP Generation and the $2 billion portfolio of shopping centres it has established in just six years.
The consideration for the deal is $90.4 million, with $80 million of that all in scrip upfront to the owners of IP Generation, including its founder Chris Lock and key executives Greg Miles, David Blight and Ingrid van Dijken. The remainder is deferred over 12 months, paid out equally in scrip and cash.
The price of the transaction, foreshadowed this week by Street Talk, represents a multiple of 7.9 times IP Generation’s 2024 financial year normalised pre-tax earnings.
For MA Financial, which grew out of the Moelis investment banking business and is chaired by Andrew Pridham, the transaction takes its exposure to real estate to about $8 billion. MA Financial also has an interest in alternate assets such as its marinas fund and private credit.
Julian Biggins, its joint chief executive, said the broader economic environment should favour the real estate sector as it recovers from higher interest rates and elevated construction costs.
“It paints a very positive picture for people investing into real estate at this point in the cycle and it bodes very well for returns in the years to come,” he told The Australian Financial Review.
“We think this is a good time for us to accelerate our growth into the real estate sector, so this is very strategic for us in buying IP Generation.”
The key players in the IP Generation’s success will move across to MA Financial with Lock becoming its head of core real estate, a key element of the deal in a sector where investor sentiment is closely connected to their relationships and confidence in their fund managers.
Since its founding in 2018, IP Generation has built an impressive portfolio of shopping malls, taking advantage of a cyclical downturn that has forced major institutional owners to sell off significant malls at discount prices to opportunistic private platforms.
IP Generation’s managed portfolio now includes stakes in prominent assets such as the former David Jones store on Melbourne’s Bourke Street, Merimbula Square and Westfield Helensvale.
It has also already cashed out of some of its opportunistic deals, divesting some mall stakes at hefty premiums.
“We’ve been buying into what we can look back and say was a counter-cyclical strategy, All we’ve been doing is buying assets that, we think, have been mispriced or unfairly priced by market,” Lock said.
Yet more opportunity lies ahead as major wholesale property funds are expected to sell assets, including malls, to meet redemption demands, he said.
“We’re very early in that cycle. There’s a wall of redemptions that sit in these wholesale funds – there’s billions of dollars in retail assets – and there are still not the active buyers to match that. So there’s definitely mispricing opportunities and we want to continue taking advantage of that.”
