MaxCap fund on track to hit 18pc returns after spending spree
MaxCap has kicked off a second $125 million equity raising for its diversified opportunity fund, after securing controlling stakes in another five developments including a new hotel to be built at Sydney Airport and two office projects in Melbourne.
The fund, which is targeting total annual returns of at least 18 per cent, has now fully deployed the initial $125 million of capital raised from high net worth investors and family offices earlier this year.
Part of the non-bank lender’s push into direct real estate investments, the MaxCap Diversified Opportunity Fund was launched on a strategy of partnering with developers on new projects across the real estate spectrum.
It was seeded in March with investments in three projects with a combined end value of $500 million: an industrial estate in Brisbane being developed by Centennial Property Group, an apartment and hotel project by Time & Place in Melbourne’s Southbank and a boutique South Yarra luxury apartment project by Neometro.
Having deployed an initial $75 million in the three seed assets, the remaining $50 million was funnelled into five new investments in NSW, Victoria and Queensland.
They include 20,000 sq m office tower being developed at 570 Little Bourke Street in the Melbourne CBD by Argo and Hickory, a luxury Gold Coast apartment project by Tim Gurner, a 224-room hotel at Sydney Airport by Bill Moss’s Boston Global, Atlas Investment Corporation and Hickory and a 15,000 sq m office project in Cremorne in inner Melbourne being undertaken by Time & Place.
The fund has also invested in an as yet unidentified luxury residential project in the Sydney CBD that is aimed at “affluent owner-occupiers” that offers harbour views.
Simon Hulett, head of direct investment at MaxCap, said the fund was tracking ahead of its target to deliver an internal rate of return of 18 per cent per annum over the five-year term.
He said the latest acquisitions over the past six months were considered “best in class” projects given the calibre of the development partners.
The deals grow MaxCap’s direct portfolio to a fully developed end value of $4.5 billion. The second equity raising for its diversified fund will close in December.
MaxCap, which is 50 per cent owned by US firm Apollo Global Management, kicked off its direct investments business in 2019 with the launch of an industrial opportunity fund in partnership with developer Time & Place.
The strategy of this fund is to develop and sell smaller lots across Australia’s eastern seaboard to retailers and other developers seeking land to build logistics facilities.
MaxCap is also ramping up its non-bank lending business.
The Financial Review’s Street Talk column reported in September that the real estate financier was seeking investors in a mezzanine loan to fund an apartment development by Neometro in the inner-city Melbourne suburb of Brunswick
Investors were being offered an estimated 14.6 per cent return on a net IRR basis, for debt that would rank behind a construction facility from the Bank of Melbourne.
