Commercial property investor MaxCap Group has confirmed that its second hybrid equity fund has secured $125 million of high-quality assets, with investor returns expected to be above the targeted rates.
The initial capital commitment for the MaxCap Diversified Opportunity Fund (MDOF) has been allocated across eight diversified assets. These include residential, industrial and office developments in Sydney, Melbourne and Brisbane.
Now underway is a second tranche of capital raising, which is expected to close next month.
“We launched MDOF in March 2022 with three seed assets. In the last six months, we have closed a further five deals that were hand-picked from our pipeline to provide Fund investors with exposure to a diversified pool of the highest quality investments around the country,” said Simon Hulett, Head of Direct Investment at MaxCap.
“Our sophisticated joint venture partnership model has proven to be highly resilient given the focus on providing strong downside protection for our investors whilst also delivering outsized returns in market. We can now provide certainty of deployment to the Fund’s investors which is typically challenging in these types of funds.
Simon Hulett, Head of Direct Investment MaxCap
“With the initial capital raise being oversubscribed earlier this year, we are now offering a second tranche of capital to investors for the next close in December and expect this to be well received.”
Mr Hullett added that the high performance of the fund to date is reflective of the quality of the structure and offering, focused on ‘best in class’ projects with joint venture partners such as Gurner, Centennial Property Group and Time & Place.
He also said the key objective of the fund is to provide investors with significant upside opportunity while focusing on protecting against downside risks. This is through hybrid equity investment structures.
“From the outset, our target for MDOF has been to deliver outsized risk-adjusted returns to investors of 18% IRR over the five year term. With the portfolio of assets now secured and initial capital fully allocated, we are pleased to be tracking ahead of that target,” said Mr Hullett.
“With a strong spread across geographies, asset classes and partners, the success of the fund is centred around delivering assets into an environment where the ‘flight to quality’ trend across all elements of the real estate spectrum has become a dominant trend in the wake of the pandemic. People expect more from built-form environments now and this is what we are focused on delivering.”
Since the launch of MDOF in March 2022, MaxCap has secured the following five assets
Confidential Sydney asset
Located in Sydney’s CBD with a prominent local developer, it is an exclusive luxury residential project. The development is expected to attract affluent owner-occupiers seeking high-quality amenity offerings.
570 Little Bourke Street, Melbourne VIC – Argo, Hickory
This asset is an 20,000 sqm A-grade office development in the heart of Melbourne’s CBD.
Gurner Burleigh Heads, 1929 Gold Coast Highway QLD – Gurner
In partnership with ambitious developer Gurner, this project offers 80 luxury apartments in the premium lifestyle location of Burleigh Heads. Planning approval is expected before the year’s end.
Sydney Airport Hotel, 210 O’Riordan Street, Mascot NSW – Boston Global, Atlas Investment Corporation and Hickory
This 4.5-star hotel development will feature 224 rooms, and is strategically located at the entry to Sydney Airport. This project is expected to benefit from the normalisation of travel and demand for accommodation at the busiest travel hub in the country.
75-119 Cubitt Street, Cremorne Richmond VIC – Time & Place
This new 15,000 sqm A-grad office development is located on a rare large handholding in the Cremorne precinct.
These assets follow the initial seed investments that were announced in March.
The Link Industrial Park, 142-172 Sherbrooke Road, Willawong QLD – Centennial Property Group
The Link is a modern multi-unit industrial and logistics estate, which will offer 32,000 sqm of Gross Lettable Area (GLA). Willawong is located 18 kilometres south of the Brisbane CBD, in close proximity to key arterial roads.
88 Queensbridge Street, Southbank VIC – Time & Place and Hickory
Comprising of 367 apartments and a 202-key hotel, this project is located adjacent to the Melbourne CBD.
41 – 49 Walsh Street, South Yarra VIC – Neometro
Located in the Domain precinct in South Yarra, this development will offer nine ulta-luxury apartments with development partner Neometro.
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