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MaxCap secures high quality portfolio for MDOF

Feb 7, 2023

Second capital raising for MDOF underway

27 October 2022, Melbourne – Leading Australian commercial property investor, MaxCap Group, has confirmed its second hybrid equity fund, the MaxCap Diversified Opportunity Fund (MDOF) has secured a high quality portfolio of investments and is forecasting strong performance with investor returns above the targeted rates.

MaxCap confirmed that the initial $125m of capital commitments has been fully allocated across a secured portfolio of eight diversified assets. These include industrial, residential and office developments in the core markets of Sydney, Melbourne and Brisbane. A second tranche of capital raising is now underway for a second close in December 2022.

“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. 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,” added Mr Hulett.

Mr Hulett said the high performance of the fund to date reflected the quality of the structure and offering focused on ‘best in class’ projects with joint venture partners of the calibre of Gurner, Centennial Property Group and Time & Place.

He said the Fund’s key objective is to provide investors with significant upside opportunity whilst focusing on protecting against downside risk 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,” he said.

Key Assets – MaxCap Diversified Opportunity Fund
In confirming the latest portfolio composition for MDOF, Mr Hulett emphasised that MaxCap had taken a highly selective approach to which assets would be included in the Fund to ensure it wasn’t overweight in any single aspect.

“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 MDOF launch in March 2022, MaxCap has secured the following further five investments:

An exclusive luxury residential project in the Sydney CBD with a prominent local development partner. The iconic project is expected to attract affluent owner-occupiers seeking a superior amenity offering, ultimate convenience and weeping views across Sydney harbour. The project remains under confidentiality.

570 Little Bourke Street, Melbourne VIC – Argo, Hickory
A 20,000sqm A-grade office development at 570 Little Bourke Street Melbourne in the heart of Me CBD with leading development partners Argo Group and Hickory. The project has a premier location and will provide the next generation of workplace offering to leverage the flight to quality across prime office markets.

Gurner Burleigh Heads, 1929 Gold Coast Highway QLD – GURNER
In partnership with Australia’s pre-eminent private developer, Gurner, this project will deliver a boutique residential lifestyle offering comprising 80 high-quality luxury apartments in the highly sought-after and premium lifestyle location, Burleigh Heads. Planning approval is expected in December 2022.

Sydney Airport Hotel, 210 O’Riordan Street, Mascot NSW – Boston Global, Atlas Investment Corporation and Hickory
The development of a 224-key, 4.5-star hotel which is strategically located at the entry of Sydney Airport, less than 500 metres from domestic terminals. The project is forecast to benefit strongly from the normalisation of travel and increased demand for quality hotel accommodation at Australia’s busiest transport hub.

75-119 Cubitt Street, Cremorne Richmond VIC – Time & Place
This new A-grade office development of c.15,000sqm is located on a rare large landholding in the heart of the Cremorne precinct with three street frontages. In partnership with trusted partner Time & Place, the project will deliver institutional grade workplace into Melbourne’s tightest and well-established fringe office market.

The initial seed investments announced at launch in March 2022 included:

The Link Industrial Park, 142-172 Sherbrooke Road, Willawong QLD – Centennial Property Group
Developing a modern multi-unit industrial and logistics estate for the mid-space market, comprising 32,000 square metres of Gross Lettable Area (GLA). The project is located in a rapidly maturing industrial market of Brisbane, Willawong, approximately 18km south of the Brisbane CBD and in close proximity to key arterial roads.

88 Queensbridge Street, Southbank VIC – Time & Place and Hickory
A mixed-use development comprising 367 residential apartments and a 202-key hotel. The planning approved development is well located in Southbank, adjacent to the Melbourne CBD with outstanding access to transport, amenities, parks and entertainment offerings.

41- 49 Walsh Street, South Yarra VIC – Neometro
A boutique mid-rise building comprising nine ultra-luxury apartments with highly experienced development partner Neometro. The development is located in one of Melbourne’s most exclusive and tightest held precincts, the Domain precinct in South Yarra, with incredible access to parks and amenities.

MaxCap Group
MaxCap Group is Australia’s leading real estate financier and is an established investment manager for domestic and global institutions with current Funds Under Management and Advice of circa A$6.0bn, having invested more than $15.4bn across more than 550 investments since inception in 2007 (as at 30 September 2022)

MaxCap’s Direct Investment team has established an enviable record of success in originating and managing high-yielding investments. This includes a diversified investment portfolio with an end value of over $4.5 billion on completion.