MaxCap Group, one of Australia’s leading real estate debt and investment houses, today confirmed it has forged successful joint venture partnerships with Troon Group, a highly respected developer and off-shoot of the 150 year old Victorian builder H.Troon. The two groups have been collaborating for some time and have recently completed their first development together and commenced construction on their second.

The partnership between the groups has seen the recent completion of a significant value add office project in the blue-chip Melbourne suburb of Mont Albert and construction commence on the new BMW Berwick car dealership in the south east. Both projects were being delivered by Troon Group’s construction arm, H.Troon.

Simon Hulett, MaxCap’s head of direct investment, and Tom McInerney, Troon Group’s managing director, said they were both delighted to have been able to form the partnership.

“We are exceptionally proud of our relationship with Troon Group and the results this will deliver to investors. Tom and his team have a unique ability to identify opportunities through their extensive networks across the country and equally strong reputation. This was evidenced with Mont Albert and BMW Berwick – both deals that were sourced off market. Combined with their execution and delivery capability, Troon is a great partner for our Direct Investment business” Mr Hulett said. “Our approach is to establish long term relationships with a select group of leading developers, those that are both well established and those that are on the way up. We can grow with our partners and tailor joint venture capital solutions to their needs to ensure they can successfully deliver outstanding development product across all real estate sectors.”

Mr McInerney said Troon Group had first worked with MaxCap on a debt funding opportunity for the construction and development of the Mentone Centre (Melbourne, Victoria) in 2014.

“Having worked with MaxCap for a number of years now, they understand our business which allows our team to really focus on what we are good at and trust that we will have the capital support we need from MaxCap to execute. Working together as joint venture partners on the BMW Berwick and Mont Albert projects – and with more to come – we enjoy a number of synergies with MaxCap,” said Mr McInerney. “Troon Group is a delivery focused developer with unique whole of Development capabilities forged from 150 years and 6 generations of H.Troon history.”

Mr McInerney emphasised that he saw diversification across various asset classes as bringing resilience to the Troon Group in a post COVID environment. Mr Hulett added this was similar to MaxCap’s diversification of its core debt-funding business over recent years to now include joint venture capital funding through the more recently established direct investment business, allowing MaxCap to provide funding solutions across the full capital stack.

Hamilton Street Mont Albert Project

In less than 12 months, MaxCap and Troon Group acquired, extensively refurbished and re-leased the suburban office building that had stood vacant for more than ten years. The building is well located in Mont Albert, in Melbourne’s Inner East.

The scope of the upgrade included 3,700 sqm of office space over three levels, with 114 basement car parks and new end of trip facilities. Leasing interest was strong from the outset, with 92% of the building pre-leased to Telstra Business Centre and Laing O’Rourke prior to the commencement of construction works.
Located on Hamilton Street, the main commercial and neighbourhood strip of Mont Albert, the building is less than 100 metres from Mont Albert train station, which provides easy access to Box Hill (a Major Activity Centre under Plan Melbourne) and the Melbourne CBD.
“After a decade of sitting empty and derelict, we saw the opportunity to redevelop the building and revitalise the Hamilton Street precinct,” said Mr McInerney said. “That has occurred quicker than expected with pre-leases secured shortly after settlement and construction now completed on time and budget.

Mr Hulett added, “The blue-chip suburban location was supported by the fact that the Inner East suburban office market has been experiencing historic low vacancy rates driven by strong tenant demand and a very limited supply pipeline. In the post COVID environment, we expect to see demand for decentralised workplaces grow and locations such as this thrive.”

BMW Berwick

MaxCap and Troon have also recently commenced construction on the development of a purpose-built BMW car dealership with Jowett Motor Group (JMG) in Melbourne’s south eastern growth corridor. The site is located on Coventry Road, Narre Warren and will have a built area of close to 3,000sqm.

“Construction commenced in May and is on track for completion and handover for November 2020,” Mr McInerney said. “We are very excited to be working with Jowett Motor Group and a leading luxury car manufacturer like BMW.”

As part of its ongoing acquisition campaign, the MaxCap Industrial Opportunity Fund (MIOF) announced today that it has settled its third industrial asset. The site is located in Brooklyn in Melbourne’s thriving inner west industrial core and is a strong strategic addition to the Fund’s other assets in Epping and Truganina.

MIOF was recently established via partnership between developer Time & Place and investment manager MaxCap Group in response to the unprecedented demand for small and medium sized industrial land lots located in established industrial precincts across the east coast of Australia.

The 13.6-hectare site is strongly aligned to the Fund’s investment guidelines being situated in the tightly held core industrial market of Brooklyn. It benefits from excellent access to main arterial roads as well as being closely located to the future exit of the West Gate Tunnel.

The Fund has begun design and planning works to subdivide the site which is already zoned for industrial use and is currently leased by multiple private users. The subdivided lots will likely cater to mid-sized industrial warehouse uses which are significantly undersupplied in the catchment area, however the Fund has the ability to adapt the offering based on the prevailing market conditions. Diminishing industrial supply in and around the Port of Melbourne is predicted to drive strong demand for inner city industrial land, in which the site is perfectly positioned.

Chris O’Keefe, director at Time & Place, said, “The Brooklyn site is a great example of an outstanding investment opportunity that was secured off-market through the agility of the Fund and the ability to work with the vendor to meet their needs and timing. We have extended the existing leases on the site to secure income for the Fund whilst we work through planning and ride out the current global crisis. We are well positioned to secure further opportunities in 2020, with a strong pipeline of potential acquisitions being investigated by the team.”

Simon Hulett, Director of Direct Investment at MaxCap said, “The core of the Fund’s strategy is buying high quality sites in established industrial locations close to arterial roads and residential population to take advantage of the emerging e-commerce sector and the focus on last mile logistics solutions for consumers. Brooklyn presented an excellent buying opportunity that met all the strategic objectives of the Fund at a great price. Whilst nobody is immune from the impacts of the COVID-19 crisis, we are seeing strong demand in the e-commerce and last mile space and believe this will remain resilient through this period. We have a sharp focus on continuing to protect our invested capital at the moment, however, we are also well positioned to move quickly on new opportunities in the market having now raised over $100 million in the Fund.”

The Fund is a four-year closed-ended vehicle targeting a strong net return to investors of 20%. This is the Fund’s third acquisition, adding to its first two seed acquisitions in Epping and Truganina in Metropolitan Melbourne.
Cooper Park: a 9.78-hectare site in Epping, in Melbourne’s North. This was the first site secured through the Fund. The land was settled in June 2019 and construction is due to commence in early 2020.

Leakes Park: a 16.7 hectare site in Truganina, in Melbourne’s West. The second site was settled in August 2019. It is located within the Wyndham City council and planning approval is expected imminently. The development will comprise a mixture of lots targeting light industrial and warehouse use. Stage One that comprises 20 lots is currently for sale.

MaxCap Industrial Opportunities Fund at a glance:

• Target size: Hard cap of $150 million
• Fund strategy: acquisition, subdivision and development of industrial lands
• Geography: Primarily in Melbourne, Sydney and Brisbane
• Target number of investments c. 6-8 investments
• Structure: closed-ended
• Fund term: Four years fixed term + one year option to extend
• Investment Period: Two years from the first closing date
• Fund target return: 20% net IRR

Australian specialist real estate financier MaxCap Group is setting up operations in New Zealand in a joint venture with Bayley Corporation and investment advisory firm Forsyth Barr.

The company which has offices throughout Australia, has opened an office in Auckland with Bayley’s and Forsyth Barr between them owning 50 per cent of MaxCap NZ.

“Our objective is to become New Zealand’s premier non-bank commercial real estate lender focusing particularly on property development projects as well as investment funding,” says Brae Sokolski, MaxCap’s co-founder and chief investment officer.

MaxCap Group specialises in commercial real estate debt funding and has originated and managed approximately A$7.7 billion worth of loans since it was established 13 years ago, says Sokolski. It currently has approximately A$4.1 billion of funds under management.

“We obtain and actively manage the funds that we use to provide finance via a variety of sources which we have built up over many years. These range from high net worth individuals through to large institutional investors, including major superannuation and pension funds,” says Sokolski.

“Bayley’s will be assisting us with originating lending opportunities through its far-reaching network and client base across New Zealand. We will also be looking to access Kiwi currency funding sources, focusing initially on high net worth private investors utilising Forsyth Barr’s considerable expertise and experience in wealth management.”

“The recent drop in the Official Cash Rate (OCR) to one per cent and the flow on effect this has on bank deposit rates means that our New Zealand managed funds are likely to have increased appeal to experienced investors searching for a higher level of return.”

Bayley’s’ managing director Mike Bayley says the company’s involvement in the joint venture has been driven by current limitations on commercial property funding from retail banks.

“These limitations are, at times, having a negative effect on market activity and are a source of frustration for clients, particularly developers who play a vital role in creating new leasing and investment opportunities.

“It has prompted us to look for alternative sources of funding for clients. MaxCap NZ will be taking a relatively conservative approach but it will be able to offer more flexibility in its funding and consider more complex deals.”

Jonty Edgar, co-head of markets for Forsyth Barr, says Max Cap Group’s move across the Tasman will provide the firm’s wholesale and institutional clients with more commercial property investment options.

“We have been looking to diversify our offerings in the property sector, driven by private investor demand for alternative investments with higher yields and attractive risk-reward dynamics. This joint venture with MaxCap Group and Bayley’s enables us to do that,” says Edgar.

“MaxCap has a well-established track record in Australia for their rigorous approach to risk management. They have a history of returning full principal and interest to all of their investors and delivering on terms issued to borrowers.”

Mark Farrands has been appointed chief investment officer for MaxCap NZ.  He has over 27 years’ real estate finance and valuations experience and was previously Auckland regional manager, property finance at ASB Bank.

He says MaxCap NZ’s initial focus is on financing $3 million-plus property transactions with negotiations already well advanced on funding for several land development deals in Queenstown and Auckland.

MaxCap Group (MaxCap), a leading CRE debt investment manager has delivered one of the largest single
commercial office construction funding facilities in Australia.

The construction facility is for the Midtown Centre, a premium office redevelopment in the centre of the Brisbane CBD. The Project will join two towers to create a modern 45,000sqm, 26 level office building with large 1,850 – 2,500 sqm campus style floorplates, featuring 3,000 sqm of landscaped balconies, terraces and rooftop gardens, and one of the largest end of trip facilities in Brisbane. The project is underpinned by Rio Tinto as an anchor tenant, having committed to around 20,000sq m in the building. Hutchinson Builders have been on-site since April and the building is scheduled for completion in mid-2021.

Commenting on the transaction Eddie Law, MaxCap’s Executive Director Investment NSW/QLD/ACT said, “At a level of greater than $360million, this is possibly the largest single hold for development finance ever in Australian history and represents a watershed moment for the non-bank finance industry.
From MaxCap’s perspective, it’s a testament to the talented team we have built both nationally but more specifically in NSW and Queensland.”

The project is being developed by the Ashe Morgan Group and DMann Corporation. Mendy Moss, Principal of Ashe Morgan Group stated “We appreciate the focused and professional support of the entire MaxCap team in organising this facility which provides all the funding necessary to complete the project and allows the AM/DMann team to focus on delivering this landmark development”.

Mr Michael Nitschke MaxCap’s Investment Director Qld said, “This directly fits our strategy to partner with high quality sponsors with market leading assets
and it is well supported by our institutional investor partners.”

The Australian CRE debt market is an investment strategy that is increasingly carving its place as a stand-alone asset class in institutional portfolios. In
addition to local funds, international capital continues to flow into the Australian CRE debt market. Dutch asset manager APG Asset Management has recently
awarded MaxCap an exclusive investment mandate committing up to A$600million in Australian real estate debt.