Sep 24 2018Add to Favorites
In 2014 we co-invested with former Managing Director and board member Steve Day, in the headstock of real estate investment management business, Propertylink. Investing in and managing major industrial warehouse portfolios, office tower portfolios, and infrastructure projects, other Propertylink co-investors included Goldman Sachs and London’s Duke of Westminster.
Propertylink was set up with a key focus on industrial logistics property and listed on the ASX with the aim to be an attractive Australian platform combining a large industrial portfolio with a successful investment business with $1.9b funds under management.
The Australian IPO yielded our MP Funds Management investment partners a net annual internal rate of return of 21%.
Most recently just a few days ago, private equity-backed logistics platform ESR is set to take over Propertylink in a $723.4 million deal ($1.20 per share) after both sides announced they had struck a binding agreement on the buy-out.
The deal follows nearly a month of due diligence by the powerful Asia-based platform, which only recently established a presence in the Australian market, and seeking a local industrial platform in Australia, acquired the CIP platform from Charter Hall in July in a $102.5 million deal.
ESR has also taken minority stakes in both the listed Centuria Capital Group, 14.9% and the Propertylink platform, 19.9%.
In September this year, Propertylink launched a $755m takeover bid for the listed Centuria REIT, at the same time taking an 18% stake in the business.
In response to Propertylink's bid for Centura, ESR as a minority shareholder in both Centuria and Propertylink put forward their bid for Propertylink.
As part of its offer to acquire Propertylink, ESR also confirmed it plans to vote its 19.89 percent stake against a move by Centuria to spill the Propertylink board.
ESR is a pure play, pan-Asia logistics real estate platform, one of the largest in the region, with assets under management of more than $US12 billion.
ESR is backed by Dutch pension fund managers APG and PGGM, Canada's CPPIB, Goldman Sachs, Chinese insurance giant Ping An, and South Korean conglomerate SK Holdings.
Mandi Prager is the principal of MP Funds Management. MP Funds Management has provided investment funding for over $1.1bn of real estate based investments across 22 transactions and produced an average annualised investment return of 21-22% (IRR).
Monday this week for me has been back to back meetings with clients, investors and catch-ups in Melbourne. It’s amazing the visceral improvement in sentiment since the results announcement of the weekend’s election.
From 2012 to 2017, MP Funds Management focused on investing in loans to finance the construction of residential apartment blocks. Over this period, we made 15 to16 deals (loans) delivering a combined investment return of around 15% to 26% pa with Leverage to Loan Ratios (LVRs) up to 85%. In most instances, we made sure that presales (excluding GST and agents’ commissions) covered our principal and interest with each loan meeting or exceeding the forecasted return.
Whilst overall consumer sentiment is cautious in the lead up to the Australian federal election, together with the media attention surrounding the decline in the housing market (compounding negative sentiment in the short term), we believe Australia’s domestic economy is heavily reliant on inflows of tax-paying skilled migrants to bolster the diminishing, younger tax payer-base. This is as a result of our top-heavy aging population.
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