AREA sells minority stake to National Australia Bank to fuel growth

The direct asset management arm of NAB has acquired a 35% non-controlling interest in the New York private equity real estate firm as AREA looks to expand its institutional base and fund operations.

The direct asset management arm of National Australia Bank, nabInvest, has acquired a 35 percent minority interest in AREA Property Partners.

Confirming the deal Wednesday, AREA said the joint venture would not affect the management of the New York-based firm, led by chairman William Mack (pictured) and global chief executive officer Lee Neibart, but would help fuel the growth of the firm in terms of deal flow and future capital raising.

AREA was recently among the final three bidding groups for the US assets of Centro Property Group and although it lost it out on the deal to The Blackstone Group, the firm said it expects the nabInvest equity infusion to help it grow its debt and equity activites as well as do “new things”, Neibart added in a Bloomberg interview. “There’ll be an opportunity to acquire larger distressed assets, we think that there’ll be an opportunity to significantly grow our debt business. So by having access to this type of capital, we can look for bigger things to do.” The deal will also allow AREA to grow its institutional investor base more globally using nabInvest's network of institutional and retail investors in Australia and New Zealand.

AREA and nabInvest declined to comment on financial details, but said the equity infusion would remain within the AREA management entity. A majority of the equity is expected to be used as co-investment in existing and new AREA funds, nabInvest added in a separate statement.

Founded in 2007, nabInvest has become an active investor in fund managers over the past year. In June, the firm acquired global REIT fund manager Presima from Caisse de Depot et Placement du Quebec subsidiary, SITQ, while in November it acquired a minority equity holding in start-up manager Wiltshire Capital, sponsoring the hedge fund’s initial fund. The AREA deal is nabInvest’s first private equity real estate investment and its third in an international fund manager.

Mack (pictured) said National Australia Bank was “exactly the type of partner we sought to open greater international channels and to increase our capital for investment in real estate assets around the world”.

With a limited institutional real estate market in Australia, Garry Mulchahy, nabInvest’s executive general manager of asset management, said offshore investment in the asset class was critical. “[We have] sought to position itself with business partners that are able to meet investors’ needs in this sector, initially in global REITs, and now in direct real estate. We believe AREA is a great fit for NAB.” Three NAB executives will join AREA’s eight-member board.