EXCLUSIVE: Altis beats $300m target in one closing

The Sydney-based real estate fund manager raised $320 million for the first closing of its third investment vehicle and is on course to reach its $400 million hard cap.

Altis Property Partners, the Sydney-based real estate fund manager, has exceeded the fundraising target for its third investment vehicle in just one closing, PERE can reveal.

The firm, set up in 2008 by principals Paul Notaras, Shaun Hannah, Alistair Wright and Chris Packet, has corralled A$320 million (€211.4 million; $262.8 million) for its Australia-focused Altis Real Estate Equity Partnership (AREEP) III fund, beating its original A$300 million target in a single closing.

Altis has set a hard cap of A$400 million for the fund and is thought to be targeting a final closing within six months.

Investors are believed to have been enticed to back Altis’ third effort on the back of a strong performance by the firm for its first ARREP fund, for which the firm raised A$107 million in April 2011 and is close to being fully harvested.

Including the sale of A$224 million of industrial properties to property company Mirvac, which was announced last month, Altis is just two property sales away from wrapping up the fund. Those are understood to be close to being sold as they are in the due diligence process with prospective suitors.

From the sales so far, the firm is in line to exceed its value-added-style target return for its investors of between 15 percent and 18 percent IRR. 

The firm raised A$250 million for AREEP II in 2012 and that fund is thought to be fully invested now.

Altis is expected to reduce its return expectation for AREEP III, however, in line with the current point in the market cycle in Australia. Reflecting a market where yields in its principal markets of Sydney, Melbourne and Brisbane have compressed, the firm is aiming to generate returns of between 12 percent and 14 percent IRR for the vehicle, closer to core-plus strategies.

It is expected, nonetheless, to continue to invest in primarily the office and industrial sectors in keeping with its first two funds.

Altis declined to comment.