New York investment bank Goldman Sachs, and London-based property firm Grosvenor Group have committed equity to a club investment vehicle focused on industrial property in Australia.
Managed by Sydney-based asset manager Propertylink, the Propertylink Australian Industrial Partnership (PAIP) is focused on Australian industrial assets, and has already acquired seven properties across several states worth a total of $100 million, according to a Propertylink statement. The remaining capital is expected to be deployed within approximately 12 to 15 months, and with leverage is expected to expand to $400 million worth of assets.
The equity size of the vehicle was not disclosed, but PERE understands that Goldman Sachs, Grosvenor and Propertylink committed approximately $160 million of capital to the vehicle altogether. Goldman Sachs is making the investment from its special situations arm in Australia with capital from its balance sheet, and it is understood that this is Goldman Sachs' first direct equity investment in Australia private real estate since the onset of the global financial crisis. Propertylink will act as manager of the fund.
PAIP is an open-ended club fund with the option for investors to re-up or add in new investors. Every few years the investors will also hold a review to determine whether to hold or sell the portfolio. Speaking to Australian media, Propertylink managing director Stephen Day listed merging the portfolio with one of its existing industrial funds in infrastructure or in the listed space, an IPO or a straight sale as the club’s exit options.
Propertylink and its investors are understood to be seeking value-added returns in the mid-teens, with a large portion of that coming from distributions.
Typical investments are expected to be multi-let estates and single tenant distribution centers in good locations but with pending vacancy. Discretion for the vehicle is understood to involve all investors in PAIP, with an investment committee including Goldman Sachs and Grosvenor approving all investments.
“The assets of most interest to us are those which present the opportunity for Propertylink to add value or to achieve higher yields and total return by taking some calculated lease risk and ‘sweating the asset’ with intensive asset management,” Day said.
With $1.6 billion assets under management nationwide, Propertylink focuses on office and industrial property as well as infrastructure investment. This is the firm’s first private equity real estate club fund, although it has managed separate account mandates for industrial property in the past.