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GPT plots fundraising round for two vehicles

After completing a deal with DEXUS and CPPIB, the Australian-listed fund manager plans to raise as much as A$700 million.

Sydney-based GPT Group is planning to launch another fundraising round for two of its unlisted open-ended funds to finance the acquisition of four real estate assets in Australia, according to the firm.

The Australian-listed fund manager has just completed its long-awaited asset transfer deal with the Canada Pension Plan Investment Board (CPPIB) and Sydney-based real estate investment firm DEXUS Property Group, which sees the firm add A$1.04 billion (€705 million; $961 million) of assets to its portfolio.

The three office properties and a large shopping mall, all in Melbourne, have now been placed in the GPT Wholesale Office Fund (GWOF) and the GPT Wholesale Shopping Centre Fund (GWSCF), respectively. The firm has taken a 50 percent stake the shopping mall and one of the offices and a 100 percent stake in the other two offices, according to statements.

As is typical in Australian open-ended funds, the new asset purchases have been funded with debt, GPT’s head of funds management Nicholas Harris explained, but the firm will eventually seek to raise more equity to decrease leverage over time.

The potential equity target for the fundraisings is still being determined, but in order to keep the two funds in their target leverage range of between 10 percent to 30 percent, GPT would likely look to raise somewhere between A$600 million and A$700 million, PERE understands.

The fundraisings for both GWOF and GWSCF are expected to be launched before the end of the year. Since its launch in 2006, GWOF has raised A$2.5 billion of equity while GWSCF has hauled A$1.8 billion since its 2007 launch. Both funds have a core strategy, seeking 9 percent IRRs post-fees.

The funds currently have a mix of approximately 25 percent international and 75 percent domestic investors, Harris added. Although potential future fundraising rounds would not set a target for investor profiles, he said typically GPT has attracted a similar mix of international and domestic institutional investors for its funds.

Termed a “peace deal” by Australian media, GPT’s deal with CPPIB and DEXUS was first announced in January, after the two made competitive buyout bids for the A$3.7 billion Australian REIT Commonwealth Property Office Fund. As part of the settlement, the deal was originally supposed to include five assets: four offices and the Northland Shopping Centre, with a total valuation of A$1.2 billion.

However, as several of the Commonwealth fund’s assets had other co-owners, it has taken until now to fully settle the deal, Harris said. One of the office assets, 10 Shelley Street in Sydney, was co-owned by Brookfield Asset Management, and the fund manager exercised its pre-emptive right to acquire the remaining 50 percent stake in the building for A$130 million. The remaining assets, however, were handed over to GPT.

“This is a strong result for GWOF particularly given the current competitive market environment,” GWOF fund manager Martin Ritchie said in a statement. GPT’s unlisted funds now have approximately A$8 billion assets under management.