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Macquarie taps third-party capital for opportunistic real estate

The Australian firm previously invested its own balance sheet capital in the higher-risk, higher-return strategy for more than 10 years.

Australia’s Macquarie Asset Management has tapped third-party capital for opportunistic real estate investment for the first time amid the firm’s broader push to grow its investment capability.

Eyeing potential opportunities created by the covid-triggered market dislocation, the asset management arm of Australian investment bank Macquarie Group has raised A$1.1 billion ($840 million; €700 million) in the past 12 months from institutional investors for its first opportunistic real estate fund. With a focus on developed markets in Asia-Pacific, the fund will invest in both real estate platforms and hard assets.

Jelte Bakker, head of Asia-Pacific real estate at Macquarie Asset Management, told PERE that it is a natural progression for it to raise a fund to invest in opportunistic real estate. Macquarie Capital, the investment advisory arm of the bank, branched into opportunistic real estate investments more than 10 years ago with its own balance sheet capital and had previously raised opportunistic real estate capital on a non-discretionary basis. In 2019, the group moved the opportunistic real estate team from Macquarie Capital to Macquarie Asset Management to provide third-party investors access to the investment strategy.

Over that period, the firm has built up a track record in opportunistic real estate investments in Asia-Pacific. “We have been particularly successful in investing in a combination of both specialist platforms and direct real estate,” Bakker added. Some of the firm’s notable investments include the backing of logistics real estate group LOGOS Property in 2014 and US multifamily specialist Greystar’s first Asia rental housing fund Greystar Australia Multifamily Venture I in 2018. Macquarie sold its stake in LOGOS to Singapore’s ARA Asset Management in 2020 after LOGOS grew to become one of the biggest warehouse specialists in the region. Greystar’s Asia fund closed at A$1.3 billion as Macquarie brought along Dutch pension fund manager APG and other investors into the vehicle.

But investing with balance sheet capital limits the scale and potential of the firm’s investments. “Our Asia-Pacific opportunistic partnership gives us access to a larger funding base and has also provided us with a great opportunity to make our investment strategy available to our investors,” Bakker explained.

Besides the new fund, the A$562 billion Macquarie Asset Management also manages and invests third-party capital for core, core-plus and value-add strategies globally. In Asia-Pacific, the firm has had six real estate funds focused on a value-add strategy as well as a number of separately managed accounts, according to PERE data. Most recently, PERE revealed that the firm sold a Chinese retail portfolio of six malls on behalf of sovereign wealth fund Abu Dhabi Investment Authority to Brookfield Asset Management for $1.3 billion in May.