MaxCap Group, the Australian commercial real estate (CRE) debt investment manager, has raised around A$50 million ($38 million; €36 million) in the first close on its debut commingled closed-ended vehicle, according to a source familiar with the capital raising.
The MaxCap First Mortgage Fund was brought to market in 2016 with an A$100 million capital raising target.
Initially the MaxCap First Mortgage Fund was to be a higher-yielding fund with investments in preferred equity transactions, but the firm eventually decided to shift the strategy and raise capital for a first-mortgage fund instead. The source explained that this was done partly in response to investors’ increasing preference in investing in more defensive debt opportunities such as first-mortgage investments in the light of volatility in global markets. And partly also to take advantage of the growth in the Australian real estate debt sector driven by the Australian Prudential Regulation Authority’s (APRA) tightening of property lending criteria imposed on the major retail banks. Australia’s major banks traditionally dominated the first mortgage market.
PERE understands that the capital so far has been raised from Australian institutions, superannuation funds as well as family offices and high-net-worth investors.
The fund will have a term of four years and the firm is targeting returns of around 10 percent from investments. The A$50 million has already been deployed in deals in Sydney and Melbourne.
MaxCap Group has $1.4 billion in funds under management, comprising separate account mandates and special purpose vehicles, in addition to over $2 billion worth of deals in the pipeline over the next 12 months.