Last month, Sydney-based investment management firm Propertylink made its much-anticipated debut on the Australian Securities Exchange.
On August 5, the industrial landlord and fund manager raised A$503.5 million ($383.97 million; €339.06 million) through an initial public offering (IPO) at a price of A$0.89 per stapled security. A basket of retail investors and institutional investors from North America, New Zealand, Asia and Europe bought into Propertylink securities at an initial yield of 7.7 percent. Global firms including HSBC, UBS, BNP Paribas and JPMorgan are currently among its top 20 buyers.
Speaking to PERE on the motivations behind launching an IPO, Stuart Dawes, the firm’s newly-appointed chief executive officer, said they wanted to take advantage of an open space in the listed market.
“There are externally managed real estate investment trusts (REITs) in the country but the only Australia-focused internally managed listed REIT is Goodman that has also grown out of Australia and become global. Coupled with that, we were also able to take our largest fund PAIP and bring that on to the balance sheet, providing the opportunity to go into logistics REIT.”
The IPO was in line with Propertylink’s target capital raise of A$500 million. Expressing satisfaction with the outcome, Dawes said the exercise was well supported and in fact the offer was oversubscribed many times.
The share price movement, however, told a different picture. On its first day of trade the stock briefly fell to around A$0.81 before ultimately reaching A$0.86 on the day’s close. Two weeks later the shares were trading at A$0.77, following days of price volatility. According to one analyst who spoke to PERE, the initial share price was deemed too high by the market, ultimately leading to this price fall.
Dawes acknowledged the volatility but insisted he did not know why it was happening. He refuted other kinds of market speculation that the performance could also be due to recent changes in Propertylink’s top management that saw managing director Stephen Day pass on the leadership mantle to Dawes, the firm’s then chief operating officer and head of investment management. Day is now the executive director and vice chairman.
“It is not to do with any management change,” he asserted. “We are focused on the business and nothing has changed in our business at all. We have two components – the balance sheet which represents 83 percent of the income. We have great leasing success on that [front]. We are also well supported on the investment management side. The stock price will follow good news and that is what our focus is.”
In a bid to show a sign of confidence in Propertylink, Dawes and other directors in fact bought some Propertylink shares on the market in mid-August.
Going forward, Propertylink plans to utilize its balance sheet capital across a variety of capital partnerships. Depending on the right opportunity it may look to expand the remit of the Propertylink Enhanced Partnership, the joint venture program with Goldman Sachs via which the two partners acquired a portfolio of logistics and warehouse assets from Denison Funds Management for A$142 million days before the planned IPO.
As for its fund management business, which now represents around 20 percent of the firm’s revenues, the firm is in the process of raising capital for the Propertylink Australian Industrial Partnership (PAIP) II, its second value-add vehicle, and expects to close the vehicle over the next few months at its target of A$300 million to A$400 million.