Altis Recapitalises AREEP3 Portfolio

Altis Property Group have completed a recapitalisation of the Altis Real Estate Equity Partnership 3 (AREEP3) Fund which held 12 assets worth $760m.

The recapitalisation brings on board capital from US investment giant Starwood and Sydney-based global investment firm Arrow Capital Partners to replace some existing investors exiting the fund.

The introduction of new partners will see the Starwood and Arrow Capital join Altis as manager in running the assets.

The AREEP3 Fund was a 6 year closed end fund established in 2015 with $320m of equity.

In 2016, the Fund acquired a national industrial portfolio comprising of 14 B Grade assets for $90m across three states (NSW, Vic and Qld) at a combined initial yield of 8.76% and a WALE of 4.6 years.

The portfolio deal included two assets in Sydney (15-21 Britton St, Smithfield and 63 Britton St, Smithfield) and one in the Hunter Region (11-21 Gardiner Street, Rutherford), ten properties in Cheltenham, VIC (Brixton Road, Wangara Road and Bay Road) and one asset in Crestmead, QLD.

In 2016, the Fund also acquired the ground lease from NSW Ports of 2 Simblist Road, Port Botany for $44m as well as Office assets including, 3 & 5 Ryder Boulevard Rhodes for $235m and 6 Eden Park Drive Macquarie Park for $81m.

The recapitalisation transaction was completed in mid November and crystallised a substaintial uplift in the value of the assets for Altis and their original investors. As part of the deal, 3 Ryder Boulevard Rhodes was transacted at $126m (+34% gain) 5 Ryder Boulevard was transacted at $186m (31% gain) and 6 Eden Park Drive Macquarie Park for $134m (+65% gain).

Altis were not available to comment on the success of the transaction.

The Group are however in the process of raising capital for AREEP 4 with a target of $500M by Christmas. The new Fund will also target the acquisition of existing income producing industrial and commercial office assets with an overriding focus on improving the income and investment profile of the portfolio.

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About Warwick Petschack

Warwick has over 25 years of property investment and management experience. Principally responsible as Managing Director for Capital Management Australia and Joint Managing Director for Chauvel Capital Partners and Editor of Australian Property Markets News.

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