Dexus today announced that it has launched the Dexus Real Estate Partnership 1 (the Fund), the first in a series of closed-ended opportunity funds that seek to provide wholesale investors with an enhanced return via exposure to investments in value-add, development and special situation opportunities.
Dexus will co-invest up to $100 million in the Fund, providing an alignment of interest and an opportunity to benefit directly from the Fund’s performance.
Dexus Executive General Manager, Funds Management, Deborah Coakley said: “Our new unlisted fund will capitalise on emerging pockets of opportunities where we can leverage Dexus’s large-scale platform of transactions expertise, active asset management and development capability to deliver enhanced returns to the fund’s investors.
“This Fund represents a unique opportunity for unlisted investors to access a concentrated exposure to this strategy, that was not previously available.”
Details of the new Fund, including the target fund raising, target investments and returns have not yet been released. Dexus is however seeking to fund its existing pipeline of projects with further sources of equity and the Opportunity Fund is likely to partner with its other wholesale or listed funds in the delivery of these.
Dexus welcomes Jason Howes who has been appointed as Fund Manager. Jason brings experience in special situation investing across the capital spectrum. Jason was previously Head of Australia/NZ at Lone Star Funds responsible for origination, execution and management of special situations, alternate credit and value private equity investments. The US-based private equity giant withdrew from the Australian market in June 2020 after unsuccessful attempts to land deals including GE Capital’s Australian-based loans business as well as Aveo and Boral.
Dexus has a track record of delivering enhanced returns within its existing portfolio via its trading business, achieving an unlevered IRR of more than 29% and $369 million of realised trading profits (pre-tax) since FY12.
Fund raising for the new fund will be a good test of the capital markets as closed ended Opportunistic Funds have fallen out of favour with most institutional investors due to the uncertain investment programs, conflicts of interest, higher risks, higher fees and higher taxation arrangements.
Investors have also been caught in pooled products where other investors have struggled to provide capital as and when called.
Dexus could solve for many of these issues with the right investment structure and governance processes but the road ahead could be challenging.
Related Articles
