Gallery Securities has launched an unlisted wholesale fund to provide investors an opportunity to access returns from a diversified portfolio of Australian property development assets.
Gallery was founded in 2011 by the Barclay Family office (SFO) and is a vertically integrated property development and investment firm focused on Australian residential real estate investments.
The fund intends to invest in at least 3 build to rent projects, 2 residential land subdivision projects and 1 apartment project with a target net return of 8-10% per annum.
Gallery Securities are hoping to raise $100m for the Fund and is targeting SWFs, institutional, family office and HNW investors with a minimum of $10m per subscription.
Basic Terms
| Responsible Entity | Gallery Securities Pty Ltd (AFSL No. 506347) |
| Fund Manager | Gallery Securities Investment Management Pty Ltd (CAR No. 001 284 144) |
| Fund Size Target | $100m |
| Fund Open | 27 November 2020 |
| Fund Raising Close | 31 March 2021 |
| Fund Term | 7 Years |
| Target Return | 8-10% per annum net of fees |
| Liquidity | None |
| Investor Type | Wholesale Only |
| Target Assets | Build to Rent, Residential Sub Division, Residential Apartment Development |
Headquartered in Sanctuary Cove, Queensland with offices in Brisbane, Sydney and Melbourne. The group state that they employ several hundred staff and contractors throughout Queensland, New South Wales and Victoria.
The IM for the Fund (see below) provides a brief outline of 6 previous project the Group has been involved, predominantly in land subdivision projects.
The Group will appoint Unity Fund Services as an independent Fund Administrator and Evolution Trustees Limited to assist to manage its risk & compliance framework, to meet certain AFSL obligations.
The fund will target an LVR of 50% but be permitted to draw up to 70% if required.
Gallery Securities will charge a range of fees including a base management fee of 1.25% on committed capital for first 12 months and then on gross asset value, a 20% performance fee above a 9% IRR hurdle, a 1% acquisition fee, a 1% disposal fee, a 0.025% trustee fee (with a minimum of $300,000pa).
Refer to the following documents for full and further details.
Our Views
We provide the following information as general advice and not specific advice for any particular investor.
Positives:
- The Fund has identified seeded assets which can be reviewed in further detail.
Negatives:
- The Trustee is not independent
- There is no information on how much debt or equity is required for each project and whether the Fund will be a sole investor or co-investor
- There is no evidence that senior bank debt is available to fund the projects to the required amounts
- There is no evidence of external valuations being available to justify the land acquisition or selling assumptions
- There is no evidence of the sponsor participating in the capital raising.
- There is insufficient information to determine whether the project returns justify the risks involved.
- The fee regime appears to be higher than market practice.
Our view is that Gallery Securities will struggle to raise sufficient capital for the fund.
Related Articles
