Investa Property Group has raised almost AUD800m (€549m) in equity and debt for its flagship wholesale fund, Investa Commercial Property Fund (ICPF).
Investa completed a AUD600m capital raising and closed the first US private placement issuance of US$150m (€136m).
The equity has been raised from new and existing, local and offshore investors, said Peter Menegazzo, Investa’s CIO.
He said the original target was AUD450m, and the raising more than 30% oversubscribed.
Menegazzo said investors were attracted to the quality of the assets, as they are weighted to Sydney.
Australia’s economic resilience relative to the global economy was also a factor.
Menegazzo said ICPF has built up a strong track record of managing its capital position effectively by utilising its balance sheet capacity and attracting ongoing support from a list of blue-chip institutional investors.
“This support has continued, following the recent change in ownership of the Investa office management platform,” he said.
ICPF, which owns a AUD4.1bn prime office portfolio, has attracted more than AUD$2.2bn in new equity since 2010.
The capital and debt raised will go into funding recent acquisitions totalling around AUD750m in three prime office buildings in Sydney CBD.
In one of these buildings, ICPF’s interest will move to 100%.
Among ICPF’s recent transactions is a 50% interest in 60 Martin Place, Sydney, a AUD900m project underway and due for completion mid-2019.
Jason Leong, ICPF’s fund manager, said the fund was well-placed to invest in the asset’s redevelopment.
“The new investments are directly in line with strategy, complement our existing portfolio and increase our tactical weighting to the well-positioned Sydney CBD office market,” he said.
ICPF secured AUD1bn in additional borrowing from existing local and foreign lenders to complete the acquisitions.
Leong said the capital raising repositioned ICPF’s balance sheet following a series of quality acquisitions in a very tight market.
Together with proceeds from the US Private Placement issuance, the fresh capital will be used to pay down borrowings, moving ICPF back into the low end of its targeted gearing range.
Menegazzo said Leong was undertaking a full strategic review of ICPF, to be completed in November.
The review will determine the future direction of the wholesale fund.
Investa was seeking to raise new capital for the ICPF fund in May, following months of ownership upheaval and uncertainty.
The move followed a failed takeover of the Investa Office Fund.
Investa endured a protracted period of uncertainty as its owner Morgan Stanley Real Estate Investing began to exit the business, attracting takeover bids for various parts of the company.
Morgan Stanley paid AUD6.6bn for Investa Property Group in 2007.