Dutch pension asset manager APG has committed to a new US$400m (€343m) mandate to Australian non-bank lender MaxCap – its third mandate since 2019 – to invest in real estate debt.
The new discretionary mandate will continue targeting first mortgage loans across all real estate sectors with a primary focus on the living sector, while retaining flexibility to invest across other sectors and throughout the property lifecycle.
APG head of alternative credits Menno van den Elsaker said: “This mandate forms part of APG’s broader private credit allocation and reflects our conviction in real asset credit as an attractive source of long-term risk-adjusted returns for our pension fund clients. Australian commercial real estate credit continues to offer compelling opportunities, supported by strong market fundamentals and an established lending environment.
“This investment further expands and diversifies APG’s private credit portfolio into other regions outside of Europe and the US. Through our longstanding partnership with MaxCap, we are well-positioned to access these opportunities in a disciplined and responsible manner.”
The Dutch pension manager has now entrusted MaxCap with a total of A$1.3bn (€790m) to deploy to construction lending, boosting housing stock across Australia.
MaxCap’s executive chairman Wayne Lasky told IPE Real Assets: “The earlier mandates established a strong foundation for this next phase of the partnership, which carries a greater emphasis across the asset lifecycle.
“We see a significant structural opportunity across Australian real estate credit, with the undersupply of housing and strong population growth providing an important thematic backdrop.
Commenting the current housing market downturn in Australia, Lasky said: “Property markets move in cycles, and Australia has historically experienced relatively short, contained peak-to-trough corrections compared to other developed markets.
“For example, since 2000, the average Australian downturn has seen prices fall around 4% over roughly 14 months – about half the magnitude of the average US downturn, which has seen an 8% decline over a similar timeframe of 13 months. What we’re seeing so far is consistent with that pattern.”
He added the mandate had flexibility to invest across the real estate lifecycle and across multiple real estate strategies including income-producing assets.
MaxCap’s current real estate credit pipeline remains strong at more than $8bn, with borrowers continuing to build into existing demand. He added that recent changes to tax on residential investment would not apply to new builds.
“Our portfolio of medium- and high-density development will not be affected by these changes. Interest rates may influence near-term demand and valuations, but they don’t change the long-term fundamentals: population growth, insufficient new supply, low vacancy and an enduring need for well-located housing.”
“While we take a top-down view of macroeconomic conditions, sector fundamentals and relative value, portfolio construction is ultimately driven from the bottom up. Our origination capability is well-known across all major sectors and markets.”
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