Dexus has launched its second Australian opportunistic real estate fund with expectations that it will grow into a A$2bn (€1.2bn) entity.

The Dexus Real Estate Partnership 2 (DREP2) fund would be “substantially” bigger than its first fund, DREP1, which closed in December 2022, the manager said. DREP1 has an investment capacity of A$1bn.

It is understood the new fund will raise A$1bn in equity and, with gearing, will have A$2bn to invest. It will have its first capital close in the first half of next year.

DREP fund manager, Jason Howes, told IPE Real Assets that 80% of capital in the first fund had been committed and, by Christmas, it would be fully deployed. “This is the reason we are launching the second fund today,” he said.

Funds in the DREP opportunity fund series have a seven-year term and a three-year investment period.

DREP1 today completed its acquisition of 120 apartments – the residual stock in two residential projects in Melbourne.

“We continue to see attractive entry points in the residential market, which presents further opportunity for the fund in a capital-constrained investment environment,” he said.

DREP1 has deployed capital across credit (38%), repositioning (27%), development (23%) and special situations (12%), Howes said.

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