Lendlease is due to enter the commercial real estate credit market with the imminent launch of a A$775m (€432m) credit fund in the US over the next month. This will be followed by a second fund for the Australian market next year.
The inaugural fund will be backed by an unnamed US institutional investor in a partnership structure. Lendlease will have a co-investment of up to 20% in the fund.
Addressing analysts during the company’s earnings call to announce a A$225m annual profit –- a turnaround from last year’s A$1.5bn billion loss – group chief executive and managing director, Tony Lombardo, said the partnership would target multifamily residential, office and life sciences in the US.
Later, during a media call, Lombardo told IPE Real Assets: “It is imminent that we will close our first deal.”
Although the fund would start off as a partnership, Lombardo said: “We have kept a bit of flexibility with our partner and we have the option to bring other investors into the partnership to grow the product.”
He said the capital partner was happy to have a 50% stake that it would be prepared to increase to 90%.
Lombardo added: “We are also in negotiation with another capital partner to launch a fund in Australia.” This will be smaller than the US debt fund, with Lendlease aiming to raise around A$500m for the Australian fund.
He said the group was in the midst of detailed negotiation in terms of the size of the mandate for the Australian fund.
Lendlease has also been successful in raising capital for funds in other countries including Japan and Singapore.
Based on its track record in Singapore where it is currently redeveloping a large commercial project in the heart of the city, Lombardo said: “We are currently in advanced discussions with a global capital partner to secure a A$1.2bn mandate across both value-add office and industrial to reposition existing assets generating target return in the low to mid-teens post-fee.
“In data centres, we’ve established the US$1bn mandate with one of our key global capital partners. We have completed our first 70MW data centre under that mandate and are in the final stages of selling down that data centre, which will deliver a return in excess of the fund’s performance target. We are now in the process of commencing a second 70MW data centre, which has a 100% leasing commitment.”
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