Propertylink is looking to raise AUD500m (€343.7m) in an initial public offering.
The Sydney-based property fund manager’s move is being supported by Goldman Sachs, the Townsend Group, Grosvenor and the Saudi Arabia Economic and Development Company (Sedco).
Propertylink, which has a USD$1.6bn portfolio of industrial and office buildings, lodged its prospectus and product disclosure statement with the Australian Securities and Investments Commission (ASIC), aiming for a listing on the Australian Stock Exchange.
In an interview with IPE Real Estate on the eve of the stock exchange announcement, Stuart Dawes, Propertylink’s chief executive, said that, since the global financial crisis, there had been an increase in cross-border capital flows.
Five years ago, Propertylink’s present management was brought in to re-energise the company.
It has since lifted the value of assets under management from AUD35m to AUD1.6bn.
Propertylink has also offered shariah-compliant structures to investors who follow strict Islamic finance principles.
The firm manages nearly AUD100m in assets for two investors from the Middle East – the Bahrain-based Islamic bank, Al Salam, and Sedco.
Dawes told IPE Real Estate that Propertylink worked with its legal and accounting advisers to develop a structure known as ‘murabaha’ – a debt-like facility that qualifies as shariah-compliant.
Initially, the facility was created to suit the Bahrain investors.
Since 2013, Al Salam Bank and PropertyLink have jointly purchased two industrial assets worth around AUD70m.
Using the murabaha structure, Propertylink last year brought Sedco to Australia.
“Sedco had been looking to invest in Australia for some time but was unable to find the right investment structure,” Dawes said, adding that the Saudis were now looking for more core-plus and value-add assets in Australia.
Sedco, an investment house, operates in 17 countries, investing on behalf of Saudi nationals and corporates.
“Our observation is that the investors looking for shariah-compliant investments are from oil-based economies,” Dawes said.
“Saudi Arabia is 90% linked to oil, and we have heard firsthand that some investors want to diversify from oil into property.”
Propertylink first came to prominence in 2014, when Goldman Sachs, together with the Grosvenor Group, made a major commitment to the Propertylink Australian Industrial Partnership 1 (PAIP 1).
The pair of capital partners also backed Propertylink’s purchase last year of an office and industrial portfolio in Australia from Equity Commonwealth Trust, then controlled by US property tycoon Sam Zell, for AUD303.3m.
Propertylink vice-chairman Stephen Day – who, with Dawes, is credited with widening the company’s base of offshore capital partners – said: “We have established a good alliance with Grosvenor and Goldman Sachs.”
Day said Grosvenor carried the investment on its balance sheet and had now co-invested in assets valued at more than AUD1bn.
Propertylink launched PAIP II to co-invest with Townsend Group and Japan’s Norincukin Bank.
With around AUD167m in seed investment, the vehicle is targeted to grow to around AUD$500m.
It has a minority interest with China’s Fosun in an office building in North Sydney, close to the central business district.
“We have five industrial and three office facilities, and our average total internal rate of return is in the high 20s,” Dawes said, adding that it had been possible to achieve this rate of return by doing some heavy-lifting spadework to improve the assets.
“It is the high returns that have been the most attractive feature of investing in Australia for offshore investors,” he said.
