Australian real estate manager Qualitas has raised around A$100m (€61m) in the first close of its A$500m Opportunity Fund II.

The Melbourne-based manager’s second opportunity fund was launched last month to capitalise on market dislocations, particularly in Australia’s residential sector.

Qualitas expects to reach its target raise within a year in an accelerated programme tapping into strong demand for opportunistic investment.

Many of its existing institutional investors, including those from Europe, have reinvested in the Opportunity Fund II, which will open to new investors in subsequent closes.

Andrew Schwartz, Qualitas group managing director, said the predecessor fund, which raised A$300m two years ago and was now fully deployed in real estate debt.

He told IPE Real Assets that this fund differed from Qualitas’ first opportunity fund.

“This first opportunity fund has been successful and is on track to achieve its target return,” he said. 

“However, the environment for alternative real estate investment for the second fund has altered, due to a very different outlook for the property sector compared to just three years ago.” 

Schwartz said the second fund would look for opportunities to work with developers who needed capital to recapitalise or reposition a project. 

 He said that while some parts of the market remained sound, some operators might have over-reached by making revenue and capital assumptions that were correct at the time but, due to circumstances, had now changed.

 “Generally, we will bring capital stability to a situation; we will fix up assets and then sell them to get an equity return from our investment,” he said. 

Schwartz spoke of “some excellent opportunity” to create a landbank over the next two to three years, knowing “with some confidence” that particularly the higher density markets on the eastern seaboard would rebound in the next two to three years. 

He said a marked slowdown in residential development had led to prices recalibrating, and this, in turn, had created a conducive market for an opportunistic situational fund.

Schwartz expects soon to close the first deal for the new fund in what he describes as a “very healthy” pipeline of opportunities.