Dutch pension fund APG has reportedly committed $419.5 million to Australian real estate debt investments, according to APAC Real Estate. This is to jumpstart its foray into Asia Pacific property debt. The fund has teamed up with Australian commercial real estate debt manager MaxCap Group to complete its first mortgage stretch-senior loans transactions, according to reports.
APG has been busy in investments connected to real estate debt. It's been active across Europe and the US for the past five years.
These past few years, they are expected to invest further into other similar strategies across the Asia Pacific. Graeme Torre, managing director, and head of private real estate, Asia Pacific at APG, said that there is a 'structural shift' happening at the Australian sector due to a 'convergence' of debt returns and equity.
APG has initially committed $211 million to the strategy, with a further option to push total commitments to $422 million. The partnership has already put investments into a mixed-use development located in Melbourne, using this as the strategy's seed loan. APG invested the fund on behalf of its various clients.
Previously, the Melbourne-based Maxcap Group managed to put the $300 million into construction, according to The Urban Developer. An option is open for APG to increase commitments in this market up to $600 million. The partnership will also be pushing for first-mortgage or 'senior debt' loans across different real estate asset classes.
Managing director Wayne Lasky shared that commercial real estate debt-as an institutional asset class-is still a rising 'asset class' in its early stages in the region. MaxCap, meanwhile, has a $50 billion funding gap until 2023. This is placed in the $300 billion commercial property sector.
APG also manages a $13 billion real estate portfolio across the Asia Pacific region out of its Hong Kong office. The investment was made on behalf of its many pension fund clients, the fact of which was proven in the APAC report.
APG has emerged as the largest pension delivery organization in the Netherland. The company oversees a collective amount of €505 billion in pension assets. MaxCap, for its part, has $2.6 billion in assets under management. It has been managing commercial real estate debt since the company was founded in 2007.
According to the analysis, a real estate debt strategy gives both companies more opportunities to access the 'asset class' without giving up too much to risk and maximizing returns in the process.
