APG has doubled its allocation to Australian commercial real estate debt with a A$600 million (€409 million) commitment to MaxCap Group, the Melbourne-headquartered property investment manager.
The Dutch pension fund manager’s partnership with MaxCap was initiated in 2019 when it invested A$300 million. The fresh commitment comes with an option to increase total commitments to A$1.2 billion.
APG said its partnership with MaxCap, which manages a series of commercial property debt funds focused on Australia and New Zealand, would continue to target first mortgage loans lending across all real estate asset classes. It is focused, primarily, on the residential sector, which has seen the withdrawal of major Australian banks from the sector.
Graeme Torre, managing director and head of real estate, Asia-Pacific, at APG, said: “By assisting developers [to] proceed with their construction, we are indirectly supporting the Australian residential sector by increasing the supply of new units.
“The projects are predominately residential developments and include apartments as well as sub-divided land (for houses).”
APG and MaxCap also lend to industrial, retail, office and hotel development projects, but Torre said “these are less common”.
“Commercial real estate debt, as an institutional asset class in Australia, is a proven strategy that offers strong risk-adjusted returns for the benefit of APG’s pension fund clients and their participants,” he said.
APG has increased its investment on behalf of its pension fund clients ABP, SPW and PPF APG.
Wayne Lasky, executive chairman of MaxCap, said: “Commercial real estate credit continues to play an increasingly important role in uncertain times reducing portfolio volatility and increasing returns, in addition to acting as an inflationary hedge due to the floating rate structure of loans in Australia.”
Last August, Patrick Kanters, global head of real estate and infrastructure at APG Asset Management, told affiliate title PERE that the Dutch pension fund manager can allocate up to 5 percent of its portfolio into real estate debt, which it views as more “tactical” in nature.
He said the investor was actively looking at construction and development loans for housing schemes in markets like Europe and Australia where traditional lenders are more reluctant to finance property developments.
“The investments that we are targeting there are really to provide for equity-like returns, so it’s higher-yielding debt with an often lower-risk profile,” Kanters said.
APG began investing in real estate debt more than eight years ago in Europe and the US before expanding into the strategy in Asia through its MaxCap partnership.