This article is from the Australian Property Journal archive
LOOKING to take advantage of chronic undersupply in Australia’s residential market, global investment giant Warburg Pincus is committing $490 million to MA Financial’s $1 billion Real Estate Credit Vehicle, in another boost to the country’s real estate credit market.
Global alternative asset manager MA Financial announced the vehicle earlier this year. MA Financial will originate and manage real estate credit facilities for Australian developers and projects for the vehicle.
Warburg Pincus said it is making the move to “address the persistent funding gap within Australia’s acutely undersupplied residential housing market”.
“We have built a strong conviction in the secular tailwinds of Australia’s residential market, driven by the immigration-led population growth and the undersupply of housing primarily due to a tight credit environment and higher construction costs,” said co-head of Warburg Pincus Asia real estate, Takashi Murata.
He cited a projected cumulative dwelling shortage of 254,000 units over the next five years, alongside an anticipated 30% increase in annual population growth.
“With traditional financiers tightening credit, there is an estimated US$37 billion funding gap that needs to be addressed. The new vehicle will help meet the demand from sophisticated borrowers as Australia tackles its nationwide housing shortage.”
Warburg Pincus has been establishing a footprint in Australia in recent years through supporting its portfolio companies including ESR and StorHub, as well as through its WPARE investments in joint ventures – one with Hale Capital Partners focusing on last-mile logistics real estate and another with KIO focusing on the country’s nascent build-to-rent sector.
Julian Biggins, MA Financial’s joint chief executive officer, said, “With the commitment and support of Warburg Pincus and the encouraging responses received from like-minded global investors regarding this strategy, we are optimistic about the vehicle’s potential for future success.
“We believe that it is well- poised to help address the housing shortage challenges in Australia while also providing compelling opportunities for investors.”
Australia’s real estate credit market has been gaining momentum in 2024. David Di Pilla’s HMC Capital, in line with its target to build a $5 billion private credit platform, acquired Payton Capital earlier this year in a $127.5 million deal, while in June, $12.2 billion specialist alternative investment manager Regal Partners acquired Adrian Redlich’s commercial real estate lending business Merricks Capital for $235 million.
Centuria Bass Credit recently secured a new circa-$150 million warehouse facility, with an initial $100 million backing from global investment bank UBS.
Major players in the space also include MaxCap Group, which has more than $8 billion in funds.
