This article is from the Australian Property Journal archive
MA Financial is launching a $1 billion Real Estate Credit Vehicle with global private equity firm Warburg Pincus, which the ASX-listed company says has aim of “closing the current funding gap in the Australian residential real estate market”.
MA Financial will manage the vehicle and co-invest via equity and notes of up to $20 million.
“The vehicle will provide global institutional investors with unique access to Australia’s real estate credit market, funding high-quality developers and residential real estate projects,” MA Financial said.
“The Real Estate Credit Vehicle has an initial target of A$1 billion in note commitments and will aim to assist in closing the current funding gap in the Australian residential real estate market.”
MA Financial will market debt investments in the vehicle to institutional investors, and Warburg Pincus will facilitate offers to certain Warburg Pincus funds which have indicated their intention to invest in notes issued by the vehicle, as well as select investors in their network
Institutional investors will be offered to participate in the vehicle via a note issues, with the first date on which notes are issued in the vehicle anticipated to occur by the end f the year, with an initial target for first close of at $700 million in commitments.
Warburg Pincus will have a right to be granted options to acquire up to 2.5 million shares in MA Financial upon the Vehicle achieving targets of $500 million and further options to acquire another 2.5 million shares upon achieving targets of $1 billion, with a strike price of A$6.00. The options can only be exercised after a minimum of two years following first close and before the winding up of the Vehicle.
“The Australian residential market is a very attractive investment market, and this vehicle will help meet the demand for sophisticated borrowers as Australia addresses a nationwide housing shortage,” said MA Financial’s joint CEO, Julian Biggins.
Co-head of Asia real estate, Warburg Pincus, Takashi Murata, said, “We are pleased to support MA Financial in establishing the Vehicle, which will provide a unique opportunity for institutional investors to gain access to Australia’s burgeoning real estate private credit market. MA Financial has a highly experienced team and a strong track record investing in Australian real estate credit and we believe the Vehicle is well positioned to close the funding gap in the acutely undersupplied Australian residential market.”
Meanwhile, MA Financial released its first-half results yesterday, showing group underlying revenue lifted 5% compared to the first half of 2023, to $134.5 million was up 5% on 1H23. Recurring revenue was up 7%, pushed by inflows into private credit funds and growth of the Finsure mortgage aggregation platform.
First-half asset management inflows lifted 13% to $9.7 billion, with gross funds inflows of $1.1 billion up 16%.
During the period, MA Financial private credit funds entered a $1 billion strategic partnership with commercial asset financing platform Flexicommercial, part of ASX-listed Humm Group.
The MA Money loan booked grew 231% on 1H23 to $1.6 billion and its net interest margin is expanding. MA Money is poised to become a profitable contributor to the group in October.
Finsure managed loans were up 22% to $121 billion.
Underlying EBITDA was down 16% to $38.3 million, as expenses rose 16% largely due to strategic investment spend “which will benefit earnings growth in future periods”.
Underlying earnings per share (EPS) was down 27% on to 11.1c, and Statutory EPS was down 22% to 8.4c. The interim dividend of 6c per share was in line with 1H23.
The earnings headwind of strategic investment spend is expected to slow the second half, and “given strong momentum across the business Underlying EPS is anticipated to be materially higher” in the second half.
MA Financial this week just found a buyer for its Mantra Bathurst in NSW at $13 million, while it has put the sub-regional Arndale Shopping Centre in Adelaide to the market with expectations of more than $130 million.
Early in the year, it snapped up the large-scale Vibe Docklands hotel in Melbourne for $96 million.
