Qualitas announces successful first close of its $200 million Real Estate Opportunity Fund

22 February 2016

Real estate investment management firm Qualitas has announced the successful first close of its Opportunity Fund, raising capital from institutional and high-net-worth (HNW) investors, to sit alongside its co-investment.

The investment vehicle, which is funded by offshore and domestic investors, has a target size of $200 million. It will provide equity and mezzanine debt for high-quality commercial, retail and residential projects identified by Qualitas’ experienced investment team.

Andrew Schwartz, Group Managing Director and Chief Investment Officer at Qualitas, said the fund allows investors to benefit from the unique dynamics of the Australian property sector.

“Australian real estate markets, particularly in the private capital space, tend to be localised and relationship-based. Well-established, local investment firms can therefore achieve superior risk-adjusted returns thanks to their access to information and on-the-ground knowledge.”

“In the private, mid-market real estate sector where Qualitas specialises, we tend to have a first-mover advantage on profitable deals, thanks to our strong relationships. We can generate value by seizing opportunities early,” Mr Schwartz said.

Qualitas’ fund will focus on quality investment and development opportunities in the mid-market segment.

“Australian core real estate has reverted to the prices and momentum seen in the pre-GFC period, and is heavily dominated by large-scale institutional and public capital. However, those sources have yet to turn their attention to the value-add and development spaces, and this is where we see significant opportunity for value creation by private capital investing. ”

“We have already proven our model with a number of successful debt funds that continue to attract investors. As a result, the new fund has attracted strong interest,” Mr Schwartz said.

Qualitas will be responsible for identifying and originating Opportunity Fund deals, using a rigorous screening and risk management framework. This discretionary approach is the same as the one used for existing investors, who trust in the firm’s people and processes to secure valuable assets.

“The big banks’ focus on capital requirements has led to a contraction in lending for property development, opening up the market to alternative capital providers who provide ‘gap funding’. However, the banks are highly selective – and not just about the projects they will finance, but the third party capital partners they’ll work with. In this environment, Qualitas is ideally positioned as an experienced, credible provider of debt and equity. That’s been a big drawcard for the banks we work with, and now, the investors in our Opportunity Fund,” Mr Schwartz said.

Commenting on the strong interest from offshore investors, Mr Schwartz said, “A combination of a continuing low interest rate environment, lower currency, positive market dynamics and good governance make Australia attractive to overseas investors. However, they want local knowledge too. Many global investment managers adopt a ‘fly in fly out’ approach, so they don’t have the same access to deal flow or opportunistic investments. This is one of the reasons we had a strong response from investors,” Mr Schwartz said.

You can read the interview of Andrew Schwartz, Group Managing Director, in the AFR here.

The article in Propertyshowrooms.com can be viewed here.

For more information, click here to contact Yossi Kraemer, Head of Institutional Capital.