Fund managers are bracing for a wave of property groups to tap the Australian Securities Exchange after a buoyant reporting season confirmed the demand for high-yielding stocks and new asset classes.
The pipeline includes the float of David Devine’s Metro Property Development, being handled by Moelis, and manufactured housing village operator Gateway Lifestyle. That group’s advisers, investment banks UBS and Macquarie Group, are slated to formally market the $300 million float by month end.
Gateway’s properties are owned by syndicates controlled by investment firms Alceon, PortNordica and Harvest and Alceon’s other investments are attracting interest.
Alceon, which has about $650m worth of investor capital invested across 37 property and debt plays, has nominated its portfolio of shopping centres as one that could eventually be in line for a roll-up strategy with a listing.
Alecon is tracking to deliver an average annual net return of 16 per cent across its five retail investments. It owns about $90m worth of centres and is targeting mid-market sized assets in the $20m-$70m range.
Alecon executive director Damien Cronin cautioned that much of the group’s focus was on financing residential developers.
Propertylink, led by Steve Day, has also been tipped as a float candidate. It raised about $5m last year to restock its balance sheet but Mr Day played down the prospect of an imminent move.
Folkestone Maxim Asset Management managing director Winston Sammut said “at the right pricing there would be interest” in new floats. “I think there is still money looking for places to go; providing the assets are OK and the assets are OK and managements are OK, I think there would be appetite,” Mr Sammut said.
New offerings are tipped to face stiff competition from secondary issuances by existing funds. Childcare landlord Arena REIT raised $25m last week and The Australian can reveal that Fife Capital Group has appointed boutique Evans & Partners as capital markets adviser to the Australian Industrial REIT.
The fund is under siege from Tony Pitt’s 360 Capital, which is attempting to create an $800m industrial trust by taking over the Fife Capital-run fund.
Fife Capital said last week it had under consideration a pipeline of future built-to-suit projects with an estimated value on completion of $150m and may tap the market while its price is elevated.
Aged-care and retirement assets could also be on the agenda, but private capital is providing stiff competition to groups with ambitions to float. Major players, Opal Aged Care, which is owned by AMP Capital and GK Goh, and private equity-owned Allity Aged Care are among those harbouring float ambitions.
However, these groups have just been beaten to the $100m Embracia portfolio by a privately owned mid-size aged-care operator. The MacKenzie family are close to selling a portfolio that spans about nine aged-care homes in Victoria and Queensland. Embracia also has retirement villages on Queensland’s Sunshine Coast.
This article first appeared in The Australian Business Review.