Sydney-based wholesale fund ICPF is set to raise $500 million to finance new acquisitions and development projects.
Investa Commercial Property Fund (ICPF or the ‘Fund’), one of Australia’s leading unlisted wholesale office funds, is seeking to raise new equity via a capital raising drive.
The high performing fund, which owns some of Australia’s leading commercial office buildings including 126 Phillip Street, Sydney, 120 Collins Street, Melbourne and recently completed premium development at 60 Martin Place, Sydney, plans to use the new capital to replenish the fund’s balance sheet, positioning the fund for future acquisition and development opportunities.
ICPF has a proven track record, outperforming all peer funds on the MSCI/Mercer Australia Core Wholesale Property Fund Index over 1, 2, 3 and 5 years. In FY2019 the fund delivered an impressive net total return of 15%.
The fund’s existing investors will be given pre-emptive rights to purchase the new securities issued. They predominantly include a mix of Australian institutions and superannuation funds.
Jason Leong, ICPF Fund Manager noted: “It is our expectation that existing investors will participate in the offer and any securities not taken up by existing investors will be made available to new investors, where we have strong demand”.
Potential new investors from across the globe have already showed significant interest in aligning their investment strategies with the fund.
Mr Leong explained that institutional investors have been waiting for this opportunity, with interest from potential investors from Asia, the UK, Europe and North America to date.
“Potential investors come from a range of areas including insurance companies, pensions and sovereign wealth funds,” he said.
The capital raise follows ICPF closing of its 10-year liquidity offer in late 2018, with redemptions fully satisfied.
ICPF’s portfolio currently comprises interests in 15 prime grade office buildings primarily located in Sydney and Melbourne valued at $5.6 billion.
The fund will continue to focus on developing new office buildings to own for the long term. Its development pipeline has an end value in excess of $1.5 billion.
ICPF recently reached practical completion on the premium grade 60 Martin Place Sydney, achieving record rentals with leasing commitments in excess of 90% delivering the project a 7.5% yield on cost.
It is also planning to commence construction of 360 Queen St Brisbane, a 55,000m² prime grade commercial office project in 2020.
ICPF has been active recently, selling its interest in 242 Exhibition St Melbourne for $830 million, along with its co-owner Oxford Investa Property Partnership (OIPP) at a 20% premium to valuation.
It also recently struck an agreement to acquire a further 50% interest in a central Sydney office building, 135 King Street, from co-owners Stockland for A$335 million and a 1,000 bay cark park adjoining its 567 Collins St Melbourne building.
Peter Menegazzo, Investa’s Chief Investment Officer noted: “The ICPF management team has been disciplined in its investment execution, divesting assets no longer aligned with its strategy and focussing on building a pipeline to develop new generation buildings.
“These actions have enhanced the portfolio and will ensure that ICPF retains its position as Australia’s premier unlisted office vehicle.
“Australia continues to screen well globally as an investment destination. This, along with the positive positioning and outlook of the Australian office markets and ICPF’s strong investment track record are all ingredients that form a compelling investment proposition.
“We expect that these factors will result in solid support for the capital raising, and in turn, will set a sound foundation to deliver ongoing investment performance.”