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SYDNEY (Reuters) – Abu Dhabi’s sovereign wealth fund, one of the world’s largest, will double its investment in an Australian real estate private credit vehicle, the fund’s manager said on Tuesday, as traditional lenders grow wary about the sector.
Qualitas said an Abu Dhabi Investment Authority (ADIA)-owned vehicle will invest A$700 million ($449 million) into one of its Australian commercial real estate private credit fund.
The move doubles ADIA’s investment to A$1.4 billion after a first round last August.
Australian-listed Qualitas (ASX:QAL) invests in real estate private credit and equity and has A$7.5 billion under management, the vast majority run on behalf of institutional investors.
Co-founder Andrew Schwartz said in a statement Qualitas had A$2.3B ready to invest “as traditional financiers appear to continue to retreat, particularly in the residential and development sectors.”
Major banks and public debt markets are growing wary about a real estate sector where higher rates are crunching property values just as home working and e-commerce challenge the long-term viability of some offices and malls.
The head of Dexus (ASX:DXS), one of Australia’s largest office landlords said last week public bond markets were “effectively closed” for real estate companies while banks were becoming very particular about lending. Dexus remained well-supported by its banks, he added.
Tuesday’s deal also opens the door to ADIA taking an equity stake in Qualitas. As part of the initial A$700 million investment last August, ADIA received share options equivalent to 9.99% of Qualitas’ issued equity.
ADIA is now eligible to exercise roughly two-thirds of those options at a strike price of A$2.50. Qualitas shares closed on Tuesday at A$2.48.
The remaining options will become available should ADIA invest a further A$300 million.
Qualitas declined to comment when asked if ADIA had indicated it planned to exercise the options. ADIA declined to comment.
($1 = 1.5598 Australian dollars)
