New Trans Tasman Property Finance JV

August 26, 2019

Australian specialist real estate financier MaxCap Group is setting up operations in New Zealand in a joint venture with real estate company Bayley Corporation and investment advisory firm Forsyth Barr.

The Melbourne-headquartered company, which has offices throughout Australia, has opened an office in Auckland with Bayleys and Forsyth Barr between them owning 50 per cent of MaxCap NZ.

“The joint venture’s objective is to become New Zealand’s premier non-bank commercial real estate lender focusing particularly on property development projects and investment funding,” says Brae Sokolski, MaxCap Group’s co-founder and chief investment officer.

MaxCap Group specialises in commercial real estate debt funding and has originated and managed approximately A$7.7 billion worth of loans since it was established 13 years ago, says Sokolski. It currently has approximately A$4.0 billion of funds under management.

“We obtain and actively manage the funds that we use to provide finance via a variety of sources which we have built up over many years. These range from high net worth individuals through to large institutional investors, including major superannuation and pension funds,” says Sokolski.

“Bayleys will be assisting us with originating lending opportunities through its far reaching network and client base across New Zealand. We will also be looking to access Kiwi currency funding sources, focusing initially on high net worth private investors utilising Forsyth Barr’s considerable expertise and experience in wealth management.

“The recent big drop in the Official Cash Rate (OCR) to one per cent and the flow on effect this has on bank deposit rates means that our New Zealand managed funds are likely to have increased appeal to experienced investors searching for a higher level of return.”

Bayleys’ managing director Mike Bayley says the company’s involvement in the joint venture has been driven by current limitations on commercial property funding from retail banks.

“These limitations are, at times, having a negative effect on market activity and are a source of frustration for clients, particularly developers who play a vital role in creating new leasing and investment opportunities.

“It has prompted us to look for alternative sources of finance for clients. MaxCap NZ will be taking a relatively conservative approach but it will be able to offer more flexibility in its funding and consider more complex deals.”

Jonty Edgar, co-head of markets for Forsyth Barr, says Max Cap Group’s move across the Tasman will provide the firm’s wholesale and institutional clients with more commercial property investment options.

“We have been looking to diversify our offerings in the property sector, driven by private investor demand for alternative investments with higher yields and attractive risk-reward dynamics. This joint venture with MaxCap Group and Bayleys enables us to do that,” says Edgar.

“MaxCap has a well-established track record in Australia for their rigorous approach to risk management. They have a history of returning full principal and interest to all of their investors and delivering on terms issued to borrowers.”

Mark Farrands has been appointed chief investment officer for MaxCap NZ. He has over 27 years’ real estate finance and valuations experience and was previously Auckland regional manager, property finance at ASB Bank.

He says MaxCap NZ’s initial focus is on financing $3 million-plus property transactions with negotiations already well advanced on funding for a number of land development deals in Auckland and Queenstown.

MaxCap Group will be bringing a group of Australian developers to New Zealand in mid September to look at opportunities, with the official launch function of MaxCap NZ to be held in conjunction with this.

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