Agincourt to Invest Property Dim Sum Bond Funds by January
Agincourt Capital, which last week introduced the first yuan-denominated bond fund to buy Australian real estate, said it plans to invest in A$500 million ($533 million) of properties by January.
The Hong-Kong based group expects to announce contracts on two buildings in the next two weeks, to be settled by October, and is seeking to spend the rest of the fund’s first capital by the start of 2012, Chief Executive Officer Craig Turnbull said.
“In the last three or four years, there’s been a complete lack of new supply of commercial property, not because there’s no projects, but because the funding is tight,” Turnbull said in an interview in Hong Kong yesterday. “In residential too there are great projects that can’t be funded. There’s all sorts of opportunities now.”
Agincourt introduced the fund on July 14, offering 3.5 billion yuan ($541 million) of five-year, 4 percent convertible bonds to take advantage of record yuan deposits in Hong Kong. The manager expects to raise the first A$500 million by the end of September, followed by a second A$500 million early next year, Turnbull said.
Agincourt is focusing on investments in office, mixed-use, and land developments, favoring office properties with leases of more than 10 years to corporate or government tenants that offer about 8 percent yield and average rental increases of 4 percent, Turnbull said.
Strategy
The group is aiming to invest about A$350 million of the first funds raised into “core” office properties that are well-leased with stable returns, and the remaining A$150 million into developments, he said.
“This allows us to go for smaller assets, A$30 million to A$50 million, which offer us higher returns,” Turnbull said. “We can blend that with a couple of larger assets and overall our yield is higher and our chance for uplift is higher.”
Agincourt, with offices in Hong Kong, London and Melbourne, charges a 2 percent management fee and will collect a 20 percent performance bonus if the investment fund produces a minimum return of 8 percent, Turnbull said on July 14 before a media briefing on the introduction of the fund.
It is now in due diligence to buy a multistage development in Queensland’s Gold Coast that was being developed by an overseas company, and is in early talks with a Brisbane developer on an apartment complex joint venture in the city, Turnbull said. He declined to name the properties, citing non- disclosure agreements the group has signed.
New Plans
Agincourt is also close to finalizing the purchase of a building in Perth with a 15-year lease to the Western Australian state government, and another with a 10-year lease to an international oil and gas tenant, Turnbull said without naming the properties.
Agincourt plans to triple its staff of four within a year, with about a third in Australia and the rest in Hong Kong, Turnbull said. It will introduce similar bond funds in China in early 2012 and Brazil in 2012 or 2013, and will expand its staff accordingly, he said.
This year’s sales of yuan-denominated bonds globally have more than doubled from a year earlier to 85.3 billion yuan, according to data compiled by Bloomberg. Thirty-two banks have arranged dim sum bond deals at least once this year, compared with 15 banks in 2010, data shows, and Deutsche Bank AG has started an index tracking the bonds as trading volumes surge.
To contact the reporter on this story: Nichola Saminather in Sydney on nsaminather1@bloomberg.net
To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net
Rate this Page