Qualitas lands A$700 million investment mandate
One of Australia’s premier alternative real estate investment managers, Qualitas, has secured a A$700m mandate from a wholly owned subsidiary of Abu Dhabi Investment Authority (ADIA) to invest in Australian commercial real estate (CRE) private credit opportunities on behalf of a new investment vehicle.
The Abu Dhabi Investment Authority (ADIA) is a sovereign wealth fund owned and operated by the Emirate of Abu Dhabi. The fund invests on behalf of the Government of Abu Dhabi with a focus on long term value creation. According to Bloomberg, ADIA’s investment choices have a direct impact due to the sheer size of its war chest. It is one of the biggest investors in US real estate and is the third-largest sovereign wealth fund in the world with US$708bn in assets under management.
In return, Qualitas has granted options to ADIA to acquire new ordinary shares equating to 9.99% of Qualitas’ current issued equity on a fully diluted basis, conditional on ADIA committing further incremental investment mandates totalling A$1 billion over the coming two years. According to the company announcement, “The options will be exercisable in tranches if ADIA increases its investment mandates with Qualitas within the next two years2 and the exercise price will be based on the volume weighted average issue price (VWAP) of Qualitas shares (currently A$2.50, which is consistent with Qualitas’ IPO price). ADIA will be eligible for the Maximum Equity Interest if it commits a full A$1 billion in incremental investment mandates to be invested by Qualitas on its behalf, taking its investment mandates with Qualitas to A$1.7 billion.”
Andrew Schwartz, Group Managing Director and Co-founder of Qualitas said: “I am proud that such a well-regarded leading global institutional investor has chosen Qualitas for this significant mandate and has backed its belief in our business with options to acquire a meaningful stake in Qualitas. We believe this decision is a testament to the expertise and quality of Qualitas’ in-house origination, credit assessment and asset management skills in the Australian CRE private credit market. Should the options be exercised, the additional capital raised will continue to strengthen our balance sheet providing additional capacity for Qualitas to warehouse opportunities and co-invest with our fund investors in line with growth in underlying FUM.”
The newly created investment vehicle, Qualitas Diversified Credit Investments (QDCI), will act exclusively for the sovereign wealth fund with Qualitas co-investing 5 percent or $35m into it.
The investment focus will be on Australian commercial real estate private credit opportunities. According to the Qualitas, “The mandate is well-timed to coincide with the current dislocation in global markets, driving increased volatility and hesitancy by traditional funding sources to deploy capital. This has led to rising benchmark returns and risk premiums in Australia.”
Schwartz says, “This mandate highlights the benefits of Qualitas’ scalable platform and solidifies our position as a trusted Australian alternative real estate investment manager benefitting from robust relationships with global institutional investors, strong balance sheet capacity, and a market leading, best-in-class investment and operational team. Together with Mark Fischer, Global Head of Real Estate and Co-founder of Qualitas, and the entire Qualitas investment team, we will work diligently to perform under the mandate to achieve the agreed target returns of this exciting new investment vehicle.”