Dutch APG enters Asia Pacific debt market with US$420m Australian venture

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Dutch pension fund APG has committed up to A$600m (US$419.5m) to Australian real estate debt investments in its first foray into Asia Pacific property debt.

The pension fund has teamed up with Australian commercial real estate debt manager MaxCap Group and will target first mortgage stretch-senior loans, focusing on construction lending across different asset classes.

APG has invested in real estate debt across Europe and US for the past five years and expects to invest further capital into other strategies across Asia Pacific.

“We see the structural shift in the Australian banking sector market dynamics contributing to a convergence of equity and debt returns,” said Graeme Torre, managing director and head of private real estate, Asia Pacific at APG.

“A real estate debt strategy therefore offers us the opportunity to access this asset class with an appealing risk /return proposition.”

APG has made an initial commitment of A$300m to the strategy with a further re-up option to take total commitments to A$600m.

The partnership has already invested in a mixed-use development in Melbourne as the strategy’s seed loan.

APG made the investment on behalf of its pension fund clients, ABP, SPW and PPF APG.

“CRE debt as an institutional asset class in Australia is in an early cycle and we’re looking forward to a long-term relationship with APG to deliver strong risk-adjusted returns for its clients and their members,” added Wayne Lasky, co-founder and managing director of MaxCap.

APG is the largest pension delivery organisation in The Netherlands, managing €505bn in pension assets.

From its Hong Kong office, the pension fund manages about €11.6bn of Asia Pacific real estate assets across private and public markets.

MaxCap, which has about A$3.7bn in assets under management, has originated and managed more than A$7bn of commercial real estate debt since it was established in 2007.