The Sydney-based fund manager co-founded by Max Walsh a decade ago is looking to raise a fresh tranche of up to $150 million worth of unsecured notes that will be listed on the Australian Securities Exchange to back its growing US property empire.
The group’s US Masters Residential Property Fund, the largest Australian-listed property trust invested in America’s housing market, is issuing the notes, as it seeks to overhaul its existing portfolio and to expand.
The trust, with a market capitalisation about $709m, has amassed $1.13 billion of assets. It has focused on single-family housing assets in the New York City metropolitan area, since it was established in 2011.
The portfolio, which was listed on the ASX in 2012, includes 1572 housing units across 601 houses and 14 apartment complexes.
Walsh & Company manages about $2.5bn worth of client assets under management across equities, residential and commercial property, and other investments, including listed debt.
The URF Notes III carry a fixed annual interest rate of 7.75 per cent a year, payable quarterly, and have a maturity of about five years.
The offer is for a minimum of $50m and up to $100m, with the ability to accept oversubscriptions of up to a further $50m.
The latest offer follows the issue of URF Notes I and II that raised $150m and $90.5m in December 2014 and October 2015, respectively, which has given Walsh & Co the confidence to launch a third tranche of unsecured notes.
Alan Dixon, managing director and chief executive of Dixon Advisory USA, which runs the portfolio, said the notes would optimise the group’s financing structure.
“URF Notes III will allow us to continue to develop our property portfolio with a focus on further acquisitions and renovations. Since launching the fund in mid-2011, our business model has become increasingly integrated,” Mr Dixon said.
He said the group had been able to create efficiencies around the acquisition, renovation and leasing process and its target investment area remained the New York metropolitan area, with a focus on undervalued neighbourhoods.
He cited those experiencing growth and gentrification such as Brooklyn, Manhattan and Queens, New York and Hudson County, New Jersey. Proceeds from the issue of URF Notes III will be used to back the trust’s strategy, including renovating properties and acquiring assets.