MA Financial Group Limited (MA Financial) (ASX: MAF) has today announced the establishment of a A$1 billion Australia Real Estate Credit Vehicle for institutional investors. MA Financial will manage the Vehicle and co-invest via equity and notes in the Vehicle in an amount representative of 2% of total capital, up to

A$20 million. The Vehicle will provide global institutional investors with unique access to Australia’s real estate credit market, funding high-quality developers and residential real estate projects.

Institutional investors will be offered to participate in the Vehicle via a note issuance, with the first date on which notes are issued in the Vehicle (First Close) anticipated to occur by 31 December 2024 with an initial target for First Close of at least A$700 million in commitments (inclusive of MA Financial’s co-investment).

Warburg Pincus will facilitate the offer of notes in the Vehicle to several existing Warburg Pincus funds as well as select investors in their network. A number of Warburg Pincus funds have indicated an intention to invest in the Real Estate Credit Vehicle note issuance.

Warburg Pincus has over 58 years of strong investing experience globally and is now one of Asia's largest real estate investors. Leveraging its global network of relationships and nearly 20 years of experience in Asia real estate, Warburg Pincus is well-positioned to facilitate the distribution of the notes to potential investors. As part of the facilitation agreement, Warburg Pincus will have a right to be granted options to acquire up to 2.5 million shares in MA Financial upon the Vehicle achieving targets of approximately A$500 million and further options to acquire another 2.5 million shares upon achieving targets of approximately A$1 billion, with a strike price of A$6.00. The options can only be exercised after a minimum of 2 years following First Close and before the winding up of the Vehicle.

MA Financial’s Joint Chief Executive Officer, Julian Biggins, said: "We are delighted to work with one of the most successful global real estate managers. This initiative is a testament to MA Financial’s significant real estate investment and debt structuring capability across our entire platform. The Australian residential market is a very attractive investment market, and this Vehicle will help meet the demand for sophisticated borrowers as Australia addresses a nationwide housing shortage.”

MA Financial Managing Director and Head of Global Partnerships, Anthony Habis said: “The nature of this initiative provides institutional investors with the combined expertise and track record of MA Financial and Warburg Pincus. Warburg Pincus’ track record of partnering with management teams to build out strategies is an exciting development for MA”.

Co-Head of Asia Real Estate, Warburg Pincus, Takashi Murata, remarked: "We are pleased to support MA Financial in establishing the Vehicle, which will provide a unique opportunity for institutional investors to gain access to Australia’s burgeoning real estate private credit market. MA Financial has a highly experienced team and a strong track record investing in Australian real estate credit and we believe the Vehicle is well positioned to close the funding gap in the acutely undersupplied Australian residential market.”

CBRE Capital Advisors’ Stuart McCann, Paul Ryan and Andrew McCasker advised MA Financial.

Stuart McCann, Managing Director, Capital Advisors: said, “The Australian residential market is experiencing one of the largest housing deficits on record, with an estimated shortfall of over 250,000 dwellings projected over the next three years. The commercial real estate funding market needs to expand significantly to support developers in activating supply and play a pivotal role in closing the funding gap in the under supplied residential market.”

Paul Ryan, Managing Director, Capital Advisors: commented” We continue to see considerable interest from investors seeking exposure to Australia’s real estate private credit market which offers highly attractive risk-adjusted returns. With non-bank lenders representing approximately 10% of the domestic market compared to over 50% in mature global markets there is significant opportunity for future growth.”

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