South Wharf DFO financing augers well for 2011: Wingate

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Wingate Group and J.P.Morgan’s Global Special Opportunities Group have provided a $42.5 million mezzanine finance facility to part-fund Plenary Group’s 50 percent acquisition of the South Wharf Retail Precinct in Melbourne.

Wingate Group and J.P.Morgan’s Global Special Opportunities Group have provided a $42.5 million mezzanine finance facility to part-fund Plenary Group’s 50 percent acquisition of the South Wharf Retail Precinct in Melbourne.

The South Wharf Retail Precinct, which is made up of a Direct Factory Outlet (DFO), Homemaker Hub, and Food and Beverage Precinct, was majority-owned by Austexx Pty Ltd.

Plenary’s acquisition is an equal joint venture with Colonial First State Retail Property Trust which has also purchased three other DFOs. The mezzanine finance will be part of Plenary’s total investment of $160 million and will earn an ongoing coupon plus a profit share on sale of the asset.

Mr Ryan Levin, joint head of property at Wingate Group, says that the tightness of traditional bank funding looks set to continue in 2011 and as a result mezzanine finance is likely to be an attractive option for borrowers.

“Mezzanine finance is an area we have substantially accelerated in the past 18 months and I would expect this to continue in the next few years.

“In that context, this transaction represents an excellent opportunity for both Plenary Group and Wingate / J.P.Morgan, through exposure to the high-quality South Wharf retail precinct which provides strong security and opportunity for growth.

“In particular, we see this as an outstanding investment opportunity for Wingate and our clients, who will be offered the chance to invest in the debt facility provided to Plenary and also share in the equity upside on this property.

“We are not just investing in a blue-chip Melbourne location; we are investing in Plenary Group’s extensive property development experience and knowledge of the South Wharf precinct and Colonial First State’s strong track record in retail asset management,” Mr Levin said.

He said that the purchase price is at a substantial discount to the development costs incurred by the previous owner, providing major upside in this investment.

“In addition, over $1 billion has been spent on the South Wharf development and on infrastructure in the area in recent years,” he said.

The Wingate Group was founded in 2003 and is a private investment and advisory firm focused on property, private equity and listed investments. Its has been active in mezzanine property funding and investing for the past five years and currently has over $1 billion in property assets under finance. Wingate’s clients and co-investors include some of Australia’s most substantial private families and business owners.

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For more information please contact:
Ryan Levin – 03 9913 0703

6 January 2011