Giant US property funds manager REIT Management & Research LLC is planning to build a portfolio of up to $US 1 billion in Australia as a platform for growth into Asia.
The privately held group, whose United States-listed CommonWealth REOT recently acquired the small MacarthurCook Industrial Property Fund, is planning to build up its holdings over the next year.
It will work with George Wang’s AIMS Financial Group, which managed the small MacarthurCook fund, on buying office and industrial properties in what it sees as a fast-growing market.
Boston-based RMR was set up in 1986 to manage publicly owned real estate investments and has lifted its assets under management to more than $ US 17 billion ($17.4 billion). It joins other US groups such as GE and Morgan Stanley in investing in Australia.
RMR runs trusts invested in the commercial and industrial sectors, hotels, senior housing and companies engaged in healthcare and travel.
It also manages property securities funds, which was how it formed a relationship with MacarthurCook before that group’s takeover by AIMS.
CommonWealth REIT focuses on office and industrial markets throughout the US and has a $US6.8 billion portfolio.
Except for two Canadian properties it holds, RMR’s move into Australia is its first shift offshore. It is already looking to add to it.
RMR wanted to deploy “half a billion to a billion within 12 months” on behalf of the CommonWealth REIT, group chief executive Adam Portnoy said. RMR was way into plans to buy an office asset in Sydney on top of its $US80 million acquisition of the MacarthurCook fund. “Things are starting to unfreeze.” he said.
Once it had built up a local portfolio RMR would look to take it public in Australia or the US, he said. RMR believed there was an appetite among US retail investors for Asian property.
RMR intends to be an “all-cash” buyer in Australia as, in a reversal of previous times, the cost of capital is lower in the US than locally.
The strong Australian dollar could have an effect. However Mr. Portnoy said the group would be a long-term holder of property and was not overly worried by this factor.
“We’re nuts and bolts real estate folk,” he said, adding that he wanted a broader regional presence.
Mr. Portnoy viewed buying in Australia as a way of tapping into Asian growth “without all the risk of investing in Asia”, RMR now planned to work with AIMS in Asia.
Mr. Wang said AIMS had advanced its plans for a $700 million city project near the Chinese port of Tianjin and further approvals had recently been granted. He said the group was also pushing ahead with plans to expand an industrial property trust it runs with AMP in Singapore to a $1 billion vehicle.