Dexus has raised more than $300 million for a first close for its dedicated real estate opportunity fund – the Dexus Real Estate Partnership 2 (DREP2) – putting it on track to raise up to $1 billion in equity.
Multiple funding rounds are still expected to close before the end of the year. According to Dexus, once completed, and with gearing, the fund expects to invest as much as $2 billion commencing with the funds from the first close.
DREP2, the second of the firm’s closed-ended funds targeting Australian real estate opportunities, seeks to provide institutional and wholesale investors with exposure to investments in property repositioning, development, special situations, and real estate credit opportunities.
Dexus chief executive for funds management Deborah Coakley said: “This successful fundraising illustrates the continued investment appetite for enhanced returns and investors’ support for the specialist Dexus team to identify and deliver successful transactions in this space.”
The firm clarified that the capital raise attracted a mix of new investors and investors from its first fund from the series, DREP1.
“As anticipated, DREP2 has attracted substantial investor interest from domestic and international investors who believe that the current market environment offers the right set of circumstances for opportunity style investing,” commented DREP fund manager Jason Howes.
DREP1 closed in December 2022, with the fund’s investment capacity at some $1 billion, including gearing.
According to Dexus, up to four DREP1 deals are expected to be exited this calendar year, with fund returns expected to be consistent with the target net equity IRR of 15 per cent, which DREP2 is similarly targetting.
Howes noted that DREP1 implemented a “disciplined and rigorous” deal assessment process, resulting in only 4 per cent of potential opportunities progressing to execution. DREP2 will adhere to a similar process.
“Our targets for deploying capital are up to 33 per cent in credit opportunities, with the balance weighted toward equity repositioning and special situations strategies. We expect at least 60 per cent of the portfolio to be in Sydney and Melbourne and will cap gearing at 55 per cent of gross assets,” he concluded.
In December, Dexus welcomed new chief executive officer and executive director Ross Du Vernet, who succeeded Darren Steinberg after 12 years at the helm of the firm.
Du Vernet has been a member of the executive leadership team since he joined Dexus in 2012 and served as its chief investment officer up until his appointment.
It is understood that he officially took up the role in March.
