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According to a report, the firm is on track to raise $1 billion in equity for its newest fund.
Dexus revealed the successful raise for a first close for its second dedicated real estate opportunity fund.
The Australasian real asset manager’s Dexus Real Estate Partnership 2 (DREP2) fund “seeks to provide institutional and wholesale investors with enhanced returns”, with exposure to investments across property repositioning, development, “special situations” and real estate credit opportunities.
With multiple funding rounds expected to close across the year, Dexus said the fund expects to invest up to $2 billion.
It comes after DREP1 closed back in 2022, with investment capacity at circa $1 billion.
With respect to that fund, Dexus said that up to four DREP1 deals are expected to be exited this calendar year. It reported that fund returns are expected to be consistent with the target net equity IRR of 15 per cent, and DREP2 is targeting the same IRR.
Weighing in on the latest raise, Dexus’ chief executive for funds management, Deborah Coakley, said it “illustrates the continued investment appetite for enhanced returns”.
She also said it was a product of investor support “for the specialist Dexus team to identify and deliver successful transactions in this space”.
DREP fund manager, Jason Howes, said substantial investor interest has been courted from both domestic and international investors “who believe that the current market environment offers the right set of circumstances for opportunity style investing”.
According to reports, the capital raise attracted a mix of new and existing DREP1 investors.
Two-thirds of investors are considered institutional, while the remaining third are wholesale investors.
When it comes to selection of deals for the fund, it’s expected to be a “disciplined process”, according to Howes.
He said: “Our targets for deploying capital are up to 33 per cent in credit opportunities, with the balance weighted towards 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.”
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