Centuria announces Bass Capital Joint Venture
Enables expansion into real estate debt markets
- $24m investment for 50% of Bass Capital, a real estate debt fund manager
- Providing real estate secured non-bank finance for development projects, bridge finance and residual stock
- Bass Capital brings:
- $270m committed loan book
- $300m+ in pipeline opportunities
- $107m open-ended debt fund
- 20 current debt funds backed by ultra and high-net-worth investors
- The transaction will be accretive for FY22 earnings.
Centuria Capital has secured a 50% investment in experienced real estate debt fund provider, Bass Capital, for $24m with the option to fully acquire the remaining 50% interest in five years.
The 50:50 JV will expand Centuria’s unlisted funds platform, providing a diversified suite of investment opportunities for its clients, while offering non-banking finance for real estate secured transactions including development projects, bridge finance and residual stock.
Bass Capital was established in 2016 by former UBS European Head of Leveraged Finance and Debt Capital Markets, Giles Borten, and former Managing Director of Wingate and Gresham Partners, Nicholas Goh, who will continue to lead the real estate debt team.
Jason Huljich, Centuria Joint CEO, said, “For the past three years we have partnered with Bass Capital across a number of lending opportunities and have confidence in the team’s abilities and its business model. Our investment in this platform is an opportunity to capitalise on strong demand from our high-net-worth investors for debt products, as they seek a diversified investment risk profile.
“This investment brings a new business line to Centuria, which helps expand our unlisted platform, diversify our recurring revenues and provide further investment opportunities to our investor clients.
“We whole-heartedly welcome Giles, Nick and the wider Bass Capital team to the Centuria fold.”
To date, Bass Capital has delivered an average internal rate of return (IRR) of more than 12% p.a.1. Its strong financial performance has translated to an average 100%+ Compound Annual Growth Rate (CAGR) in EBITDA2 since the business was established.
The JV will begin operating with a c.$270m committed loan book, more than $300m in pipeline opportunities and a $107m open-ended debt fund.
Strong investment appetite recently saw Bass Capital significantly oversubscribed with $107million raised for the first close of its open-ended fund – the Bass Property Credit Fund – and $50m in estimated demand for the second close.
Giles Borten and Nicholas Goh, Bass Capital Founding Partners, continued, “We are very pleased to be joining the Centuria team to expand our debt offering. We will leverage Centuria’s Australasian scale, balance sheet and the team’s deep real estate relationships and expertise across traditional and alternative real estate sectors, to grow the platform significantly.
“To date, based upon the strength of our track record and how we have grown our investor base by word-of-mouth, we are excited to proactively deliver our debt offerings to a new group of loyal high net worth investors with the backing of Centuria.”
The JV expects financing demand from the non-banking financial sector will continue to grow. Currently in Australia the big-four banks alone dominate all lending with over 75% market share3. This compares with estimates of less than 40% for all banks in the US4.
1 Past performance is not indicative of future performance. The average return is not indicative of the returns for any particular fund. Each fund should be assessed on its specific features and risk.
2 CAGR measured between FY16 and FY21 year to date and based on unaudited accounts of Bass Capital
3 According to the Australian Government Productivity Commission’s Competition in the Australian Financial System, Productivity Commission Inquiry Report Overview and Recommendations (No. 89, 29 June 2018)
4 According to the US Federal Deposit Insurance Corporation (FDIC) Quarterly – Bank and Nonbank Lending over the past 70 years, Chart 1