Singaporean-based Aquaint Capital Holdings is undertaking due diligence on a mixed use development project in Fremantle, Perth, but has its sight firmly fixed in the Sydney and Melbourne suburban office and retail markets, according chief operating officer Daniel Tan.
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Speaking in Sydney during the week, Mr Tan, said the opportunities for the group in Australia are positive and in time a float of a new fund, upwards of $100 million, could occur, depending on seed assets.
"We like the eastern seaboard, initially, but the mixed use site at Fremantle also meets our investment criteria," Mr Tan said.
"We aim for income producing, high yield assets, mainly in retail and office."
The company will use cash raised from the recent sale of a residential block in the upmarket suburb of Kensington, with the 12-unit apartment block sold for £2.55 million ($A4.62m).
The expansion of Aquaint comes as more than $11 billion of offices, retail and industrial assets are forecast to be offered for sale, as wholesale funds come to the end of existence, but buyers could be hard to find if the quality of the properties are not up to scratch, according to agents.
The assets will come from the closed-end wholesale funds that were created pre the global financial crisis and are now up for renewal or closure. If the latter, there is a concern that because they may not be of investment-grade quality, investors waiting on the promised return may not see the cash for a while.
Based on the typical fund life of eight years, CBRE believes that about 84 funds are set to terminate between 2013 and 2016, but the peak is tipped in 2015 and 2016, when about 50 funds with a gross asset value (GAV) of about US$40 billion will expire.
These funds were primarily focused in the opportunistic risk segment and showed a strong preference for assets in major markets in the Asia Pacific region, in particular Australia, Japan and China assets that with the onset of the GFC saw significant impact on their value
According to Nick Crockett, executive director, CBRE, Capital Advisors, Asia Pacific, the shortfall between the potential liquidity of funds ending their lifespan and the market's ability to absorb these assets will be around US$10 billion in the coming two years.
"The combined effects of a wave of fund dispositions and a market with a limited capacity to absorb them, has critical implications to fund managers over how they should position their funds and the options they should consider beyond termination. These assets could therefore face difficulties in finding buyers or being disposed of at desirable terms," Mr Crockett said.
John Wills, senior director, Capital Advisors, Asia Pacific for CBRE, said fund managers continue to grapple with the "ghost of Christmas past" desiring to maximise returns yet trying to balance an optimal approach between market cycle and scrutiny from investors.
."Options for exit will need to be carefully planned and executed in order to retain ongoing investor support," he said.
"Dependent on assets and investors, managers within Australia are likely to employ a variety of strategies including recapitalisation, rollover, secondaries and orderly asset divestment(s)."
