Growthpoint has acquired Australian real estate fund manager Fortius for $45 million, adding $1.9 billion worth of third-party funds under management to its business.
Fortius manages assets such as the 307 Queen Street property in Brisbane, the Rundle Place asset in Adelaide and the Central Park asset in Sydney.
Under the deal, Growthpoint will gain enhanced sector and product capabilities, including office, retail, mixed-use and debt investments across value-add and opportunistic strategies, in addition to growing its total assets under management to $7.2 billion.
Founder and Executive Director Ray Sproats will remain as a senior adviser for at least two years and CEO Sam Sproats will join the group’s executive management team as Executive Director – Funds Management.
Growthpoint Managing Director Timothy Collyer said the establishment of a funds management business had been a key strategic priority for the group.
“Fortius is a best-in-class fund manager with an over thirty year track record of generating an average IRR2 of 17% per annum for its investors, a mix of high-quality institutional investors, high net worth and wholesale investors,” Collyer said.
“We intend to grow the funds management business, targeting 10-20% of Group EBIT over the medium term, delivering incremental growth to earnings and income stream diversification for our securityholders.”
Fortius management Ray and Sam Sproats said joining with Growthpoint was an ideal outcome, as it provided the best path to grow with our investors’ aspirations, as well as provide opportunities for our talented investment team.
“We are enthused by the complementary fit of an active funds manager with a leading office and industrial REIT,” they said.
The deal included an additional $10 million earnout component, subject to Fortius achieving agreed milestones relating to funds under management and revenue growth over the period to June 2024.
Growthpoint said the performance fees for existing funds will be paid to the sellers on an after-tax basis as an additional purchase price adjustment, while new fund performance fees would accrue to Growthpoint.
Recent M&A deals include CBRE’s acquisition of New Zealand’s largest independent property valuation and advisory firm, TelferYoung in June, in a move that was expected to double its size in the country.
In April, Cushman & Wakefield acquired Perth-based office leasing and property management agency, Sheffield Property, marking its fifth acquisition in seven years.
Last October, global property consultancy Knight Frank partnered with Cresa, the world’s largest occupier-centric commercial real estate firm.