24 September 2020
Qualitas injects $150m into Tim Gurner's expansion plans
Financial Review Rich Lister Tim Gurner has struck a $150 million equity partnership with private real estate financier Qualitas to acquire distressed assets and turn them into successful development projects.
Mr Gurner, who this month received approval for a $1 billion project in Fishermans Bend in Melbourne, said he would use the funds to take advantage of current market conditions and continue to diversify his portfolio. This included looking at opportunities in commercial and retail property and gaining a foothold in the Sydney residential market.
Under the agreement, Qualitas will commit up to a $150 million of equity from its Opportunity Fund No. 2 to be used by the developer to acquire sites across Australia and New Zealand. The two parties will then split the development profits.
“Our motivation for seeking out a capital partner is to accelerate our ability to purchase, quickly settle and bring multiple sites to market across different asset classes, and diversify at scale over the next few years,” Mr Gurner said.
He said he sensed there was a higher probability of distressed assets hitting the market over the next 18 months.
“A partner like Qualitas who can turn around approvals for deals as we find them and has the capital already raised was key to our decision,” he said.
“We are also keen to build on our portfolio of large-scale multi-staged developments like FV in Brisbane and Saint Moritz [in Melbourne] and take part in all of the important government tenders and sites that are usually dominated by the larger, slower-moving public companies.
“With $150 million in capital available, we can act quickly on opportunities and hunt aggressively to identify the right opportunities.”
He said his focus would be on Melbourne and Sydney, followed by Brisbane, the Gold Coast and Auckland, with Perth acquisitions also on the cards “if it feels right”.
“This time a large focus will be on Sydney – we missed the last run on the market so we don’t want to be in that position again and are open to all scale of development in Sydney,” he said.
The investment in the Melbourne-based Rich Lister marks a return to deal making by Qualitas since it battened down the hatches in late March when the pandemic struck.
Tim Johansen, the firm’s managing director and global head of capital, said six months ago: “Whilst we have capital to undertake deals, for the near term it does not make sense to be investing in new deals against an environment that is evolving day by day.”
Commenting on the deal with Mr Gurner, Qualitas global head of real estate and co-founder Mark Fischer said the developer’s display of discipline, agility and ability to deal with complexity was a perfect match for Qualitas’ opportunistic funds.
“Our Opportunity Fund series has over a long period of time been highly successful in partnering with best of breed developers,” Mr Fischer said.
“We did, however, find 2019 and early 2020 a difficult market to deploy in due to stretched pricing and so are excited about the current environment.”