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Home» About Macquarie Group» News & announcements» Archive 2004» Macquarie Launches MREEF4

News & announcements

Macquarie Launches MREEF4

13 May 2004

Macquarie Real Estate Equity Fund No. 4 Pty Ltd (MREEF4), a $50 million five-year closed-end wholesale property development fund, has been launched by Macquarie Property.

MREEF4 offers an exposure to a diversified range of property development and property trading opportunities in the major Australian metropolitan centres in partnership with experienced developers and within a single, actively managed investment vehicle. Macquarie established the MREEF series in 2002 with all funds from MREEF1 and 2 now fully committed.

"MREEF 1 and 2 were very popular, with many investors investing in both funds," said Head of Macquarie Property's Development Funds Management, Steven Papadopoulos. "The strong pipeline of transactions we are able to offer together with the diversity of assets ranging from luxury residential developments in Melbourne and Brisbane and industrial developments in Sydney to land subdivisions in Adelaide and Perth were attractive to wholesale investors."

MREEF4 is targeting projects that would deliver a pre-tax internal rate of return of 18 per cent per annum on drawn investor capital, net of all fees. "Unlike many of the development funds currently in the market, investors will gain exposure to true diversification across developers, asset classes and locations and an opportunity to invest side by side with Macquarie," said John Spitznagel, MREEF4 Fund Manager. "The MREEF funds are primarily targeted at institutional and superannuation investors, however, with a minimum investment of $500,000 there is an entry point for wholesale private investors."

"Macquarie Property's large national team of experienced staff has provided investors with access to new transactions within a strict risk management and corporate governance framework. Extensive research of all the market sectors and Macquarie's approach to project investment selection and criteria, has also proved popular with investors.

"Changing market conditions across all markets have created and will continue to create more good buying opportunities over the next 12 months.

"We believe MREEF4 is ideally positioned to take advantage of those opportunities and achieve the target returns," said Mr Spitznagel. "MREEF2 committed all of its capital within 9 months and I would expect a similar trend within this new fund."

The MREEF funds have also proved popular with developer joint venture partners, who recognise the opportunity to increase their range of projects, leverage their equity returns and take advantage of the risk appetite of a specialised development equity fund. The range of partners also includes developers and land owners.

Projects in MREEF4 will have predetermined investment lives and defined exit strategies to ensure that Investors receive their return within a fixed (five year) period. Macquarie's co-investment, as well as the performance based remuneration structure, will align the interests of investors and Macquarie.

MREEF4 will have the same corporate structure and board composition as MREEF1 and 2 with a majority of experienced independent directors. An Investment Committee will be established as a sub-committee of the Board, and will be empowered by the Directors to make investment decisions on behalf of the Fund. The Investment Committee will consist of two directors from Macquarie Property and two of the Board's independent directors, with all investment decisions requiring unanimous approval

MREEF3 is focussed on longer-dated, diversified land rezoning and development opportunities and has an eight year investment profile. "We are continuing the marketing to a more specific profile of wholesale investors as there are good buying and partnering opportunities emerging. We expect to close it in the third quarter of 2004," said Mr Papadopoulos.

Applications for MREEF4 can be made through the Information Memorandum which will set out the assumptions and risks underlying the target return. Performance is not guaranteed. The Information Memorandum is expected to be available mid-May.

For further information, please contact:

John Spitznagel
MREEF4 Fund Manager
Macquarie Property
Tel: (612) 8232 4956

Steven Papadopoulos
Head of Development Funds Management
Macquarie Property
Tel: (612) 8232 3043

Robyn Turner
Senior Communications Manager
Macquarie Property
Tel: (612) 8232 6989

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