Case Study - Riverside Plaza Syndicate
Elanor Investments has established the Riverside Plaza Syndicate, a single asset fund which has acquired Riverside Plaza in Queanbeyan, a supermarket anchored shopping centre.
Co-head of real estate, Michael Baliva, spoke to Industry Moves about how they put a product together and the current state of the retail real estate market.
What goes into launching a new product?
It is an asset specific product where we identify an investment and come up with a strategy and forecast income and prepare an information memorandum, which we present to investors. This is an investment specifically in this retail town centre asset in Queanbeyan. It has been over subscribed by high net wealth individuals and wholesale investors.
We do multiples of these. On the retail side we’ve got eight funds. Across the business we’ve got two listed funds … the most recent one being our commercial fund. We’ve also just launched an unlisted health care fund with two assets in it which we’re looking to grow.
Why did you decide to launch now?
Our business is real estate focussed [and] investment led.
We're quite selective in what we do and we're pretty targeted. In all of our sectors we’ve got quite a specific niche and we're seeing opportunities are increasingly come to market now there is a bit more certainty in the market.
How did you find market opportunities?
For our business we’ve got quite a specific criteria that we’ve established. We have strong relationships with real estate brokers. We seek to source opportunities that are either on market or off market. Obviously we're active in the market place so deals are usually brought to us by brokers or we continue to do transactions with parties that we have previously done transactions with.
How have you found the past six months?
We’re seeing that there are actually more opportunities coming to us. We invest in supermarket based shopping centres so our assets have performed very well during that period. Because the majority of the retail centres are very much focussed on every day focussed goods and services, which have been increasingly sought after.
What challenges did you face in launching this product and how were they overcome?
It’s definitely a process. The hardest part is securing the asset and coming up with the strategy and getting confidence around our strategy and our return profile. Once we’re confident around the asset and we have completed our due diligence and we are confident around returns it kind of flows from there.
How did you decide on service providers?
We’ve got strong relationships and we typically use the same groups in each jurisdiction. We seek out the best providers in each jurisdiction and for each different skill. It is very much more relationship based and obviously about understanding one another from working together.
Can you explain the fee structure?
There is an acquisition fee for us sourcing and doing the due diligence and then there is an ongoing management fee which is an annual percentage. Then there is a performance fee element to it as well, which is typically a percentage over the hurdle so there is an alignment of our interests with those of our investors [and] so we are incentivised to achieve outperformance. We co-invest for alignment.