Pallas Capital has acquired Melbourne-based real estate advisory firm Gravitas Group for an undisclosed amount as part of a broader strategy to build a stronghold in the Victorian market.
The purchase saw the commercial real estate investment manager take on Gravitas Group's $75 million raised from from wholesale investors for real estate debt and equity products since 2017.
This moved Pallas Capital towards their $500 million fund under management goal for 2020, of which $300 million had already been built.
The merger follows plans from Pallas Group to construct a new staff building on a corner site in South Melbourne purchased for $8.55 million.
If approved the nine-storey building on Palmerston Crescent is expected to have an estimated end value of $38 million and would include commercial and retail space.
Pallas Capital chairman Patrick Keenan said Gravitas Group’s extensive experience would prove to be a major asset and provide excellent strategic advice as their platform continued to grow.
“We are delighted that the Gravitas investor base will be consolidated with our own existing network delivering increased financing capacity for our borrower clients,” Keenan said.
Gravitas Group founder Felicity Fowler said they were pleased with the merge.
“We see strong alignment in the depth and breadth of Pallas Capital’s investment product and our investor base,” Fowler said.
“We’re motivated by the opportunity to focus on a product pipeline of circa $1.5 billion that offers wholesale investors some of the strongest risk adjusted returns in the CRE capital markets today.”
The weight of private capital moving into the non-bank sector continues to grow to fill what was estimated to be more than $30 billion.
The Australian commercial real estate debt industry significantly changed in 2014 when the Australian Prudential Regulatory Authority measures drove the banking industry to reduce its real estate land acquisition and development loan exposures.