Former Mirvac boss Greg Paramor’s $120 million real estate investment management venture
Folkestone is eyeing six projects with an end value of $750 million.
As reported by The Australian, Folkestone revealed yesterday that it was conducting due diligence on the six development properties that include land subdivision, apartment projects, mixed use and neighbourhood retail projects.
The announcement comes as Folkestone looks to consolidate two of its listed funds, the $390 million Folkestone Education Trust (‘FET’) and the $90 million Folkestone Social Infrastructure Fund, into a larger entity through a merger deal put to shareholders this month.
This announcement also follows an attempt by Folkestone to merge FET with rival childcare centre owner, the $330 million Arena REIT – an offer rejected by the Morgan Stanley-backed Arena.
“These development opportunities provide a fantastic platform for Folkestone to expand its suite of development funds and invest part of our balance sheet capital, either directly into these projects or co-invest in our development funds,” Mr Paramor said.
“Some of these projects may also provide completed product for our unlisted real estate income series.”
Folkestone is tapping the market for $42 million to subsidise its plans, to accelerate its existing development pipeline, and to buy 9 million units in FET for $16.8 million as part of the merger deal.
The share purchase will take Folkestone’s stake in FET from 1.3 per cent, up to 9.5 per cent.
BG Capital and Moelis Australia are handling the raising, which includes a $15.8 million placement to institutional investors and a one-for-four non-renounceable entitlement offer to existing eligible shareholders for $26.2 million.
“Folkestone is well-positions for its next stage of growth and this $42 million of new capital will facilitate Folkestone increasing its strategic holding in the Folkstone Education Trust, growing its funds management platform and investing in select development opportunities on its balance sheet or co-investing in its development funds,” Mr Paramor told The Australian.
Currently, Folkestone is developing the second stage of Millers Junction business park in Altona North in Melbourne’s west. Folkestone is also developing a subdivision in Officer in Melbourne’s outer eastern suburbs, and a 690-lot subdivision in Truganina in the city’s west.
Folkestone is due to issue new shares at 20 cents each, a 10 per cent discount to the company’s five-day volume weighted average price.