- SCIM Core Partners Fund 2 has raised $46.8M
- Fund targets equity and subordinate investments in mid-development sectors
- Success from the inaugural fund included the sale of a Taco Bell in regional NSW
Stamford Capital’s funds management arm has announced the over-subscribed capital raising for its newest fund.
Stamford Capital Investments (SCIM) witnessed strong investor demand for its SCIM Core Partners Fund 2, which raised $46.8 million.
The new fund primarily targets equity and subordinate investments that focus on mid-development sectors across the eastern seaboard valued up to $80 million. Primarily residential, retail, convenience retail, standalone fast food, office and industrial assets are targeted.
“We’ll do projects of reasonable scale in good locations, where we can limit the downside risk. We won’t be doing 200 units in Docklands,” said Michael Hynes, Joint Managing Director.
“The construct of CPF2 is what differentiates it in the market,” added Daniel Pirrello, Head of Investments.
“It unlocks the ability for us to underwrite positions and sell down as well as co-fund with our institutional and private capital partners.
“It essentially provides a replenishable balance sheet for SCIM. Based on historic flows, we expect it will drive investment well in excess of $100 million,”
The new fund is based on the structure of Stamford’s previous inaugural Core Partners Fund 1 (CPF1), of which the forecast net returns will be 38% higher than the initial projection of 18% IRR.
SCIM has already repaid 81.7 cents per unit to investors of the fund, inclusive of franking credits. Two remaining equity investments are yet to be realised.
Behold Taco Bell
Critical to CPF1’s success was the acquisition of Taco Bell in Orange, NSW. The 2,438sqm site at 52-54 Bathurst Rd was acquired for $1.75 million.
Significant value was added thanks to securing a long term pre-commit from the parent company of Taco Bell to lease the entire premises. This included the management of approvals and builders for the work program.
SCIM later sold the asset off-market to a private investor for a price of $4.7 million. This represents an itntial yield of just 3.8%, and a return of 46%.
“The asset strategy originally intended to be a 3 to 5-year hold when we assembled the transaction in late December 2020, however, we pro-actively pivoted to divest early as we saw the strong market appetite for properties with longdated income streams to blue chip tenants, and realised incredible value for investors during the period of sharp cap rate compression.”
Daniel Pirrello
A similar result occurred when SCIM took Taco Bell Tamworth to auction in September 2021.
The sale price of just under $4.8 million reflected a 3.77% capitalisation rate. Likewise, there was a long-term pre-commit to Taco Bell Australia’s parent company.
“This Fund is part of our post-COVID strategy, and the rapid support from our investors clearly reflects a strong appetite for structured commercial real estate investment in the current market,” said Mr Hynes.
$400 million of principal has been repaid across 60 individual investments across equity, preferred equity and mezzanine debt. Since its inception, SCIM has delivered 18.5% per annum average net investor return from their managed funds.
$2 billion in settlements occurred during the 2021 calendar year for Stamford Capital Australia – double the previous year.
