Wayne Lasky

Apollo Global Management, Inc., (together with its consolidated subsidiaries, “Apollo”) has announced that clients managed by its affiliates have entered into a definitive agreement to acquire up to a 50% equity stake in MaxCap Group (“MaxCap” or the “Company”), a leading Australasian commercial real estate (“CRE”) financier and fund manager.

Founded in 2007, MaxCap is ranked No. 1 in CRE Debt* in the Australian marketplace and is headquartered in Melbourne. Following completion of the deal, MaxCap co-Founders Wayne Lasky and Brae Sokolski will continue to lead the company and retain the remaining shareholdings.

The strategic investment will align MaxCap with one of the world’s leading asset managers and enable the business to continue its rapid growth in Australia and New Zealand. The transaction is expected to bolster MaxCap’s access to capital and strengthen its ability to create and deliver innovative lending solutions for borrowers alongside Apollo’s leading credit platform. MaxCap expects to generate significant investment opportunities for its clients, and today has a forward pipeline of more than A$6 billion.

Since its founding, the Company has had a strong track record of performance across more than 450 investments totaling more than A$11 billion. For Apollo and its clients, the investment extends the firm’s reach into Australasia – an attractive market with significant growth in lending opportunities. Currently, Apollo originates commercial real estate debt and equity solutions across North America, Europe and Asia, and through this transaction expects to increase its activity in Australasia.

Wayne Lasky, MaxCap’s Co-Founder and Managing Director said, “We are driven to deliver the highest quality and broadest array of investment opportunities for our clients. This transaction is a key aspect of fulfilling our promise of creating lasting value for them. We look forward to achieving that by leveraging Apollo’s extensive industry expertise, coupled with the capital firepower they bring to the table. This will further enable us to provide compelling solutions for every commercial real estate sector at every stage of the real estate life cycle, and we’re thrilled to join forces with such a highly respected global manager.”

Mr. Lasky emphasised how MaxCap has created a market leading platform and built a high-quality Australasian team. “This partnership is a watershed moment and a key component of our team’s long-term strategic plan. Now we are looking forward to the next phase of MaxCap’ s growth and to delivering further client value together with a partner who shares our vision and strategy,” he said.

Apollo Co-President Scott Kleinman said, “Australia presents significant long-term opportunities for Apollo and we’re thrilled to strategically partner with MaxCap, a leader in the non-bank real estate lending space with a standout reputation. This is an exciting opportunity to expand our origination capabilities, support the strong management team and together leverage our highly complementary platforms and expertise.”

Philip Mintz, Senior Partner, Real Estate at Apollo said, “MaxCap is an industry leader and we’re excited to provide capital and strategic support to help accelerate their business and increase our activity in Australia. The company’s strong track record of origination, its market positioning in Australia and New Zealand, and its performance have made them a partner of choice for investors and borrowers alike. Together we see significant opportunity ahead as the non-bank real estate credit market continues to grow in the region.”

Mr. Mintz noted that the Apollo funds’ investment in MaxCap was the latest extension of its investment origination platforms. It follows a recently announced transaction with Foundation Home Loans, a specialist UK mortgage lender, as well as a strategic agreement with Victory Park Capital in the US to invest in asset-backed credit facilities for emerging companies. Apollo’s strategy to build, buy, and partner with proprietary origination platforms enhances the firm’s ability to source and structure investments for its insurance and institutional clients.

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The specialist debt financier has entered the direct investment space with MaxCap leaders, Wayne Lasky and Brae Sokolski saying the strength in the commercial release estate sector gave room for further offerings and expansion.

They see the timing as now right to selectively participate in direct investment. This is coupled with investor demand for higher yielding investment opportunities to complement their existing focus on senior and structured debt portfolios within MaxCap Group.

“We are a highly specialised investment house with a specific focus on Australia and New Zealand Commercial Real Estate,” said Wayne Lasky, MaxCap Co-founder and Managing Director. “Working with trusted developers as a passive joint venture capital partner is a logical step for us at this point in time.”

Mr Lasky said that MaxCap’s investors were wanting to see a greater breadth of investment opportunities.

“So alongside MaxCap’s mainstream debt business, we are also providing direct investment opportunities as the timing is right in terms of returns. Our goal is to build our direct investment business to be 10% of the Group’s activities over the next three years.”

Mr Lasky noted that MaxCap Group specialises in commercial real estate debt funding and had originated and managed approximately A$8billion worth of loans since it was established in 2007.

“Looking back over the last decade, we have been grateful to receive strong support from our investors, backing our innovation and benefiting from strong first mover advantages,” he said. “In 2010, we developed the largest mezzanine book in our market after identifying structural change and subsequently introducing institutional capital – and followed this up in the senior debt space a few years later when we could see regulatory intervention open up opportunities to achieve strong risk adjusted-returns.”

In 2019, MaxCap has crossed the Tasman to establish JV operations in New Zealand, and in response to recent market dynamics, has now added a direct investment capability.

Direct investment

Speaking to the direct investment business, Mr Sokolski referenced the recent appointment of Simon Hulett, ex Charter Hall, who will head that business.

“Simon will lead the development and execution of MaxCap’s direct investment strategy nationally and originate opportunities across all asset classes,” said Mr Sokolski.

He noted that MaxCap had been highly selective in how it had entered the equity investment market, taking joint venture positions in high quality development projects across commercial, residential, hotels, offices, and industrial real estate sectors.

“Each of these is underpinned by strong market fundamentals and experienced development partners,” he said. “We’re also keen observers of where capital is flowing. In 2019, in equity capital markets we’ve seen much less inbound capital for non-institutional grade development and that’s created an “opportunity gap” in the Australian market for local investment.”

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The company which has offices throughout Australia, has opened an office in Auckland with Bayley’s and Forsyth Barr between them owning 50 per cent of MaxCap NZ.

“Our objective is to become New Zealand’s premier non-bank commercial real estate lender focusing particularly on property development projects as well as investment funding,” says Brae Sokolski, MaxCap’s co-founder and chief investment officer.

MaxCap Group specialises in commercial real estate debt funding and has originated and managed approximately A$7.8 billion worth of loans since it was established 13 years ago, says Sokolski. It currently has approximately A$4.1 billion of funds under management.

“We obtain and actively manage the funds that we use to provide finance via a variety of sources which we have built up over many years. These range from high net worth individuals through to large institutional investors, including major superannuation and pension funds,” says Sokolski.

“Bayley’s will be assisting us with originating lending opportunities through its far-reaching network and client base across New Zealand. We will also be looking to access Kiwi currency funding sources, focusing initially on high net worth private investors utilising Forsyth Barr’s considerable expertise and experience in wealth management.”

“The recent drop in the Official Cash Rate (OCR) to one per cent and the flow on effect this has on bank deposit rates means that our New Zealand managed funds are likely to have increased appeal to experienced investors searching for a higher level of return.”

Bayley’s’ managing director Mike Bayley says the company’s involvement in the joint venture has been driven by current limitations on commercial property funding from retail banks.

“These limitations are, at times, having a negative effect on market activity and are a source of frustration for clients, particularly developers who play a vital role in creating new leasing and investment opportunities.

“It has prompted us to look for alternative sources of funding for clients. MaxCap NZ will be taking a relatively conservative approach but it will be able to offer more flexibility in its funding and consider more complex deals.”

Jonty Edgar, co-head of markets for Forsyth Barr, says Max Cap Group’s move across the Tasman will provide the firm’s wholesale and institutional clients with more commercial property investment options.

“We have been looking to diversify our offerings in the property sector, driven by private investor demand for alternative investments with higher yields and attractive risk-reward dynamics. This joint venture with MaxCap Group and Bayley’s enables us to do that,” says Edgar.

“MaxCap has a well-established track record in Australia for their rigorous approach to risk management. They have a history of returning full principal and interest to all of their investors and delivering on terms issued to borrowers.”

Mark Farrands has been appointed chief investment officer for MaxCap NZ. He has over 27 years’ real estate finance and valuations experience and was previously Auckland regional manager, property finance at ASB Bank.

He says MaxCap NZ’s initial focus is on financing $3 million-plus property transactions with negotiations already well advanced on funding for several land development deals in Queenstown and Auckland.

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