MERRICKS CAPITAL CLOSES DEAL FOR ICONIC SYDNEY CBD DEVELOPMENT

Merricks Capital has closed a property lending deal for the development of ‘Castle Residences’, a hotel and residential development located at 203 Castlereagh Street on the southern fringe of Sydney CBD’s mid-town precinct.  The $420 million development is for Chinese-based developer United Development Sydney (UDS) and is backed by Merricks Capital’s Partners Fund and a combination of offshore institutions and high net worth investors.

The UDS development will retain the heritage-listed Porter House built in 1876. It includes a 37-story mixed-use tower standing 115 metres above street level with 122 hotel rooms, restaurants, bars and 131 residential apartments.  It forms part of the firm’s multi-asset investment offering, which has raised over $3 billion in capital across property lending, commodities, equities, structured credit, hard assets, agriculture and infrastructure.

Andrew Torrington, Merricks Capital’s Chief Operating Officer, said Sydney’s employment and population growth along with increasing international and interstate visitor numbers, were driving demand and continuing to produce strong growth in median apartment values across Sydney CBD.

“Castle Residences is a worthy inclusion in our high-quality loan book which will deliver exceptional risk-adjusted returns for our investors”, he said.  “It’s a great addition to our expanding lending portfolio which has seen us finance over twenty-five projects in the last 12 months.  We also remain on track to deploy another $1 billion of capital in 2019”.

Mr Torrington said the development was another example of the strength of Merricks Capital’s overseas and domestics partners, and that UDS was the right developer to oversee the landmark construction. “UDS has a proven history of owning, developing and managing complex residential and commercial real estate both in China and Australia”, he said.

Merricks Capital CEO Adrian Redlich said that the firm had been growing its property lending book across construction, land banking and agriculture, as an important part of the firm’s multi-asset funds management strategy.  “Unlike single asset class specialists, we work across a broad range of domestic and global investment markets.  We take a long-term view in investing in execution capability with a flexible and nimble approach to take advantage of market opportunities”, he said.  Mr Redlich said that the firm is currently filling the void left by the banks in financing commercial real estate, agriculture and infrastructure assets in Australia which he believes represented one of the best risk weighted returns globally.

Early works on the UDS development began in May 2018 with construction completion expected by December.  The hotel will be fully operational by 2021.