The property fund manager has divested most of its multi-billion-dollar portfolio and plans to rebuild.
By divesting most of its portfolio, Ascot Capital has put itself in a similar position to that it was in more than 10 years ago.
But its directors are comfortable with the move.
The Perth-based property fund manager sold $2.1 billion of assets in the space of a month, reducing its assets under management from about $2.5 billion to about $300 million.
Its September sale of Jandakot Airport for $1.3 billion was one of the largest property transactions in Western Australia.
Weeks later it confirmed a $681 million deal with Sydney’s GPT Group for its logistics and office assets, largely in the eastern states.
Ascot also recently sold two office buildings in Queensland and NSW and a medical facility in South Australia to MA Financial Group for $115 million.
The company’s directors, Peter Agostino, David van der Walt and Greg King, intend to finalise the deals and then go back to the drawing board.
Ascot Capital founders Mr King and Mr van der Walt migrated from South Africa to WA in the early 2000s, leaving behind a successful property business.
The pair said it was always the plan to come to Australia but choosing Perth was a result of sheer chance.
“In those days the Qantas flight went from Johannesburg to Harare, Harare-Perth, Perth-Sydney – you always landed here at some stage of that trip, so it was an accident but we are delighted,” Mr King said.
Mr van der Walt spent his early years in Perth familiarising himself with the market before he came across Ascot’s most significant asset – Jandakot Airport.
“When I arrived I didn’t know a single person,” he said.
Ascot bought Jandakot Airport for $47 million in 2005 with its South African partner Kirsch Group from Perth-based civil contractor Hans Versteeg and land developer Kevin Pollock, who bought it for $7 million in 1998.
The company later shifted its focus to commercial industrial assets, prompting Mr Agostino to join.
Mr Agostino, former CBRE Asia Pacific senior managing director of WA, South Australia and the ACT, brought a host of new investors to Ascot and helped widen its asset base.
Development
Ascot developed the 620-hectare Jandakot Airport into a logistics hub, alongside the operating airport.
Mr King said the group brought a fresh perspective to the site.
“I think a couple of things worked in our favour,” he said.
“We were immigrants, so we looked at things with a fresh set of eyes.
“I think if you ever looked at Jandakot Airport and you speak to any of the local developers, they kicked themselves for missing it.
“As far as everyone was concerned, it was in the middle of nowhere, and it was for quite some time.”
The property fund manager worked with planning authorities to adjust a structure plan relating to the airport, which allowed it to transform the site.
One of the key moves Ascot made was connecting the airport’s road system to the Kwinana Freeway, making it more accessible to freight logistics operators.
Airport deal
Dexus bought Jandakot Airport for $1.3 billion in September, marking its foray into WA logistics infrastructure.
The transaction included 49 industrial properties over 360,000 square metres for $875 million, 80ha of developable land for $225 million, and the operating airport for $200 million.
The 49 properties are leased to 54 tenants, with an initial yield of 5.2 per cent and 4.7 per cent capitalisation rate.
Ascot Capital continues to operate the airport via its management team, as Dexus acquired 49 per cent of the company which owns the ground lease – Jandakot City Holdings.
Dexus chief investment officer Ross Du Vernet said he was drawn to the potential of Jandakot’s industrial element.
“We’ve been looking in WA for the last three to four years for scalable opportunities in the logistics and warehousing space, and we’ve shied away from doing individual asset deals,” he said.
“One of the really appealing parts of this transaction for us is it is a combination of a significant stabilised portfolio of real estate, plus the developable land, so we’ve got critical mass, day one.”
Brett Wilkins, of Ray White Commercial WA, who helped negotiate the off-market deal, said Dexus wanted to capitalise on WA’s growth.
“(They) engaged me to seek a sizeable Industrial portfolio as they were underweight in WA industrial and they recognised the strength of the WA economy,” he said.
“Such portfolios are tightly held.
“I know Ascot Capital very well and they chose the opportunity to divest Jandakot.”
Strategy
Jandakot aside, a significant portion of Ascot’s assets were in eastern states logistics hubs.
A significant reason for that was Jandakot was such a “big monolith” it did not want to over-capitalise in one state, Mr King said.
Mr Agostino said that in logistics infrastructure, the eastern seaboard was a more mature market.
“A lot of the logistics facilities in Adelaide actually service all of South Australia, Northern Territory and half of regional Victoria, whereas something in Perth just services the Perth market,” he said.
“You can often get on the east coast much deeper markets and larger scale and much more significant development in the industrial space.”
After real estate investment trust GPT Group bought 23 logistics assets from Ascot in October, it left the Perth property group with very few assets.
“When you’re getting calls daily from people asking, ‘when can we buy this asset, can we buy that asset’, we just have to take a breath and maybe take some advice,” Mr King said.
On CBRE and Morgan Stanley’s advice, Ascot was persuaded to act on those offers.
“We were persuaded that having a portfolio of this quality and scale would be well looked at by the market, and it’s turned out to be correct.
“I think as trustees of investors’ money, we are obligated to look at opportunities like that.
“For us to sit on that asset because we are comfortable is not really a reason to do it.”
Ascot still owns 43.5ha of land in Australind with industrial and residential use, a plastics factory in South Australia and is working with pet food supplier PETstock to roll out more than 20 stores across the country.
Ascot also owns about $200 million of hotel assets in a joint venture with Steve Lauder’s Pacific Hotel Group.
What’s next?
Ascot’s directors plan to continue a similar trajectory that helped them grow during the past 18 years.
“We are slow and selective in acquiring assets, and that’s why it’s taken a decade to build up the portfolio,” Mr King said.
“I would suggest that to get to the same size, again, we’ll probably take the same amount of time.
“We are not going to lie on the beach.”
Mr King said there was a “huge amount of work” to complete the company’s’ recent transactions and, once they were finalised, the team would look for more opportunities.
