Centuria lifts stake in real estate finance JV after assets quintuple in three years

Centuria lifts stake in real estate finance JV after assets quintuple in three years

Centuria Capital Group's joint CEO John McBain (left) and Jason Huljich (second right) with Centuria Bass joint CEOs Giles Borten (second left) and Nick Goh (right).

Centuria Capital Group (ASX: CNI) is lifting its stake in a real estate finance joint venture (JV) forged with Bass Capital Partners in 2021, spending $57 million in cash and shares to lift its total holding in Centuria Bass Credit to 80 per cent.

Centuria reports the venture has "grown meaningfully" since its formation in April 2021 from assets under management (AUM) of approximately $300 million to $1.7 billion today.

Based on its 50 per cent interest, Centuria earned an interim profit of $7.2 million from the venture as at 31 December 2023, with a "substantial pipeline" of potential opportunities under the microscope.

The incremental stake was funded by $28.5 million of cash and $28.5 million in CNI scrip, the latter through the issuance of more than 16 million shares at $1.775 each.

"Today’s announcement follows an ongoing review of opportunities to meaningfully scale Centuria’s platform," says Centuria Capital Group joint CEO John McBain.

"Expanding our stake in Centuria Bass Credit increases alignment and earnings-share to a market leading real estate finance business, capable of generating healthy profit accretion for Centuria’s future earnings profile.

"We retain high conviction over this asset class and are focused on broadening the range of real estate debt offerings to our investor network. Centuria’s investor network have developed a rapidly increasing appetite for the relatively competitive returns and short duration these funds exhibit."

When considering Centuria's initial purchase of half of the JV, it has spent $81 million in total to acquire the 80 per cent stake, representing an approximate 4x earnings multiple.

The group claims Centuria Bass is positioned to increase its non-bank lending market share with new real estate finance investment products that complement Centuria’s distribution platform.

The venture continues to be led by an experienced management team including its founding partners – former UBS European head of leveraged finance and debt capital markets, Giles Borten, and former managing director of Wingate and Gresham Partners, Nicholas Goh.

Key Centuria executives have been active in the Centuria Bass business. Since the acquisition of the initial stake in 2021 both Centuria joint CEOs have served on the Centuria Bass board and Centuria’s CFO and group treasurer both sit on the Centuria Bass Investment Committee.

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