Di Pilla’s $50b funds dream inches closer with major mall deal
David Di Pilla’s HMC Capital is sizing up the acquisition of a $145 million half stake in a major Sydney mall, as the fast-growing funds management platform taps interest from an expanding pool of powerful institutional investors.
While the mooted deal for Roselands shopping centre is still in due diligence, if it is concluded as hoped it will represent a fresh expansion of the rapidly evolving funds platform that went public only five years ago.
The mooted Roselands deal also shows that private equity is knocking louder on Mr Di Pilla’s door.
Multiple institution investors, both domestic and global, are offering mandates that would invest into the Roselands venture, according to several market sources. HMC did not respond to requests for comment.
The Roselands deal, if finalised, also shows HMC’s willingness to take on larger individual retail assets. HMC would be the investment manager as well.
A former investment banker at UBS, Mr Di Pilla has made no secret of his ambitions at HMC, with the aspiration of quadrupling in size to have $50 billion of assets under management within five years.
The platform sprang into being as a fully formed, traditional-style landlord eight years ago under the name Home Consortium when Di Pilla wrangled an opportunistic $725 million acquisition of the Masters portfolio that Woolworths had assembled in its failed attempt to create a hardware chain.
Since then, the investment banker turned fund manager has dramatically transformed the platform, outgrowing the HomeCo name in the process as it evolved into an asset-light alternatives manager.
Major backer
Under Mr Di Pilla’s hand, HMC has spun off two listed real estate investment trusts, the convenience retail-focused HomeCo Daily Needs REIT and healthcare and wellness fund HCW, created several unlisted funds, and is close to investing out its latest effort, the $800 million Last Mile Logistics Fund. Funds SA is a major backer of that fund.
Mr Di Pilla shows no sign of slowing, after reaffirming plans at The Australian Financial Review Property Summit this month to float two more listed funds, in digital infrastructure and data centres, and in private credit.
If HMC does secure the Roselands interest, it is likely to create a new vehicle to hold it, in the latest expansion of its increasingly busy stable of funds, according to market sources.
The Roselands stake HMC is looking at is owned by ASX-listed Vicinity, which holds the 50 per cent interest on its balance sheet at $142.3 million.
The 64,000 square metre shopping centre in Sydney’s south-west isone of the country’s oldest malls. Opened in 1965, it was once billed as the largest shopping centre in the southern hemisphere.
Three years ago, Hong Kong investment house JY Group bought out Challenger’s half stake for $167 million, a deal struck above book value at the time. Since then, mall values have dropped in response to the disruption caused to commercial real estate due to the pandemic and subsequent high interest rates.
Those upheavals have prompted a wide-ranging sell-off of sub-regional malls by the major listed landlords including Vicinity, a wave of divestment that has benefited opportunistic fund managers such as Fawkner Property, Haben and IPG Generation.
Vicinity Centres, headed by former Westfield executive Peter Huddle, is taking an increasingly active approach to restructuring its national portfolio of malls to gain more exposure at the premium end.
In the past year it has acquired half stakes in Sydney’s Chatswood Chase and Lakeside Joondalup for $307 million and $420 million respectively, while divesting smaller assets worth $550 million in the first half of 2024.
Vicinity is targeting another $250 million of divestments in 2025, Mr Huddle said at the group’s annual results in August.
