SYDNEY, AUSTRALIA: Growthpoint Properties Australia has entered into an agreement under which it will acquire 100% of the shares in Fortius Funds Management.

Transaction overview

• Fortius is one of Australia’s leading family-owned private real estate funds management businesses with an established track record of investing in Australian real estate markets and generating strong returns for its investors

• Transaction delivers on a strategic growth opportunity for the Group, adding $1.9 billion third party funds under management (FUM) to Growthpoint and bringing total assets under management to $7.2 billion1

• Consideration comprises a $45 million initial purchase price, with a net asset adjustment, to be paid in cash and funded from the Group’s existing liquidity and debt facilities

• Additional $10 million earnout component, subject to Fortius achieving agreed milestones relating to FUM and revenue growth over the period to June 2024

• Performance fees for existing funds received by the Group will be paid to the sellers on an after tax basis as an additional purchase price adjustment. Performance fees for new funds will accrue to Growthpoint Properties Australia

• Completion anticipated 1Q FY23, subject to satisfaction of conditions precedent including certain change of control consents being received

Strategic rationale

• Transaction brings enhanced sector and product capabilities, including office, retail, mixed-use and debt investments across value-add and opportunistic strategies

• Continuation of Fortius successful growth story, with founder and Executive Director Ray Sproats remaining as Senior Adviser for at least two years and CEO Sam Sproats joining the Group’s Executive Management

Team as Executive Director – Funds Management

• Provides ability to scale up the platform significantly to drive incremental growth to earnings for securityholders

• Growthpoint intends to grow the funds management business, targeting 10-20% of Group EBIT, over the medium term

Timothy Collyer, Managing Director of Growthpoint, said, “We are pleased to announce the acquisition of Fortius today and the establishment of a funds management business which has been a key strategic priority for the Group.

Fortius is a best-in-class fund manager with an over thirty year track record of generating an average IRR2 of 17% per annum for its investors, a mix of high quality institutional investors, high net worth and wholesale investors. Investing in Fortius adds $1.9 billion high quality FUM in a single transaction taking the Group’s assets under management (AUM) to $7.2 billion.

We intend to grow the funds management business, targeting 10-20% of Group EBIT over the medium term, delivering incremental growth to earnings and income stream diversification for our securityholders.”

Fortius management, Ray and Sam Sproats said “Joining with Growthpoint Properties Australia is an ideal outcome for Fortius and our stakeholders as it provides the best path to grow with our investors’ aspirations as well as provide opportunities for our talented investment team. We are enthused by the complementary fit of an active funds manager with a leading office and industrial REIT.”

Ray Sproats concluded, “The Fortius team and I are excited by the capital support for growth initiatives as well as the continuation of services for our investors. I can think of no better way to build on our thirty years of successful investing.”