Auckland-based commercial property disrupter Jasper is kicking off another funding round after securing two more industrial assets to add to its growing portfolio.
It’s a sign momentum is picking up for the proptech company, which has ambitions to become a kind of Sharesies for industrial property syndicate investors.
Following this capital raise, Jasper plans to launch a secondary market on its platform to provide liquidity and give investors the ability to effectively trade in and out of units at market value.
That will be the key to unlocking Jasper as an investment proposition for retail property investors in the future, co-founder and chief investment officer Mark Campbell said.
Having initially raised $15.2 million from qualifying wholesale investors last December, Jasper is reopening its Industrial Income Plus Fund for a second round, looking to raise a further $20m from the same investor class.
The offer is expected to go live on the Jasper platform on July 15 and Campbell says he expects many of the existing investors to participate.
The fund launched with three properties in Hobsonville, Mangere and Papakura and has now gone unconditional on two more in Pokeno and Mangere Bridge.
The fund portfolio will have eight tenants providing annual rent of $3.28m and is valued at $69.75m.
Investors effectively purchase units in the five properties and since December the fund has delivered monthly cash flow of 6c per unit.
“We are forecasting a distribution rate of 6.14 cents per unit for the fund, which equates to a 5.25 per cent cash yield per annum for investors coming in as part of this offer,” Jasper says in an information memorandum.
Jasper also has two other investment strategies- an industrial fund targeting “value-add” logistics and industrial investments across the wider Auckland region.
All up, it currently has about $150m of property assets and Campbell said he’s expecting that to increase to about $250m by the end of September. The aim is to stretch that to a billion dollars with expansion plans across Australia and Asia/Pacific in the medium term.
Campbell said Jasper was the first of its kind in New Zealand in terms of taking a technology-led approach to commercial property investing but the Covid-19 pandemic threw up obvious challenges.
“It was an interesting time to be building a new business, that’s for sure.
“We took a few months over that lockdown period to recalibrate and think about what we were trying to be as a business and what the right strategies to target in a post-Covid world were. And we landed on industrial given the tailwinds driving that sector … it’s one of the more attractive commercial asset classes from an investor perspective.”
Focused on technology
Jasper pitches itself as having a competitive advantage over other unlisted property syndicate vehicles and listed property funds through its technology-focused digital platform.
Signing up takes less than two minutes and involves less paperwork than traditional syndicate models, Campbell said.
“We’ve built a tonne of tech including fund management software, which automates and makes it more efficient to manage a couple of hundred investors, and if you go on to the platform you can be AML-accredited, investor-accredited and all ready to roll within a couple of minutes.
“In the first funding round our investors were mainly in that 55 to 65 age bracket and we were wondering how the adoption would be in terms of doing everything digitally with no paper forms. It was pretty pleasing how it went and we buttoned that up by Christmas.”
The minimum investment was $25,000, with the average about $100,000 from individuals, he said.
Jasper was founded by Campbell, Mark Hurley and Oliver Shaw with $2.3m of seed funding from the likes of Icehouse Ventures, European investor M7 Real Estate, James Property Group and Jonty Kelt.
Hurley is a former EY Entrepreneur of the Year finalist who sold his previous company Little Giant to Dentsu Aegis Media in 2017, while Campbell has extensive experience in commercial real estate and fund management, having led a $12 billion joint venture with M7.
The next step is establishing a secondary market and Jasper has been working with the Financial Markets Authority to get it fully compliant.
Campbell said it will launch following the latest capital raise and is an important part of Jasper’s ambitions to reach a wider investment market.
“At the moment we are only going to wholesale investors so it’s a slightly different offering. But in time we’d like to go to retail because ultimately you want to give access to this investing space to more people.
“We just needed to be a little bit more developed as a business and get a few more runs on the board before we felt comfortable going to that retail level. It’s a heavily regulated space generally and becoming more so.”
The plan is to get it up and running by October, although it’s not certain whether there will be any trading initially.
“In commercial real estate you sort of punt your money in and generally it’s tied up five, seven, eight years. This is really about adding liquidity to this space. The challenge at the moment may be whether anybody really wants to sell.”
Jasper’s fee card is structured around performance rather than large upfront transactional fees. An annual fund management fee is set at 0.25 per cent of the gross asset value of tangible assets in the first year of operations. This fee rises to 0.35 per cent in year two and 0.50 per cent in year three.
Further fees include property management and a performance fee calculated on investment returns and movement of net asset value per unit.
“We did a lot of work on our fee base,” Campbell said. “We looked at the entire market and every syndication product in the last three to five years and we can say we are as competitive as anyone else, if not more competitive on a fee basis.”
Rising interest rates are something Jasper is monitoring closely as industrial property yields continue to sharpen. In financing the first three properties the fund added bank debt of $11.3m.
“We are discussing with banks at the moment putting a new facility in place for the existing assets and the two assets we are acquiring.
“We’ve pushed really hard on the margin and locked in for north of two years and we will hedge at least 50 per cent of that exposure. Otherwise, that is just going to materially impact that cash return for those investors. You can’t ignore it.”
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