Dutch pension asset manager, APG, has increased its commitment to Australian commercial real estate debt via leading investment manager MaxCap Group (MaxCap) on behalf of its pension fund clients ABP, SPW and PPF APG.

Through its APG Investments Asia Limited arm, it has made a commitment to the strategy €586m with a further re-up option to increase total commitments to €1.17bn. With this deal, APG said it is assisting in addressing the funding gap in the Australian real estate market.

The partnership, established in 2019, will continue to target first mortgage loan lending across all real estate asset classes. APG managing director and head of real estate, Asia Pacific, Graeme Torre, explained that the withdrawal of the four major Australian banks from commercial real estate debt exposure is causing a lack of supply of new residential units.

“By assisting developers to proceed with their construction, we are indirectly supporting the Australian residential sector by increasing the supply of new units. The projects are predominately residential developments and include apartments as well as sub-divided land (for houses). APG and MaxCap also lend to industrial, retail, office and hotel development projects, but these are less common.”

On the partnership, he stated: “We are pleased to deepen our partnership with MaxCap on this scalable and sustainable strategy. Commercial real estate debt, as an institutional asset class in Australia, is a proven strategy that offers strong risk-adjusted returns for the benefit of APG’s pension fund clients and their participants.”

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