Australian property group Drapac is set to launch two investment funds to raise $50 million to invest in US real estate, targeting potential development sites.
Melbourne-based Drapac's two funds will invest in finished or partially developed residential lots and land in six key American states in a bid to take advantage of what industry-veteran Michael Drapac sees as a potential upswing in the US housing market.
The Drapac launch comes as a wave of other US-focused property funds hit the market. US group Domus this month launched an Asian road show to raise $100 million for an ASX-listed float of a portfolio of US apartment assets, and another rival, Dixon Advisory, has just won approvals to raise $100 million for its US housing fund.
Drapac's two parallel funds - the $30 million Drapac Stars & Stripes I and $20 million Drapac Stars & Stripes II - will have different investment mandates.
Investors will get $1 ordinary units with a minimum subscription of $100,000.
The funds, structured as Australian unit trusts, are closed-end vehicles and will have no voluntary redemptions. The offer opens on May 21 and closes on August 16.
Drapac's information memorandum expects the funds to achieve a benchmark return of 10 per cent per annum. Morgan Stanley will advise on a foreign exchange strategy.
Drapac plans to focus the larger fund on income producing development sites, both commercial and broad acre.
The smaller fund will buy non-income producing assets, mainly residential land in rebounding markets in cities such as Atlanta, Charlotte, Chicago, Los Angeles, Orlando and Phoenix.
The funds were differentiated by targeting development-ready sites rather than established housing, Mr Drapac said.
Most US property funds focused on foreclosed homes to restore and lease for income, he said.
Buying development sites was inherently risky in a strong market, but "when the market comes off a low base, as America is today, these development sites outperform by many multiples," Mr Drapac said.
The group already has $16 million of assets under contract and undergoing due diligence.
Those assets would form the basis of the funds, Drapac chief operating officer Costa Alexiou said.
The allocation of property assets between the two funds will depend on asset class, geographic location, and whether the asset is income producing or non-income producing.
According to Reuters, US housing added to economic growth last year for the first time since 2005, and single-family home prices recently rose the most on an annual basis since mid-2006.