Investors dry up as Dixon Advisory raises $31 million for US property fund in second capital raising
Just 33 investors took part in the third and final stage of Dixon Advisory’s second capital raising offer to buy shares in its US Masters Residential Property Fund, which acquires and rents out property in Jersey City, New Jersey.
In total $1.27 million was invested in the third stage, which closed on January 9, taking the total equity raised to $31.14 million from 929 investors since the second round of capital raising kicked off on October 24, 2011.
US Masters Residential Property Fund capital raising
Stage | Offer expiry | No of investors | Money raised |
1 | November 22, 2011 | 815 | $26.85 million |
2 | December 13, 2011 | 81 | $3.02 million |
3 | January 9, 2012 | 33 | $1.27 million |
Total |
| 929 | $31.14 million |
Source: US Masters Residential Property Fund
The $31 million raised equates to less than a quarter of the maximum $140 million that was sought from investors, suggesting appetite for the fund has diminished since it listed in June last year.
Dixon Advisory managing director Alan Dixon tells Property Observer he is “overall relatively pleased with the size and amount of capital raised”.
“The vast bulk of the funds came from Dixon Advisory clients (approximately 90% of the amount raised), with the balance coming from the general public. No other dealer groups or advisory firms participated in a material way,” he says.
“We actually got slightly more than we expected from Dixon Advisory clients, but we were hopeful of getting interest from other advisory groups and hence why we had the three different offer periods. However, despite some good discussions, we didn’t receive that outside support so it wasn’t surprising that raisings two and three were so small.
“Overall we were extremely happy with the support from Dixon Advisory clients and the general public who came in without an advisor.”
Dixon says the fund is still keen to try and involve some other advisory groups at some point, “hopefully in the next 12 to 24 months”.
“We have unitholder approval to raise further funds in place for another 9 months or so, after that we would have to seek approval again. We definitely hope to raise some more funds in this time, but don’t have an exact timetable.
“In the meantime, a $100 million fund leaves us very well placed to implement our strategy, and there is still a plentiful supply of attractive properties available to us. There were a few slower weeks around Christmas, but the market is already getting more active and traditionally after Martin Luther King Day (this year January 16) the market is fully active again.”
The US Masters Fund brought in $69.5 million from over 1,500 investors ahead of its listings on the small cap National Stock Exchange in June 2011, with strong demand from Australian investors and, in particular, self-managed superannuation funds.
Just before Christmas, the fund revealed it had purchased 75 properties worth $14.9 million and had received conditional acceptances on a further 99 properties $18.5 million.
All properties have been acquired in Jersey City with yields ranging between 8% and 11.3%
In December, Property Observer reported that the fund had paid more than double the most recent sales prices for one of its properties with 19 acquisitions among the 34 identified in the US Masters Fund prospectus where the latest purchase price sits substantially above the last sale price.
Dixon says he is confident of the buying process and that there is “plenty of upside” in these purchases.
The fund is currently trading at $1.67 valuing it at $102.8 million. It listed at $1.61.