Wentworth launches private credit platform with SHK seed commitment

Wentworth, the Australian real estate private equity firm, has launched a private credit platform focused on its core markets of Australia and New Zealand.

The division, dubbed Wentworth Private Credit, will be led by Issa Chehab, who joined the firm from Blackstone in September. Chehab was a managing director at Blackstone in Sydney and led the firm’s real estate debt business in ANZ.

Speaking to PERE, Chehab confirmed that Wentworth has launched an open-end fund to anchor the platform, which has secured a seed commitment from Sun Hung Kai & Co, an Asian alternative investment platform listed in Hong Kong, via its funds management subsidiary SHK Capital Partners.

Chehab said Wentworth does not have a particular target size in mind for the open-end fund, but it is seeking to raise further third-party capital to supplement the initial commitment from SHK. Wentworth did not disclose the size of SHK’s initial commitment, but Chehab said it was “scalable” and would result in Wentworth having “hundreds of millions of dollars” to deploy over time.

Transitional lending

The fund and the broader platform will be focused on what Chehab described as “performing real estate credit,” targeting double-digit returns for investors, and will not focus on special situations or distressed lending.

The platform will target sectors that Wentworth is active in already through its equity arm, including the office, hospitality, industrial and living sectors, and has already funded several transactions.

Wentworth said in a statement that the platform would focus on “underserved sectors of the credit market, such as assets in a repositioning or value-add profile,” with private credit “much more active in these types of loans globally than in Australia.”

Real estate private credit in Australia has to date had a strong focus on lending to the residential sector, which Wentworth is explicitly not intending to focus on with the new platform.

“The opportunity [for us] in private credit is to really build upon Wentworth’s real estate expertise with a new strategy, which is to do credit in a non-commoditized way,” Chehab said.

“We’re trying to do what is quite common in the rest of the world, particularly in the US and the UK, which is transitional lending, or value-add lending. The big funds here are good at it – but they need a big check size. If you come down into the space below that, the mid-market, there is a space in the market here to provide that service in an institutional way with the right real estate expertise.

“That’s what I’ve come on board to help execute and we’re building up a team to do that. We are bringing together that credit expertise with the real estate expertise [of Wentworth] so that we can take a quick, decisive and flexible approach to getting deals done, to provide the best risk-adjusted returns for our investors.”

The platform’s typical deal size will be between A$25 million ($16.4 million; €14.1 million) and A$100 million, and the firm could look for partners for any transactions larger than that.

Chehab declined to comment on the platform’s eventual size, other than to say: “We want to grow and have a fair share of the market. We see a few billion dollars’ worth of the types of opportunities that we like in the market every year – so there is a multibillion-dollar long-term opportunity set here that we can access. We’re not trying to compete head-on with most market participants, so we’ll… roll it up sensibly over the next few years.”

Wentworth closed its first commingled private equity real estate fund earlier this year on its hard-cap of A$350 million, comfortably beating its target of A$250 million.

As well as appointing Chehab earlier this year, the firm recently hired Josh Peel as head of capital. Peel joined from JPMorgan Asset Management and will lead capital raising activities for Wentworth across all its strategies. In addition, Wentworth has appointed Ben Jackson as managing director, private credit, from his previous role as co-head of capital advisory at Savills.