David Di Pilla’s high aim suggests Home Co is lining up GPT or Vicinity move

GPT Group’s 32 Smith St tower in Parramatta. Picture: Matthew Vasilescu

There have been suggestions in recent months that David Di Pilla’s Home Consortium has been considering a tilt at GPT or Vicinity Centres. And its results on Thursday threw some weight behind the suggestion.

The talk is that Mr Di Pilla, a former UBS investment banker who is the managing director, has been in the market testing appetite from institutional investors about offering support for a buyout proposal for one of the groups.

The discussions are thought to have gone nowhere for now.

But the announcement this week of an office investment partnership between Singapore sovereign wealth fund GIC and the $NZ2.5bn ($2.3bn) developer Precinct Properties New Zealand shows a takeover by Home Co of GPT or Vicinity Centres is possible.

Typically, a major real estate investor like GIC would not be seen investing in a major way with a group like Precinct that only has just over $3bn of assets but is committing about $NZ1bn.

But this agreement– and Wednesday’s sale of Stockland’s retirement arm to private equity firm EQT for close to $1bn – demonstrates the urgency major groups have in putting funds to work.

Both deals were advised by Jarden.

GPT, which has a diversified portfolio and a funds management arm, has a $9.25bn market value whereas Home Co is worth $1.8bn. Vicinity is worth $8.4bn.

Mr Di Pilla is known as an ambitious dealmaker from his investment banking days. Yet his background there was more focused on industrial companies rather than the specialised area of real estate, so competing for institutional investor funds with corporate leaders of large REITs who have spent their working life in the industry will be his challenge.

Charter Hall, for instance, has $61.3bn of funds under management and strong relationships with institutional investors throughout the world.

Still, Mr Di Pilla’s aspirations were on display on Wednesday, when HomeCo told its shareholders it wanted to more than double its funds under management by 2024 to more than $10bn.

GPT’s office and retail funds collectively manage more than $13bn of real estate and Vicinity owns a portfolio of shopping centres, including a stake in Melbourne mall Chadstone, collectively worth $13.5bn.

HomeCo said accelerating funds under management was a priority and that, over time, it expected to transition towards a more capital-light model as it pursued partnership opportunities.

It also said it wanted to scale and diversify its platform by focusing on institutional-grade alternative assets and those underpinned by long-term trends.

Particularly telling is that within its top management ranks is GPT’s former head of funds management Nick Harris, while ex-UBS real estate banking co-head Victoria Hardie also works for HomeCo.

HomeCo last year bought bulky-goods retail centre owner Aventus for $2.2bn and has grown its funds under management 431 per cent since December 2020.

For the six months to December, HomeCo increased its net profit for the half year to $78.3m compared to a $33.9m loss for the previous corresponding period amid the pandemic era.