US billionaire Michael Fuchs in LJ Hooker rescue

One of Australia’s best-known real estate brands, LJ Hooker, is set for a rebirth with the backing of a New York billionaire.

US billionaire Michael Fuchs may be about to rescue LJ Hooker. Picture: David Swift.

One of Australia’s best-known real estate brands, LJ Hooker, is set for a rebirth with the backing of a New York billionaire who has put forward a rescue plan.

The real estate franchise has been battered by the impact of the coronavirus crisis and called in administrators KPMG to its holding company last month. A Singaporean lender that supported the company followed by calling in receivers Aston as negotiations dragged out.

The rescue plan will see Janusz Hooker — grandson of famed real estate franchise pioneer, Leslie Joseph Hooker, who founded the firm in 1928 — stay at the company as it navigates the crisis.

LJ Hooker, which has about 730 franchises across Australia, NZ, Indonesia and PNG, is to be recapitalised via a scheme driven by major shareholder and billionaire Michael Fuchs, who will invest via his MFLJH Investment Pty Ltd entity. Mr Fuchs, a New Yorker, is famed for co-founding US landlord RFR Holdings 25 years ago with his childhood friend Aby Rosen. The pair built RFR into a $20bn real estate portfolio.

He has an eye for a bargain. The company began in the 1990s recession buying distressed assets from agencies such as the Resolution Trust Corporation, which was liquidating assets held by troubled lending institutions.

It now has assets across the US and Germany, including owning and managing some of Manhattan’s most prestigious signature office properties, including The Seagram Building on Park Avenue and The Chrysler Building.

RFR’s portfolio of commercial and residential real estate gives it insights into the operations of the leading local real estate franchise operation, which has generated strong earnings even as it has searched for the right capital structure since Janusz Hooker bought back into the business in 2009.

Mr Fuchs has also been a shareholder in LJ Hooker since that time and is supportive of the business strategy, with the Hooker founding family to retain an interest in the firm.

He now has his eyes firmly on Australia. LJ Hooker network chief, Graeme Hyde is also involved in steering the proposal, which will be voted on by creditors at a second meeting.

The first meeting heard the directors blamed the holding company failure on under-capitalisation and poor economic conditions.

Creditors were told the administrators had received other expressions of interest in addition to the deed of company arrangement proposal, with both financial parties and an unnamed competitor making overtures.

The company and administrators would not comment ahead of the deal being finalised but The Australian has learnt that under the proposed deed of company arrangement for LJHRES Limited, holding company of the LJ Hooker operating businesses, the two creditors, ATO and the Intermediate Capital Group, will receive 100c in the dollar. The LJ Hooker recap package includes ongoing support from the existing lender, ICG, with a $34m loan and an equity investment from MFLJH Investment of $35m.

The injection of close to $70m of debt and equity will enable LJ Hooker to navigate bumpy conditions this year, which could throw up acquisition opportunities.

The transaction has been quietly worked on for more than a month. It would see the group’s capital structure stabilised after more than a decade of changes since Mr Hooker first came back into the business, with the backing of a consortium of high-profile investors including former Mirvac chief Greg Paramor.

Mr Hooker took greater control of the group in 2015 ahead of a mooted float of the group on the ASX. That would have been a $400m play, potentially including a rival Victorian agency joining under the LJ Hooker umbrella, but the plans were dumped as the property boom tailed off amid tougher times for residential real estate agents.