Australian real estate fund manager Qualitas has formed a build-to-rent (BTR) venture with Melbourne developer Tim Gurner and seeded the platform with A$1bn (€611m) worth of apartment projects.
The platform has been seeded with three projects, which, on completion, will provide 1,100 apartments in Melbourne.
Qualitas and Gurner, who founded the property company of the same name, have plans to double the size of their portfolio to more than 2,000 apartments in the next two years as they expand interstate and to New Zealand.
Qualitas will launch a dedicated BTR fund early next year to raise capital for the purchase of more sites for the portfolio.
“We began looking at the sector about 4 years ago when I was approached by a large private family with assets in the US and Europe, seeking a local partner,” Gurner said today.
He felt at the time, he said, that even on a risk-adjusted basis, with the market running hot, Australia’s BTR market could not deliver returns to compete with alternative uses, like build-to-sell residential development.
However, recent developments had created an overwhelmingly compelling” environment to enter the sector, Gurner said, pointing to a market correction which had reduced supply significantly, falling interest rates, and tax breaks from both the NSW and Victorian governments.
Global head of Qualitas real estate and co-founder, Mark Fischer, said the post-COVID-19 environment would be conducive to the growth of the multifamily sector.
Fischer said Qualitas had invested in multifamily in the US and had been seeking the most appropriate way to capture what it believed to be a “significant Australian opportunity” for its investors.
“The key was finding a partner who has an unrelenting focus on the experience of the end-customer, and can make that work operationally,” said Fischer.
Within their partnership, Gurner will use its existing management company to operate the BTR business.
Qualitas will access its wide base of offshore investors, including those from Asia, Europe and the US, together with Australian domestic investors, for capital to fund the platform.
Qualitas is already receiving initial investment from investors interested in Australia’s BTR sector. This is coming in through a new vehicle, the Qualitas Build-to-Rent debt fund, the first of its kind in Australia.
The latest partnership expands on an existing relationship Qualitas has with Gurner.
In September, Qualitas committed up to A$150m of equity from its Qualitas Opportunity Fund No 2 to an equity partnership with Gurner to develop a build-to-sell residential project.
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