Mirvac has announced the formation of the Australian Build-to-Rent Club (ABTRC), providing wholesale investors access to Australia’s nascent build-to-rent sector, and promising to make the assets green.
The Clean Energy Finance Corporation (CEFC) has jumped onboard as cornerstone investor in the fund, believed to be Australia’s first, committing to a 30 per cent, or $50 million, stake in the first close. As part of the CEFC’s involvement, clean energy and energy efficiency technology will be implemented that could see the carbon profile of assets reduced by up to 40 per cent, compared with minimum standards.
The club will look to gain a portfolio of 5-6 properties, mainly in Sydney and Melbourne, and is reportedly targeting an initial yield of 4.5 per cent. The seed asset will be Mirvac’s new 258-apartment Indigo building at its Pavilions project in Sydney’s Olympic Park. Mirvac will act as development, investment and property manager.
Mirvac chief executive Susan Lloyd-Hurwitz said built-to-rent was becoming an attractive investment opportunity as renting was now “a lifestyle choice” for people wanting the be close to work, services and amenities.
“Build-to-rent makes good business sense for Mirvac, by providing us with a new asset class and a secure revenue stream, as well as presenting us with a new and growing customer base,” Ms Lloyd-Hurwitz said in an ASX announcement.
“We are excited to drive the establishment of the build-to-rent sector in Australia, for which we see enormous potential over time.”
She said build-to-rent could provide renters with “better choice, better quality and better security of tenure”, and recent federal reforms had helped the process along.
The CEFC finance will lead to a number of sustainability initiatives, including onsite solar PV, energy display and monitoring systems, high-efficiency LED lighting, energy-efficient appliances, glazing upgrades, car-park exhaust fans and passive solar design.
CEFC property sector lead Chris Wade said that the build-to-rent market would provide greater incentive for developers and owners to have a “whole of lifecycle” approach, which would lead to energy savings and higher quality outcomes due to the long-term ownership.
“With the creation of the ABTRC, Mirvac is helping to set the standard for commercially achievable sustainability standards in residential apartments in the build-to-rent sector and beyond,” Mr Wade said.
“Through this investment, we’ll also be supporting Mirvac as it works with tenants in the ABTRC portfolio to help them understand and reduce their energy consumption.”
CEFC chief executive Ian Learmonth said the investment was about giving renters the same access to sustainability technologies as owners.
“It’s an immediate way to lower tenant energy costs, as well as tackle greenhouse gas emissions in Australia’s rental housing portfolio,” he said.
“With almost one third of Australians now in the long-term residential rental market, it’s critical that developers and owners incorporate innovative sustainable design measures from the early planning stage.
“We look forward to seeing this approach to sustainability extended across other residential developments.”
Mirvac said it intended to grow the ABTRC over time and was currently in discussion with additional club investors.
The Indigo building is expected to be completed by FY2021.