Brisbane-based specialist investment manager Cedar Pacific has appointed Savills Capital Advisors to raise $500m for new seeded Build to Rent assets.
Cedar Pacific’s new Build to Rent vehicle has a pipeline of two seed assets totalling 833 units already under control, with a further nine assets totalling 3,500 units in its pipeline, including four with development approval.
The two seed assets comprise a 39-storey tower with 358 new apartments located in Central Takapuna in Auckland, New Zealand and a 32-storey tower located in Brisbane, which is set to emerge as the state government’s third pilot Build to Rent project, featuring 475 apartments of which up to 250 will be eligible for government-subsidised rent.
“Affordable and professionally managed housing is key to a growing population, fuelled by millennials, older Gen Z’s and the return of higher immigration numbers. We are passionate about creating positive investment opportunities with responsible social and environmental factors. The recent reform of MIT will go far to encourage investment into the growth of a sector that can respond to our housing shortage.”
Bernard Armstrong, CEO, Cedar Pacific
Cedar Pacific has partnered with McConnell Property for the development opportunities in New Zealand.
The investment strategy will target assets in key capital cities including Sydney, Melbourne, Canberra and Perth.
All properties will target a minimum 5-star Green Star rating or equivalent on construction and will operate as net carbon neutral.
“The Build to Rent sector, whilst relatively new in Australia and New Zealand, is firmly established in UK and Europe. Due to similarities between these markets, we anticipate strong interest from institutional investors both in Australia but also internationally. We anticipate attractive risk adjusted returns in the Build to Rent sector in Australasia due to forecast rental growth as the market matures over the next few years.”
Joe Guilfoyle, Co-Head, Savills Capital Advisors
The company’s appointment of Savills coincides with The Federal Government of Australia’s announcement of a reduction in the managed investment trust (MIT) withholding tax rate for newly constructed residential Build to Rent projects (after 1 July 2024).
This will allow foreign investors in qualifying jurisdictions such as Singapore, Canada, Japan, Netherlands, Germany, the UK and the US a reduced rate of withholding tax (from 30% to 15%) on fund payments; a distribution of taxable income subject to certain adjustments in relation to Build to Rent projects in Australia.
Established by Pamoja Capital in 2015, Cedar Pacific specialise in the development and management of purpose-built residential rental assets, including purpose-built student accommodation (PBSA).
Cedar Pacific manages approximately $2.5bn over 18 assets totalling more than 10,000 beds across Australia and New Zealand, with an additional four assets in development.
“The structural undersupply of purpose-built residential assets in Australia and New Zealand looks set to continue into the medium term given lead in times to deliver new projects. Taking into consideration these obstacles, we expect strong demand for this opportunity.”
Conal Newland, Head of Operational Capital Markets, Savills Australia and New Zealand
Essence Communities, a subsidiary of UniLodge, will operate the completed Build to Rent projects under a white label agreement.
Australia’s national residential vacancy rate remains at its lowest point on record in March 2023, at 0.8%, while available rental inventory in Auckland is at its lowest in five years.
The consistent GDP growth, coupled with low housing affordability is anticipated to drive demand for professionally managed rental options.
