Local Residential, the Australian Build to Rent platform, has reached final close on its inaugural managed venture, the Local: Residential Turnkey Venture I.
With capital committed by a large global pension fund, the Local: Residential Venture is now fully deployed with end value assets under management of over AU$650m.
The Venture’s strategy was to develop a portfolio of Build to Rent developments via turnkey structure. Local’s differentiated focus on a turnkey strategy seeks to achieve attractive returns with mitigated planning, financing and construction risks.
The Venture has invested in two Build to Rent assets under development in Melbourne – a 406 unit project in South Melbourne and a 425 unit project in Box Hill which was acquired from Golden Age Group last year. Both schemes include a minimum of 10% commitment to impact housing.
Dan McLennan, Local Co-CEO and Founder said traditional residential developers are increasingly looking for alternatives to deliver their projects in the faltering residential pre-sale market.
“Local seeks to partner with developers to unlock their sites via Build to Rent, providing them with a fixed take-out price on completion, while leveraging Local’s design, development and property management expertise at each stage of the process.
“For our investors, this means we are taking on reduced development risk and delivering a bespoke Build to Rent project within two years versus three to four years in a traditional development model. The model we’re pursuing is suited to current economic conditions as our competitors have struggled against economic headwinds.”
Dan McLennan, Co-CEO and Founder, Local
Local believe market conditions remain highly attractive for the Australian Build to Rent sector, with record high migration levels and ongoing low supply levels expected to continue to drive outsized rental growth.
With a significant pipeline of turnkey opportunities across Melbourne, Sydney and Brisbane, Local intends to continue to work with its capital partners to access these opportunities.
“It will be another big year as we see the market window being now for investors to tap these turnkey opportunities, and are in due diligence with investors on seed assets for a successor venture. In addition, we are exploring opportunities to deliver affordable housing, where we believe there is a significant opportunity to deliver tangible social benefits without government subsidies.”
Matt Berg, Co-CEO and Founder, Local
The close of the Local: Residential Venture brings Local’s total assets under management to over AU$1.1bn, with over 1,300 apartments including its initial 477-unit project in Kensington, Melbourne, which topped out late last year and is due to complete this year.
Established in 2021 by Dan McLennan and Matt Berg in conjunction with a fund managed by Macquarie Asset Management Real Estate, Local has grown to become one of the largest specialist Build to Rent platforms in Australia.
Local’s CEOs have played an active role in over half of the structured Build to Rent deals in Australia, while at Local or in prior roles and have been working in the sector for 10 years.
