Hines, Cadillac Fairview seal landmark BTR deal

The South Melbourne project is expected to contain c400 dwellings.

Hines and Cadillac Fairview, the real estate arm of the Ontario Teachers’ Pension Fund, have formed a partnership to acquire and develop up to $1.5 billion of Australian Build to Rent product.

About 220 units are earmarked for 36-58 Macaulay Road, North Melbourne.

Three projects will seed the alliance including 15-33 Bank Street, South Melbourne, which Hines acquired in May.

The other two properties are across town – on sites also purchased since last year, at 10 Ballarat St, Brunswick and 36-58 Macaulay Road, North Melbourne.

The announcement comes three months since Sentinel Real Estate, which like Hines is US-based, teamed with Dutch pension fund PGGM to develop and manage $1.5b of Australian BTR investments.

The Brunswick property was permit-ready for over 250 flats.

In February, Brisbane’s GreenFort partnered with Canada’s BentallGreenOak and Switzerland’s Partners Group – also to establish this type of asset.

Three other unions specifically for local BTR units have recently been struck too, between Singapore sovereign wealth fund GIC and Grocon, Gurner with Qualitas and Investa/Oxford of Canada.

Greystar (US) with Australian outfits, Local, the Lowy family, Make Ventures, Mirvac, Suleman and Time & Place are, amongst other developers, independently also investing in this space here.

Foreign market, foreign players

Build to Rent, at the scale it is coming, is new in Australia.

Melbourne’s inner city is leading a construction wave – and within that, South Melbourne and the Kensington/North Melbourne belt.

Blocks not yet zoned for any product through to established apartment complexes – including recently the Evo complex, at Parkville, are on the radar of the major players.

The Hines/Cadillac Fairview partnership will focus on all sub-markets close to transport, employment hubs, diverse retail and entertainment centres (story continues below).

“Hines and Cadillac Fairview have seen the attractive long-term defensive nature of the asset class through their international portfolios,” said Sam Bisla, managing director and head of Living, Australia at Hines.

“We have been strategically building a portfolio and are expecting to scale up the BTR portfolio in the short term, and the scale of the partnership shows a huge strategic commitment and belief in the opportunities which BTR presents,” he added.

World on radar

Hines has other partnerships to develop BTR units including with PGGM for Italian product.

“Hines has been investing in living assets across Asia for over 25 years with recent acquisitions including co-living assets in Hong Kong and residential assets in Japan, most recently through its diversified investment fund, Hines Asia Property Partners (HAPP),” Hines Asia chief executive officer, Chang Ling Ng, said following the Cadillac Fairview commitment.

“Both Hines and Cadillac Fairview recognise Australian BTR as one of the most exciting growth opportunities in Asia,” according to the executive.

Cadillac Fairview senior vice president, Investments Asia Pacific, Karl Kreppner, added BTR is an area of focus globally.

“This investment aligns with our strategic objective of expanding our investment portfolio in Asia by forming partnerships with best-in-class operators and developers in attractive asset classes such as residential, office and logistics,” he said.

“It also complements our global residential portfolio which includes large active pipelines across the US, Europe and Canada,” according to the executive.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.