Mirvac announces $1.8bn build-to-rent fund

Fund includes government backing

Mirvac announces $1.8bn build-to-rent fund

Listed property developer Mirvac has solidified its position in the rapidly expanding build-to-rent sector by announcing a $1.8 billion fund that will fuel its upcoming projects across the country.

While numerous major local developers and international fund managers have also entered the field, Mirvac was the first Australian listed group to venture into this area and aims to deliver 5,000 units, The Australian reported.

Although concerns have been raised about the potential consequences of a crowded market, governments are increasingly turning to build-to-rent as traditional apartment construction slows due to rising interest rates and stricter borrowing conditions.

Mirvac has secured cornerstone investments for its fund from prominent institutions, including the federal government's Clean Energy Finance Corporation, as well as international backers such as Japanese heavyweight Mitsubishi, according to The Australian. This move underscores the growth potential of this emerging asset class at a time when traditional apartment development is significantly lagging behind.

Mirvac will retain a 44% interest in the venture, which encompasses its operational build-to-rent assets such as LIV Indigo in Sydney and the recently completed LIV Munro in Melbourne, in addition to its build-to-rent pipeline assets including LIV Anura in Brisbane, and LIV Aston and LIV Albert Fields in Melbourne.

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Mirvac will provide investment management, property management, development management, and construction services for the venture, The Australian reported.

“We are thrilled to have established a new Build-to-Rent Venture with high-quality capital partners. Our ability to attract capital partners of this calibre is a great endorsement of the product we deliver and reinforces our reputation as a trusted partner,” Mirvac chief executive Campbell Hanan told the publication.

Hanan noted that Mirvac is Australia's first large-scale owner and operator of build-to-rent assets, with approximately 2,200 secured lots in its pipeline and an anticipated end value of $1.8 billion. He said that the venture's establishment and capitalization align with Mirvac's vision of expanding its presence in the build-to-rent sector, growing its portfolio to a minimum of 5,000 apartments in the medium term, and playing a significant role in addressing Australia's housing and rental shortfall.

This deal marks Australia's largest build-to-rent transaction to date and reflects confidence in the sector, given that a substantial portion of the capital was sourced from overseas. Michael Di Russo, head of property at the Clean Energy Finance Corporation, highlighted the environmental benefits of the build-to-rent sector.

“The build-to-rent sector is an emerging asset class in Australia with the potential for significant growth, as well as considerable scope to make a meaningful impact on the decarbonisation of the broader residential property sector,” he told The Australian.

Each new development project by Mirvac aims for a minimum average of a 7.5-star NATHERS (Nationwide House Energy Rating Scheme) rating and net-zero carbon emissions in operations, The Australian reported.

Federal Energy Minister Chris Bowen emphasised the significance of this transition.

“The Albanese government wants all Australians to be able to save on energy, and save on bills, not just those who own their own home,” he told The Australian. “Improving energy efficiency in these apartments is crucial in cutting power bills over the long term for renters, and today’s announcement adds to the $1.7bn in energy saving upgrades for homes, businesses and communities in the budget.”

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