US developer Hines is going deeper into Asia Pacific’s build-to-rent sector through a partnership with Canadian pension manager Cadillac Fairview targeting A$1.5 billion ($960 million) worth of rental homes in Australia, according to a press release Wednesday.
The joint venture with the real estate arm of Ontario Teachers’ Pension Plan plans to develop, acquire and operate rental properties across the country starting with a seed pipeline of three apartment projects acquired from Hines. The starter set of developments is expected to deliver around 850 units and have a value of A$820 million when completed and stabilised.
“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 for 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.”
The deal with Cadillac Fairview, which is a cornerstone investor in the Hines Asia Property Partners investment vehicle, comes less than a year after Hines acquired the Butterfly on Prat Hotel in Hong Kong for conversion to rental apartments and 14 months after it acquired a Melbourne site for its first build-to-rent project in Asia Pacific.
Eyeing More BTR Sites
Hines’ Bisla described the projects to Mingtiandi as located in vibrant submarkets that are accessible via transport networks and benefit from connectivity to employment hubs, retail offerings and entertainment centres.
The biggest project in the joint venture’s pipeline is a 400-unit development spanning a pair of adjoining sites at 15-33 and 35-37 Bank Street in South Melbourne, which it acquired from mainland-backed developer Ousia Investments in May for a reported A$40 million.
The company picked up that project two kilometres (1.2 miles) from the city’s financial district just three months after its February acquisition of a site along along Macauley Road in northern Melbourne where it is building a 200-unit complex.
Hines paid around A$30 million to acquire that 3,068 square metre (33,024 square foot) plot from a group led by Singapore’s City Developments Ltd (CDL).
The third seed asset is a site farther north in Brunswick which Hines purchased in August 2021 as its first ever Aussie BTR project for a reported A$16.5 million. The Brunswick site measures 4,247 square metres and is expected to yield around 250 rental homes once completed.
The JV could add 5-6 more projects within two years and is now “close” to acquiring “a number of sites,” Bisla added, without disclosing further details.
Bisla expressed confidence that the venture could be scaled up and said they are now close to acquiring “a number of sites.”
“With the scale of the commitment, we see no reason why, in addition to the seed assets, we couldn’t secure another five to six sites over the next 18-24 months,” he added.
The partners did not disclose ownership details for the venture.
Hines’ partners from Canada describe the venture as a way to expand on one of the firm’s favoured themes across markets with an experienced partner.
“The residential sector is a key area of focus for Cadillac Fairview globally, and we are pleased to be investing in the sector in Australia alongside Hines,” said Karl Kreppner, senior vice president for APAC investments at Cadillac Fairview. “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.”
The latest tie-up marks the second major APAC partnership between the two investors, coming just 18 months after Cadillac Fairview took a $400 million cornerstone stake in Hines Asia Property Partners.
That open-ended, pan-Asia strategy has an initial investment capacity of $900 million and targets opportunities in logistics, office, living, retail and select niche sectors across the region, according to earlier statements.
Both the Ontario Teachers’ Pension Plan and Hines have been busy expanding their Asia Pacific presences this year, with Cadillac Fairview’s parent organisation have announced plans last month to potentially double its Singapore-based team.
Hines, which had global assets under management of $92.3 billion as of 30 June opened its first office in Vietnam last month.
That Ho Chi Minh City debut came after the US firm made its initial investment in Singapore in February with the S$93.8 million (then $69 million) purchase of an industrial building in the Bukit Batok area through a JV with German fund manager DWS Group.