The CEFC today announced a $50 million cornerstone investment as part of a first close in Mirvac’s new Australian Build-to-Rent Club (ABTRC), Mirvac’s first institutional build-to-rent investment platform in Australia.
Mirvac has identified its new 258-apartment building, Indigo, at its Pavilions project in Sydney’s Olympic Park, as the ABTRC seed asset. The CEFC investment will further enhance the project design across the one, two and three-bedroom apartments, using clean energy and energy efficiency technologies with the potential to cut carbon emissions by as much as 40 per cent.
CEFC CEO Ian Learmonth said: “This investment is about giving tenants the same access to clean energy technologies as home owners. It’s an immediate way to lower tenant energy costs as well as tackle greenhouse gas emissions in Australia’s rental housing portfolio.
“With almost one third of Australians now in the long-term residential rental market, it’s critical that developers and owners incorporate innovative sustainable design measures from the early planning stage. It’s about delivering energy efficient buildings that have long-term environmental benefits.
“We’re pleased to work with Mirvac to demonstrate how this can be achieved across this major new investment platform. We see this as a win for tenants, a win for Mirvac, a win for ABTRC investors and a win for the environment. We look forward to seeing this approach to sustainability extended across other residential developments.”
Build-to-rent or multi-family residential developments are well established in the US and Europe, where institutional investors own entire residential developments, and offer the surety of long-term leases to individual residents. The sector is only just emerging in Australia, in response to high property prices and changing consumer preferences.
Mirvac CEO and Managing Director Susan Lloyd-Hurwitz said the ABTRC was targeting a portfolio of five to six projects, mainly in Sydney and Melbourne.
“Renting has become a lifestyle choice for a much wider group of people who want to be closer to work and other lifestyle services and amenities. Build-to-rent makes good business sense for Mirvac, by providing us with a new asset class and a secure revenue stream. It also provides us with a new and growing customer base,” Ms Lloyd-Hurwitz said.
“Build-to-rent is an emerging sector where we can leverage our significant expertise in residential development and our asset management capabilities. It is very pleasing to have the CEFC on board with Mirvac in this exciting new venture.”
With Indigo, Mirvac is creating its first purpose-built build-to-rent asset in Australia. With a customer-first focus, Mirvac is committed to offering an exceptional rental experience at Indigo, with dedicated onsite leasing and management, high-quality amenities, a resident program, and leading sustainability features. Mirvac will act as the development, investment and property manager.
CEFC Property Sector lead Chris Wade said Australia’s emerging build-to-rent market provides the opportunity for developers and owners to develop properties with a whole of lifecycle approach. This can ensure clean energy and energy efficiency initiatives are incorporated from the planning stage, driving energy savings for owners and tenants.
“With the creation of the ABTRC, Mirvac is helping to set the standard for commercially achievable sustainability standards in residential apartments in the build-to-rent sector and beyond,” Mr Wade said.
“Through this investment, we’ll also be supporting Mirvac as it works with tenants in the ABTRC portfolio to help them understand and reduce their energy consumption.”
The Indigo build-to-rent project is scheduled for completion by mid-2021. The CEFC finance will support the inclusion of a range of clean energy initiatives, including on-site solar PV, energy display and monitoring systems, high-efficiency LED lighting, energy efficient appliances, glazing upgrades, car-park exhaust fans and passive solar design.
Together, the initiatives are expected to cut energy use and greenhouse gas emissions by up to 40 per cent compared with what would be achieved under the minimum standards of the National Construction Code.
The ABTRC investment is the CEFC’s third investment to support clean energy initiatives in the residential housing market.
The CEFC has committed $90 million in debt finance to the construction of three masterplanned communities in Brisbane and Sydney, also being developed by Mirvac. The new homes will feature solar-plus-battery systems, which are expected to reduce household energy costs by as much as 90 per cent.
In another Australian-first, the CEFC is working with not-for-profit community housing provider SGCH to develop 500 environmentally-friendly social and affordable homes in Sydney, with an investment commitment of up to $170 million.