Cedar Pacific, Sumitomo Forestry Partner on $1.2bn Sustainable BtR Platform

Australian developer Cedar Pacific and Japanese company Sumitomo Forestry have inked a deal to jointly develop a $1.2-billion ESG-focused build-to-rent portfolio in Australia and New Zealand. 

Cedar Pacific’s 50 Quay Street build-to-rent tower in Brisbane will mark the partnership’s debut.

The 475-apartment tower, which is targeting a 5-Star Green Star rating, is part of the Queensland government’s build-to-rent pilot program and construction is already under way. 

Half of the apartments will be offered at below market, affordable rents under the pilot program. 

The JV has a pipeline of other projects in Melbourne, Canberra, Brisbane and Auckland. Details of the developments are yet to be revealed. 

Cedar Pacific chief executive Bernie Armstrong said the partnership would leverage their individual expertise in delivering sustainable communities and incorporate the use of cross-laminated timber.

“This partnership allows us to combine both companies’ development expertise with leading-edge sustainability practices, creating communities that are not only desirable places to live but also contribute positively to the environment and communities in which they are located,” Armstrong said.

▲ The build-to-rent tower at 50 North Quay will be the first asset in the joint venture, with further developments mooted for Australia and New Zealand.

Sumitomo Forestry Australia managing director Yasuhiro Odagane said the group was committed to expanding its sustainable development business globally and promoting the creation of more sustainable homes. 

“This partnership with Cedar Pacific represents a significant step forward,” Odagane said.  

Sumitomo Forestry has a diverse business portfolio that includes housing development, wood products manufacturing, and logistics. The partnership with Sumitomo Forestry follows significant Japanese investment into Australian real estate and development. 

In October last year The Urban Developer reported that Japan’s capital investment volume in Australia for 2023 was in excess of $2.5 billion [in October], 11 times its 10-year average, according to Colliers managing director of Asia Pacific markets Chris Pilgrim. 

Japanese real estate house Daibiru took a 50 per cent stake in Mirvac’s $630-million 7 Spencer Street office tower in May, 2023. 

Japan’s biggest homebuilder Daiwa House partnered with Lendlease on its $650-million, 797-apartment build-to-rent project at Melbourne Quarter. 

“Japanese pension funds are targeting Australia’s property market for its safe and sustained returns,” Colliers’ Chris Pilgrim says. 

He says Australia’s apartment sector, including build-to-rent and student accommodation, has accounted for 39 per cent of foreign investment in 2023. 

Savills Capital Advisors and Savills Australia and New Zealand advised Cedar Pacific on the capital raise. 

Co-head of Savills Capital Advisors Joe Guilfoyle said the favourable supply and demand dynamics provided investors with an attractive risk-adjusted return. 

“As a leading platform, with both build-to-rent and student accommodation expertise, we are delighted to have assisted Cedar Pacific in securing this first tranche of capital with a high quality institutional investor,” Guilfoyle said.