US-based Hines—the second largest global build-to-rent player—is expanding its investment horizons in Australia with some northern exposure in the emerging asset class.
It is understood the real estate giant has quietly put its foot on two assets in Queensland.
According to industry sources, a conditional deal has been inked with homegrown Brisbane-based build-to-rent developer and operator Arklife.
Last year, Arklife put its $800-million portfolio on the block to secure seed capital for its next growth phase to roll out its model around the country.
Its portfolio to date comprises three assets, including the operational 89-apartment Arklife Robertson Lane in the James Street precinct of inner-city Brisbane’s Fortitude Valley
The two other assets—at Cordelia Street, South Brisbane, and Constance Street, Fortitude Valley—are still under development and will accommodate a combined 681 apartments.
Arklife Cordelia is due for completion in February while works on Arklife Constance are under way after it was granted council approval in September last year.
It is yet to be confirmed which two assets Hines has under contract, with both parties remaining tightlipped about the pending transaction.
Arklife declined to comment when contacted by The Urban Developer and Hines did not provide any response specifically relating to the deal.
However, the Houston-based company has made no secret of its intentions to ramp up its exposure to Australia’s burgeoning build-to-rent sector, which it has described as “one of the most exciting growth opportunities in the region”.
In partnership with Canadian pension fund Cadillac Fairview, it has a mandate to acquire and develop up to $1.5 billion of assets in Australia and New Zealand.
“We’re a large player in the US and Europe, and so we see no reason we can’t be a large player here,” Hines managing director and head of living Australia Sam Bisla told The Urban Developer in May last year.
“We have ambitions to be in every capital city in Australia and across the pond in New Zealand as well. So, we’re in expansion mode for sure.”
Within a year of its push into the fledgling Australian asset class it had already acquired three build-to-rent sites across Melbourne with the potential for about 900 apartments.
The assets included a 2874sq m site at 15-33 and 35-37 Bank Street at South Melbourne it purchased for $40 million to develop 400 build-to-rent units; a 3068sq m site at 36-58 Macaulay Road, North Melbourne, acquired for $30 million with an existing approval for 220 apartments, and a 4247sq m site at 10 Ballarat Street, Brunswick, it paid $16.5 million for with plans for a 250-unit project.
Hines owns and operates $140 billion of assets globally across a diversified property portfolio. In the build-to-rent investment stakes, it is second only to another US-based heavyweight, Greystar.
The company cites that its is attracted by the sector’s strong underlying demand drivers in Australia—including a tight rental market, public sector support and a rebound in overseas migration.
About the same time Arklife was launching its bid last year to partner with an institutional investor to support the scaling of its model nationally, Hines Asia Pacific chief executive Ray Lawler was spruiking the company was “actively looking for build-to-rent opportunities in Sydney and Brisbane”.
Arklife was founded in 2018 by former Macquarie Bank and Grocon executive Scott Ponton with the backing of ADCO, one of Australia’s largest builder-developers, and other investors.
At the vanguard of the build-to-rent sector in Australia, it was among only a handful of early movers. The core markets of Sydney and Melbourne are in its immediate focus as well as additional projects in Brisbane.
