MaxCap Assembles $95m ‘Buy-to-Rent-to-Sell’ Apartment Portfolio

MaxCap has revealed a big move in its so-called “buy-to-rent-to-sell” strategy, assembling a $95-million portfolio of 125 recently completed apartments across four buildings.

The apartments, all in Melbourne, would be offered to rent “and, later in the cycle, for sale”, MaxCap head of direct investment Simon Hulett said.

The buildings from which the apartments have been acquired are Sapphire by the Gardens, 308 Exhibition Street; Premier Tower, 138 Spencer Street; St Boulevard, 601 St Kilda Road; and Australia 108, 70 Southbank Boulevard.

Hulett said that MaxCap had formed a partnership with Melbourne property services business and sales agency Colliers Residential Victoria to pick the apartments.

“Our ‘buy-to-rent-to-sell’ strategy … offers a low-risk strategy with diversification, income and liquidity that appeals to our investors—different to residual stock lending and different to build-to-rent investment,” Hulett said.

“We adopted a rigorous and highly selective approach in identifying these 125 one and two-bedroom units across four new buildings.

“We are bullish about the basic supply and demand fundamentals of the Melbourne residential market.

▲ Apartments in Sapphire by the Gardens (pictured) and Australia 108 (main image) are among those MaxCap has compiled for the strategy.

“Further, by eliminating construction risk and acquiring completed stock, we are able to enter the tightly held rental market immediately and are able to take immediate advantage of both income growth and capital growth.”

MaxCap executive director Brae Sokolski said Melbourne was experiencing a significant housing shortage. This is primarily because the supply of new projects was being hindered by rising costs and a decrease in pre-sale investors.

“Residential apartment completions for the city are forecast at 46 per cent below the five-year average for the next five years.

“When overlaid with vacancy rates of less than 1 per cent and forecast population growth and shrinking average household sizes driving increased demand over coming years, this is significantly concerning.”

Sokolski said he believed the ‘build-to-rent-sell’ approach could assist in solving some of Melbourne’s future supply requirements given demographic projections have the greater city heading for 6 million people by 2030 and surpassing Sydney in size.