TH Real Estate Eyes Debt Strategy and Build-to-Rent in Australia

Global real estate investment manager, TH Real Estate, has appointed a former CBRE Australia executive to head its debt operations as it seeks to become a major provider of commercial property debt in Australia.

Martin Priestley will oversee real estate debt investment for TH Real Estate and have responsibility for initially building a debt investment platform in Australia.

Priestley will be based in Sydney and joins TH from CBRE where he led the debt and structured finance team in the Asia-Pacific region.

The company will initially look to solidify its presence in providing core senior debt and has up to $1 billion from existing funds to make a play into investments in offices, industrial and retail assets.

The tightening of lending by banks to investors and property developers has seen opportunities for non-bank lenders like TH Real Estate to offer alternative finance options.

In its twice-yearly Financial Stability Review the RBA reported that the tightening of banks' lending standards for property loans is constraining some households and developers but, in doing so, making the balance sheets of both borrowers and lenders more resilient.

The restricted environment has prompted international interest with US investment bank Goldman Sachs lending $120 million to fund a Kokoda Property residential project in Brisbane’s Newstead last month.

TH Real Estate is also set to enter the build-to-rent sector which is in its infancy in Australia. The multifamily apartment model, more popular in the US and UK, sees the developer retain ownership of the building and lease out units on a long-term basis.

[Related reading: Mirvac Earmarks Site for Build-to-Rent in Australia]

The model is often underpinned by institutional investors including large superannuation funds. A CBRE report found that, if the market evolves, around $300 billion of residential assets could be held by the build-to-rent sector in Australia.

Established in Australia since April 2014, TH Real Estate has built a portfolio of Australian real estate assets of around A$1.04 billion. Globally it had around $103 billion in assets under management as at 30 June 2017.