Vellum Funds Management, part of financial corporation Vellum Group, and leading developer Urban Property Group (UPG) today launched The Places Build to Rent Fund(Places BTRF), a property fund focused on the new fast-growing property class, build-to-rent. The fund is the very first build-to-rent fund based in NSW.
The first stage for Places BTRF is a $132 million capital raising with $66 million already committed, and is now open to investors to participate in the remaining subscription. The fund will have subsequent opportunities for investment and with further stages the fund is expected to reach $1 billion in the next 5 years.
The fund gives institutional investors access to an Australian asset class that is set to grow significantly in the coming years, particularly in NSW where the state government halved land tax for such developments.
Places BTRF is targeting minimum 5% gross return for its investors. Focused on Sydney developments, the fund provides an opportunity for investors, including superannuation funds, to back property developments with a social purpose, as well as a healthy and stable return, with lowest possible risk.
The fund’s proof-of-concept is the Highland apartment building located in Penrith, the heart of Sydney’s fast-growing western corridor. Completed in 2019, the purpose built for rent property is fully tenanted (since early 2019) and features amenities such as a concierge service and assisted living spaces for NDIS recipients.
Vellum Managing Partner Binuo Erth, who has over 15 years’ experience in major M&A, capital raising and equity transactions in Asia and Australia, says the Places BTR is about a long-term vision for the company’s investments in the Sydney property market.
“The Places BTRF is about giving investors, including super funds, access to the rapidly growing build-to-rent market, while developing high-quality rental properties with affordable living spaces. Highland, our first completed purpose build-to-rent building is likely to serve as a model to the entire Australian build-to-rent sector in terms of community focused design and social responsibility.”
UPG’s excellent track record in Sydney with land ownership, property development, and construction was one of the most important factors for Vellum in choosing a suitable developer for its build-to-rent projects, according to Ms Erth. “UPG’s foresight, particularly at an early planning stage, and their design philosophy, led to the completion of what is a world class example of what the build-to-rent sector should be striving to achieve.”
Patrick Elias, CEO of UPG, said: “We are proud to be part of this fund and to be the developer behind one of the first, if not the first, purpose-designed build-to-rent development. UPG is backing the Places BTRF because it will encourage the growth of much needed build-to-rent developments in Australia. The NSW government should be applauded for putting in place policy mechanisms that support this kind of development. We are focused on high quality build-to-rent properties that deliver the flexible accommodation people increasingly desire. We are also committed to developing properties that provide affordable living or tailored solutions for people living with disability.”
The purpose of Places BTRF is to acquire and develop property in various areas of Sydney suitable for build-to-rent apartments. In addition to Highland, the investment management team have established a strong pipeline of projects, including a future project located in Sydney’s eastern suburb of Little Bay (Randwick City Council) and are keen to explore future opportunities working with local and state governments.
“Build-to-rent ensures a degree of affordable housing in well-located, accessible suburbs such as this project in Penrith, a major centre in Sydney’s fast-growing western corridor,” said Ms Erth.