Australian residential real estate manager Alt Living has launched a new A$500m (€316m) build-to-rent (BTR) platform, seeded with two projects in inner-city Melbourne.
Alt Living is currently in discussion with global and domestic institutional investors, targeting to raise A$200m by first close for the new fund.
Chrystan Paul, the CEO of Alt Living, told IPE Real Assets that institutional investors, including super funds, were looking to alternative asset classes, especially BTR.
He said institutional investors had found that office was no longer “as safe” an investment as they thought it was before the pandemic.
“BTR has turned out to be a real surprise. It is a very resilient asset class,” he said. “Data from the US showed that the average monthly rent collection was 97-98% during COVID, and, even at its peak, the rate did not fall below 92%-93%.
“COVID stress-tested the asset class and, fortunately, it passed the test. Capital is now saying that from an asset-characteristic profile, BTR makes a lot of sense.
“What pension funds are saying to us is that if you have a BTR platform, you are able to get exposure to thousands of tenants and therefore to diversify your concentration risks when some other investment, like office or industrial, rely on just one or two major tenants.”
Paul said that, more importantly, pension funds had to meet their obligations every year – and sometimes quarterly.
Kevin Said, head of capital at Alt Living, said institutional interest in BTR was also underpinned by low-interest rates, rising residential property prices and demographic shifts towards renting.
“As a result, we are seeing investment mandates being formed by institutional capital, specifically for build-to-rent housing in Australia,” he said.
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