APG and Bouwinvest partner with Scape Australia

Scape Australia partnered with Dutch investors APG Asset Management N.V. (‘APG’) and Bouwinvest to develop and acquire assets in Australia’s emerging build-to-rent (‘BTR’) sector.

The new joint venture, which is subject to regulatory approval, will focus on developing new urban, transport-oriented rent-to-live assets and operate under a new brand, to give capital partners access to branded, low-risk, resilient cash flow that has made multi-family a favoured asset class globally. The platform will leverage the significant operational scale and team that already manages Australia’s largest urban residential-for-rent portfolio.

The shortage of rental accommodation in Australia has resulted in consistently low vacancy levels (currently less than 1%) which makes BTR one of the most exciting growth opportunities in Asia-Pacific. The Rent-to-Live joint venture will create more affordable options for renters in Australia (as a proportion of income), giving them the opportunity to live in neighbourhoods they want to live at rents they can afford in locations of convenience and amenity. The apartments will also aim to be highly energy-efficient.

Timing of the push into BTR coincides well with the recent announcements by the Australian Federal government to introduce significant incentives to encourage investment in the sector, such as halving the withholding tax rate imposed on foreign investors in managed investment trusts to 15 per cent from July 1^st 2024.

The new partnership has the capacity to accept other institutional investors, for which a further equity raise will be undertaken. The initial target business plan is to deliver a minimum of 10,000 Rent-to-Live apartments by 2030.

The joint venture will focus on developing a portfolio of multi-family assets focused on Australian capital cities with an initial focus on Sydney, Melbourne and Brisbane. Australia’s multi-family sector is expected to mature over the medium to long term as the sector is rapidly adopted by occupiers and institutional owners alike. Lifestyle changes, rising home prices and demand for high quality, purpose-built homes with intelligent design and service-focused institutional operational managers will differentiate these assets from the existing rented housing stock. Australia’s strong urban population growth over the past 15 years is set to continue over the next decade which, in addition to a structural undersupply of apartments, strong rental demand and affordability constraints presents a compelling opportunity for the joint venture.

Stephen Gaitanos and Craig Carracher founded Scape Australia in 2014 with the same group of initial investors and are now the largest residential-for-rent owner and operator in Australia, managing more than 33 operational assets (16,300 apartments) with 12 purpose-built student housing and urban living assets under development (an additional 10,000 apartments). The group is a fully integrated, end-to-end specialist residential accommodation platform with over 700 staff and has acquired 22 major development sites since 2015. The platform’s scale is unmatched in Australia’s residential living sector and allows for superior investment in systems, technology, safety, security and the entire rental experience. 

APG Head of Asia Pacific Real Estate, Graeme Torre, said: “The rented residential sector is an important constituent of the global portfolio we manage for our pension fund clients. It is fully aligned with one of the building blocks of our real estate strategy – urbanisation, where amongst other things, we look to address important issues such as housing affordability. Professionally managed rented residential buildings are also one of the few ways to monitor and manage energy usage in the residential sector on a large scale. We have had a very successful partnership with the Scape team who have proven themselves to be capable not only of developing first class residential assets but also highly capable of managing through adversity”.

Robert Koot, Director Asia-Pacific Investments at Bouwinvest, said: “This investment contributes to Bouwinvest’s objective of achieving a long-term solid return in a sustainable and responsible manner. We have extensive expertise in the affordable and sustainable housing segment in the Netherlands, US, Germany, Japan and many other countries around the world. Via this new joint venture we are now broadening the exposure of our client and further diversify their allocation in Australia. Scape and APG are well-known to us and are excellent partners to enter this market.”

Jorrit Sennema, Portfolio Manager based in Sydney, adds: “Our BTR strategy is looking to capitalise on the structural mismatch between demand and supply of good-quality rental accommodation in the Australian market. This joint venture is addressing the need for professionally managed rental product in well-connected locations for tenants demanding flexibility and security of tenure”.

Stephen Gaitanos said: “We are excited to have high calibre global investors APG and Bouwinvest partner with us again in the BTR sector, for our Rent-to-Live JV, following the successful journey we have been on for purpose built student housing over the past 10 years. This comes at a very exciting time with our current portfolio at full occupancy and a clear need for more well designed and located rental accommodation in Australia. We look forward to continuing to grow this new venture and development pipeline on our pathway as Australia’s largest end-to-end specialist residential rental and operating accommodation platform.” “Through our vertically integrated platform we manage every aspect of the asset creation process and ongoing operations – a platform designed to ensure the communities we create and manage provide exceptional outcomes for both our residents and investors.”

Craig Carracher said: ’Our ambition is to democratise the rental market by leveraging our operational scale and delivering inspired intelligent design experiences at value like no other operator in the market. As the leading local operator in the residential for rent sector, we have a clear and scaleable value proposition for multi-family in Australia and are proud to partner with APG and Bouwinvest  – both global leading investors in the sector, for our Rent-to-Live JV in Australia.” “Built on decades of developing and creating living design experiences, our Rent-to-Live model leverages efficiencies of scale and a proven track record of successful place-making and built environments purpose built for the leasing consumer.”