Gurner and Qualitas set the pace with $1.2bn build-to-rent raise

Gurner and Qualitas (L- R) Gurner founder and director, Tim Gurner, Qualitas global head of real estate and co-founder Mark Fischer and Qualitas head of origination Rohan Davis.

Melbourne luxury developer Gurner and property manager Qualitas’s ambitious raising to fund their new build-to-rent enterprise has closed oversubscribed to the tune of nearly $1.2bn.

The joint venture partners had originally sought to raise $1bn to fund the construction of thousands of build-to-rent apartments, but the international capital raise was oversubscribed by nearly $200m.

Gurner and Qualitas, which have both also invested in the project, said the $1.2bn would help fast track the construction of 1700 apartments and fund the acquisition of further build-to-rent assets with a focus on Sydney, Melbourne and Brisbane.

The objective is to create a $5bn portfolio of 5000 apartments over the next few years, putting them in the top echelon of the emerging sector.

The area is running hot. Investment bank Macquarie last week unveiled plans to pump $500m into a series of build-to-rent complexes around the country via a new joint venture run under the Local brand.

Offshore heavyweights Greystar, Oxford, Sentinel and Hines are all active, with local groups Mirvac and Home also developing, and Stockland exploring the area.

The first Gurner project to launch will be the recently announced $450m 385-unit development at 12 Hassall Street, Parramatta in Sydney’s west, which was purchased by the joint venture partners earlier this month.

The 2049sq m site will yield 61 levels and is expected to include 4000sq m of retail and commercial space, as well as a rooftop terrace.

“We have an ambitious plan for what we want to achieve in the build-to-rent space, and look forward to focusing on delivering a product that will provide a genuine point of difference to the sector,” said Tim Gurner, the founder of Gurner.

Despite the downturn in the apartment sector, due to a softening in demand for high-density living, Qualitas global head of real estate Mark Fischer said the build-to-rent sector was perfectly aligned to the company’s focus on assets generating defensive and resilient cash flows.

“We are seeing global institutional investors increasingly allocating capital to investment strategies supported by these themes,” Mr Fischer said.

Formed just over 12 months ago, the strategic GQ Build to Rent partnership, is the first time an Australian investment manager has partnered with an established design-focused local developer to enter the build-to-rent arena.

Mr Gurner said it was humbling to witness the overwhelming response to the capital raise.

“The capital markets for build-to-rent right now are extremely competitive, and being able to secure this funding against such competition to launch our platform is very exciting,” he said. “With the majority of the capital now allocated we will soon be commencing another round of capital raising in the coming months as we look to aggressively grow the size of the fund, and as we prepare to commence construction across various projects in the next 12 months.’’

Mr Gurner said the partners had an ambitious plan for what they wanted to achieve in the build-to-rent space, and looked forward to focusing on delivering a product that would provide a genuine point of difference to the sector.

“We will be delivering product reflective of our intrinsic focus – aspirational, market-leading luxury residences, in prime locations that foster sought-after lifestyles,” he said.

“Our buildings will be targeting residents who want the service and amenity of a five-star hotel, alongside the comfort and security of a luxury home.

“We are now heavily focused on the Sydney market in particular for further sites to build the portfolio. With market penetration across the eastern seaboard we can create the largest and most sought-after platform in Australia, which is certainly our ambition.

“Sydney is our main focus now given the very large portfolio of over $10bn we have in both Victoria and Queensland.”