Going Dutch: Sentinel's $1.5b build-to-rent fund
US build-to-rent giant Sentinel Real Estate has won the backing of Dutch pension fund manager PGGM to create a $1.5 billion portfolio of build-to-rent dwellings in Australia, in one of the largest single commitments to the emerging sector yet.
While Sentinel has a portfolio of BTR projects built and under development in Australia, the commitment from the Dutch powerhouse will supercharge the US group’s roll-out in the local market. The first tranche of PGGM investment will generate more than $700 million in initial development potential for the venture.
“Their commitment to this venture is a clear vote of confidence in our build-to-rent platform and the future of the sector in Australia,” said Michael Streicker, Sentinel Real Estate Corporation president.
The partnership between PGGM and Sentinel’s Australian arm aims to develop a national portfolio of approximately 2,500 BTR units, with the first two sites for development already confirmed.
News of the Sentinel tie-up with PGGM comes amid debate this week over the role that local super funds could be playing in sponsoring the local build-to-rent sector.
While some super funds including Aware Super, Australian Retirement Trust and AustralianSuper are making inroads into the affordable end of the BTR sector, most of the running is being made by players such as ASX-listed Mirvac, Rich Lister Tim Gurner and Macquarie, along with foreign investors such as Greystar and Oxford Properties, an arm of Canadian pension fund OMERS.
Among them is Sentinel, one of the world’s major operators of BTR dwellings, known in the US as multi-family. Sentinel manages more than $13 billion of real estate assets, including over 26,000 rental apartments.
In Australia, Sentinel has more than 1,300 BTR units under various stages of development, including a Perth facility that opened three years ago and a project in Melbourne. So far, its efforts in the local market have been fund backed by British institutional investor Hermes Real Estate.
Adding momentum to Sentinel’s strategy is a looming shortfall in housing over the next decade as migration and population growth push demand well ahead of supply. That shortfall could hit 163,400 dwellings by 2032, according to modelling by the National Housing Finance and Investment Corporation.
Mr Streicker said BTR-style living has a significant role to play in the housing mix available in Australia.
“This is particularly important at a time when changes in the housing market and supply levels are front of mind for so many,” he said.
On its side, PGGM, which has partnered Sentinel in the US, is already a familiar player in the Australian market, backing fund managers such as Lendlease and Charter Hall.
“Although the (BTR) sector is still relatively small, we believe that it will grow over time and become an important part of the Australian housing market,” Jikke de Wit, PGGM’s senior director for private real estate, said.
