Ontario Teachers’ Pension Plan and Hines have acquired a 265-unit build-to-rent asset at 13-17 Cordelia Street in South Brisbane in South Brisbane (pictured), due for completion next year, along with an existing 89-unit apartment building in at 28 Robertson Street in Fortitude Valley in a $350 million deal. Photo:

Ontario Teachers, Hines buy two BTR projects in Brisbane for $350m

Michael Bleby|23 hours ago

The Ontario Teachers’ Pension Plan board and investment manager Hines have extended their exposure to Australia’s growing build-to-rent sector with the acquisition of two Brisbane assets in a deal worth $350 million.

The $256 billion Canadian pension fund and the US-based real estate investment manager have acquired an existing 89-unit building in Fortitude Valley and an under-construction 265-unit building in South Brisbane from privately owned Adco Group.

Ontario Teachers’ Pension Plan and Hines have acquired two build-to-rent project in Brisbane for $350 million.

“These assets provide us with a strategic entry point into Brisbane,” said Jun Ando, Ontario Teachers’ Pension Plan head of Asia-Pacific real estate, which invested in the assets through its Cadillac Fairview real estate arm.

“With the Australian population expected to see continued growth and consumer preferences in the country moving more towards the rental sector, we see strong, long-term potential in the Australian multifamily market.”

While high borrowing and materials costs and policy uncertainty have challenged the viability of new build-to-rent projects and slowed development – construction of new projects fell 19 per cent in the year to June – investor interest remains strong and consolidation is underway in the nascent housing type.

But the Canadian investor and Hines also face competition from local developers and investors such as local leader Mirvac and Charter Hall, which has yet to provide details of the portfolio it is developing.

“We’ll continue to prosecute the evolution of build to rent on our existing assets,” Charter Hall chief executive David Harrison told the Financial Review Property Summit last month, declining to provide further details.

“There are some opportunities that we’re creating that will [produce] build to rent.”

The 89-unit asset at 28 Robertson Street in Fortitude Valley has been operational since 2021. It uses renewable energy, recycles stormwater, and has high-performance acoustic glazing and low-energy LED lighting.

The building at 13-17 Cordelia Street in South Brisbane is due to reach practical completion in the first quarter of next year. It targets a 5-star Green Star rating and a 7.0 Energy Performance Rating under the Nationwide House Energy Rating Scheme and will have a gym, rooftop pool, residents’ lounge, co-working space, private dining room and sky garden.

“These acquisitions reflect our continued focus on actively pursuing build-to-rent opportunities in Brisbane, as well as in other key Australian cities with strong fundamentals,” said David Warneford, Hines’ country head of Australia and New Zealand.

“Hines sees tremendous potential in Australian BTR for both investors and residents. It’s poised to offer stable cash flow and income growth while helping to meet the demand for quality rental housing in the country.”

Arklife, a BTR platform co-owned by Adco, a builder and developer, will continue to manage the properties and Hines will provide asset management services.

“This transaction marks another vote of confidence in the Australian BTR market,” said CBRE agent Stuart McCann, who with colleague Andrew Purdon advised Adco on the sale of the portfolio.

“It highlights the growing confidence amongst global investors to deploy large equity tickets back into the real estate markets as interest rates look to compress and markets benefit from very strong rental growth dynamics as supply remains a challenge.”