US build-to-rent giant Sentinel turns focus to Melbourne
American build-to-rent giant Sentinel Real Estate Corporation has declared Sydney too expensive to undertake projects and has instead turned its focus to Melbourne, after securing a $200 million commitment from a European pension fund to grow its fledgling Australian business.
Sentinel, which has most of its $10 billion real estate portfolio in build-to-rent properties – or “multifamily” assets as they are known overseas – is pioneering one of the first such projects in Subiaco, Perth, with the first $75 million stage comprising 175 apartments due to take its first tenants in April next year.
The New York-based, privately-owned company has owned and managed more than146,000 build-to-rent units across America since being founded in 1969 and has identified Australia as a key market for international expansion.
Sentinel will target a 5 per cent net yield on cost for its Australia Multifamily Hold Trust, which will build, own and manage “Class-A rental apartment communities throughout Australia” and that now has $200 million to invest courtesy of the unnamed European pension fund.
“We like the positive fundamentals of Melbourne’s economic and demographic growth,” MrStreicker said.
More broadly, he said Australia had “fantastic demographics” for build-to-rent given its strong population growth and high proportion of renters among the key demographic of those aged 25 to 44.
“Among 25 to 35-year-old Australians, 55 per cent of them rent. That number would be surprising to many people,” he said.
While MrStreicker said Sentinel would be “pleased to find something in Sydney” that stacked up, it saw better opportunities in Perth, Melbourne, Brisbane and the Gold Coast.