iParters closed out our Caringbah build-to-rent deal on Friday last week. Congratulations to all investors who participated in the fully subscribed deal, we think this is a great trade.

So in taking this time to acknowledge the closure, we thought it would be worthwhile shining the spotlight on what the build-to-rent/affordable housing sector actually is.

What is affordable housing?

Affordable housing (build-to-rent) is housing that is appropriate for the needs of a range of very low to moderate income households and priced so that these households are also able to meet other basic living costs such as food, clothing, transport, medical care and education.

In order to make it affordable, housing rents vary, and are set either as a discount to the market rent or as a percentage of a household’s income.

Where rent is set as a discount of the market rent, the discount is usually between 20 and 25% compared to the market rent for a similar property in the area.

In NSW, a voluntary “density bonus” offers developers increased floor space in return for affordable rental housing. The affordable units must be rented to eligible households at 20 per cent market discount for a minimum of 10 years.

It is viewed as an attractive option for investors looking outside core real estate markets to capture value and diversify portfolios.

Major infrastructure investors UBS and Grocon pioneered the build-to-rent movement in Australia, backing the country’s first institutional-grade build-to-rent housing, including 1200 homes as part of the Parklands precinct on the former site of the Gold Coast Commonwealth Games.

Large residential investor Mirvac has followed with its Indigo development, a block of 258 apartments within its Pavilions project at Sydney Olympic Park.

iPartners Caringbah Build-to-Rent Investment

The deal offered our investors the opportunity to gain access to an institutional grade alternative investment asset class that has been on the radar of large investment banks and property firms. 

Investors will receive a 10%p.a yield, with the coupon paid monthly, and an expected 12-18 month maturity.

iPartners will co-invest up to $1.5m alongside the trust management team, who are all long term and experienced credit investors.

If you are an investor looking to get exposure to this growing asset class, or a developer or manager looking for funding, please don’t hesitate to get in contact with us at service@ipartners.com.au