Scape enters JV to deliver 10,000 build-to-rent apartments

The principals of the country's largest purpose-built student accommodation owner-operator Scape Australia have formed a partnership with Dutch investors APG Asset Management and Bouwinvest to capitalise on the fast-growing build-to-rent (BTR) sector.

The joint venture (JV) is still subject to regulatory approval, but if it goes ahead it has the potential to accept other institutional investors through a further equity raise, with an initial target business plan to deliver a minimum of 10,000 rent-to-live apartments in urban, transport-oriented areas by 2030.

The news comes amidst a flurry of activity in the industry with major BTR announcements revealed over the past two weeks from GURNER and Qualitas, City Developments Limited (CDL), Mirvac (ASX: MGR), Brookfield, and Cedar Pacific.

Against the backdrop of Australia's current housing crisis with very low vacancy levels, the developers view BTR as one of the "most exciting growth opportunities" in the Asia-Pacific region, and plan to create more affordable options for renters as a proportion of income.

Scape claims the timing coincides well with recent announcements by the Australian Federal government to introduce significant incentives to encourage investment in the sector, such as halving the withholding tax rate imposed on foreign investors in managed investment trusts to 15 per cent from July 1st 2024.

The JV will firstly develop a portfolio of multi-family assets focused on Australian capital cities with an initial focus on Sydney, Melbourne and Brisbane.

Stephen Gaitanos and Craig Carracher founded Scape Australia in 2014 with the same group of initial investors, and have since developed the business to manage more than 33 operational assets (16,300 apartments) with 12 purpose-built student housing and urban living assets under development, representing an additional 10,000 units. 

Scape currently has 700 staff and has acquired 22 major development sites since 2015.

“We are excited to have high calibre global investors APG and Bouwinvest partner with us again in the BTR sector, for our Rent-to-Live JV, following the successful journey we have been on for purpose built student housing over the past 10 years," Gaitanos said.

"This comes at a very exciting time with our current portfolio at full occupancy and a clear need for more well designed and located rental accommodation in Australia.

"We look forward to continuing to grow this new venture and development pipeline on our pathway as Australia’s largest end-to-end specialist residential rental and operating accommodation platform."

Carracher said the ambition was to "democratise" the rental market by leveraging operational scale and delivering inspired intelligent design experiences at value.

"As the leading local operator in the residential for rent sector, we have a clear and scaleable value proposition for multi-family in Australia and are proud to partner with APG and Bouwinvest – both global leading investors in the sector, for our Rent-to-Live JV in Australia," he said.

"Built on decades of developing and creating living design experiences, our Rent-to-Live model leverages efficiencies of scale and a proven track record of successful place-making and built environments purpose built for the leasing consumer."

APG's head of Asia Pacific real estate Graeme Torre said the rented residential sector was an important part of the group's global portfolio it manages for its 4.8 million pension fund clients.

"It is fully aligned with one of the building blocks of our real estate strategy – urbanisation, where amongst other things, we look to address important issues such as housing affordability," Torre said.

"Professionally managed rented residential buildings are also one of the few ways to monitor and manage energy usage in the residential sector on a large scale.

"We have had a very successful partnership with the Scape team who have proven themselves to be capable not only of developing first class residential assets but also highly capable of managing through adversity."

Bouwinvest director for Asia-Pacific investments Robert Koot said the JV would contribute to his company's objective of achieving a long-term solid return in a sustainable and responsible manner.

"We have extensive expertise in the affordable and sustainable housing segment in the Netherlands, US, Germany, Japan and many other countries around the world," Koot said.

"Via this new joint venture we are now broadening the exposure of our client and further diversify their allocation in Australia. Scape and APG are well-known to us and are excellent partners to enter this market."

"Our BTR strategy is looking to capitalise on the structural mismatch between demand and supply of good-quality rental accommodation in the Australian market. This joint venture is addressing the need for professionally managed rental product in well-connected locations for tenants demanding flexibility and security of tenure," added Bouwinvest's Sydney-based portfolio manager Jorrit Sennema.