Local: Residential closes inaugural A$650m managed venture

Local: Residential, the Melbourne-born build-to-rent apartment platform, is pleased to share that it has reached final close on its inaugural managed venture, the Local: Residential Turnkey Venture I, as covered by Michael Bleby in the Australian Financial Review.

The Venture, with capital committed by a large global pension fund, is now fully deployed with end value assets under management of over AU$650m. The Venture has invested in two assets under development in Melbourne – a 406 unit project in South Melbourne and a 425 unit project in Box Hill – both including a minimum 10% commitment to impact housing.

The close of the Venture brings Local’s total assets under management to over AU$1.1B, with over 1,300 apartments including its initial 477-unit project in Kensington, Melbourne completing this year.

The Venture’s strategy was to develop a portfolio of build-to-rent residential developments via turnkey structure. Local’s differentiated focus on a turnkey strategy seeks to achieve attractive returns with mitigated planning, financing and construction risks.      

Dan McLennan, Local Co-CEO and Founder said traditional residential developers are increasingly looking for alternatives to deliver their projects in the faltering residential pre-sale market.

“Local seeks to partner with developers to unlock their sites via build-to-rent, providing them with a fixed take-out price on completion, while leveraging Local’s design, development and property management expertise at each stage of the process.”

Local Kensington Build to Rent Apartment Hoarding

“For our investors, this means we are taking on reduced development risk and delivering a bespoke build-to-rent project within two years versus three to four years in a traditional development model. The model we’re pursuing is suited to current economic conditions as our competitors have struggled against economic headwinds.  

Local believe market conditions remain highly attractive for the Australian build-to-rent sector, with record high migration levels and ongoing low supply levels expected to continue to drive outsized rental growth. With a significant pipeline of turnkey opportunities across Melbourne, Sydney and Brisbane, Local intends to continue to work with its capital partners to access these opportunities.

Matt Berg, Local Co-CEO and Founder said “It will be another big year as we see the market window being now for investors to tap these turnkey opportunities, and are in due diligence with investors on seed assets for a successor venture. In addition, we are exploring opportunities to deliver affordable housing, where we believe there is a significant opportunity to deliver tangible social benefits without government subsidies.’’