The $150 billion Aware Super is planning to step up its exposure to the global build-to-rent (BTR) sector following a $900 million investment in leading UK built to rent company, Get Living.
In an interview with Investment Magazine, following the announcement of the deal last week, Aware’s deputy chief investment officer and head of international, Damien Webb, says this deal is the beginning of further investment in projects to be rolled out by Get Living in the UK as well as others around the world.
He said the initial $900 million was to buy a 22 per cent stake in the company and fund some of its existing development projects.
“We will put more capital into it as they acquire more sites and develop them,” he says.
Get Living was launched in 2013 to operate 1,500 homes in the former Olympic Village in Stratford in east London.
It has a $5.5 billion portfolio of some 4000 homes in London and Manchester with plans for another 6,500 in the near term in the UK cities such as Lewisham, Maidenhead, Leatherhead, Birmingham, Leeds and Glasgow.
The UK BTR sector is forecast to be worth more than $300 billion by 2032, with the number of BTR homes expected to quadruple to 380,000.
Attractive asset class
Aware likes the sector as an asset class in a stable sector with low portfolio risk and good cash flows.
“BTR is a type of investment which is really attractive to us,” he says.
“With Get Living, we have a direct investment in a well established developer, operator and owner of residential buildings in the UK with a large and growing development pipeline we can work with and support over the next 10, 15 and 20 years to grow the portfolio.”
“It also gives us additional global diversity.”
One of Australia’s largest super funds, Aware has announced plans to open its first international office – in London – by the end of the year to diversify its investment offshore. Webb will head up the office as the fund’s first offshore based executive.
The UK investment follows Aware’s first major investment in BTR in the US where it has been working with Australian property company Lend Lease since 2018.
The then First State Super and the developer signed a deal to set up a US$2 billion ($2.9 billion) residential partnership for rental housing in US gateway cities including Chicago, Boston and New York.
The fund’s experience in the US in BTR housing has helped it to develop its knowledge of the sector.
“Over the past five or six years, we have built up our knowledge of the sector and can export that experience to other countries. We are also learning about the sector in Australia,” he says.
Keen on affordable housing
Webb says Aware, which has more than a million members, was a market leader in the growing build to rent sector in Australia and the fund sees itself playing a critical role in the supply of affordable housing in Australia and overseas.
Aware’s members, many of whom were teachers, had said that being able to afford high quality housing near where they were working was one of their biggest single concerns.
The fund has committed $1.5 billion to expand its existing real estate portfolio in Australia, including 1,250 affordable housing units by 2025.
“We are the largest investor in affordable housing in Australia,” he says.
He says the fund was prepared to work with the Federal Government to help increase the supply of affordable housing in Australia.
“We have our own developments but we are very supportive of government initiatives in this area. We need more supply of quality housing.”
Aware launched Aware Real Estate in September 2022 with plans for it to hold up to $7 billion in assets within the next five years and to actively manage its Australian living, mixed use and industrial portfolio.
The UK deal brings Aware’s global property portfolio to around $10 billion and has about 40 per cent of this in its “living” sector which included affordable housing and retirement living accommodation.
According to Webb, BTR and affordable housing would continue to be a key area of investment as the fund plans to boost its assets to $250 billion by 2026.
He says the fund was expecting to double its property portfolio over the next few years as its total assets grew and its major investment focus for the rest of the year would be in private markets including property, infrastructure and private equity.
Private investments would be the main focus of its offshore investment expansion. The fund’s other offshore investments include stakes in Heathrow Airport, Forth Ports and Spanish built to rent operator, Vivenio.
“We still want to invest heavily in Australia and develop the supply of buildings in the country but with an expected $250 billion in assets under management, we need to have additional sources of investment and diversification.”