Hotels group plans big move into build-to-rent
LOS ANGELES: A major funds manager and hotel developer is preparing for a foray into the boomer rental housing market.
Pro-invest Group is planning a big move into build-to-rent apartments as it looks to further diversify its business, which owns and manages one of the largest hotel portfolios in the country.
‘‘As a hospitality company that creates experiences and build brands, we believe that approach plays really well in the BTR space,’’ Jan Smits, deputy chairman and co-chief executive of Pro-invest said.
Founding partner and CEO Ron Barrott added that his team had taken the opportunity to look at the BTR space and see where it links in with its existing platform.
‘‘We’ve created efficiencies with over 6000 hotel rooms, which puts us in a unique position in Australia [for BTR].’’
An announcement on Pro-invest’s move into BTR is expected this year.
Housing shortages, rising rents and the promise of favourable changes to the tax regime covering investment in the asset class have heralded a rush of new players into BTR and a fresh round of big equity raising from the likes of student accommodation specialist Cedar Pacific, Scape Australia co-founders Craig Carracher and Stephen Gaitanos, and the Gurner Qualitas platform.
A new report by JLL found that 8914 BTR apartments were under construction nationally – a 65 per cent increase, year to date. Alongside this, nearly 7000 more apartments have been approved, while the total number of apartments proposed or in planning has jumped 78 per cent this year to 16,269, according to the report.
There were 4340 BTR units in operation nationally, JLL said.
Pro-invest’s looming move into BTR follows its first diversification play last year, when it secured approval for its first office project in Australia, a $1 billion skyscraper in North Sydney due to be completed by 2026.
Amid the challenges faced by the office sector and debate about its future, Mr Barrott said Pro-invest was still committed to the project at 100-102 Walker Street, but that construction was on hold.
‘‘We’ve still got a period to run on the lease on the existing building [on the site], so we are waiting for the market to settle,’’ Mr Barrott said. ‘‘There is still demand for office space in North Sydney, and we’re very confident about the location, being just two minutes from the new Metro station.’’
Mr Smits said Pro-invest’s core hotel business – which had expanded with the opening of its first Hotel Indigo in Melbourne this month – was performing strongly. ‘‘The hotel sector fundamentals are great and there are more tailwinds to come. We expect a bit more upside next year from increased air capacity and from higher overseas visitor numbers.’’