Australian superannuation fund First State Super and developer Lendlease are teaming up to acquire $2 billion in US multifamily properties, the groups said Wednesday.
Each partner has committed $500 million of equity for the multifamily venture – their first outside of Australia – and will match the equity with an equal amount of debt.
First State Super will use the US venture to learn more about development, Damien Webb, the fund’s head of fixed income and real assets, told PERE. “We believe the United States is the most advanced and deepest market for this sector and that First State Super would learn valuable insights from developing assets in the gateway cities of North America that would have application to other markets,” he said. “We continue to look at opportunities in the multifamily sector and other sectors in the US and elsewhere that are underpinned by strong long-term tailwinds like demographics, healthcare and education spending and technological innovation.”
The new multifamily partnership with Lendlease includes two seed assets that the developer is completing: Chicago’s Southbank and Boston’s Clippership Wharf, which are together valued at $400 million, the firm said. The former property will be ready to occupy later this year, while the latter starts leasing early next year. Lendlease also has a pipeline of 5,000 US units that will be finished in the next decade.
The Lendlease-First State Super venture will invest in Boston, New York, Chicago, Los Angeles and San Francisco, with a develop-to-core focus.
“Once assets stabilize, we’ll bring in investors to gain access to a geographically diverse portfolio,” Ben Byrne, Lendlease’s head of North American investments, told PERE. “The US gateway cities have attractive long-term fundamentals and an ongoing need for multifamily housing. They’re markets where Lendlease has had a strong presence for years, and we’re continuing to grow in those markets.”
First State Super began investing with Sydney-based Lendlease a decade ago, committing to the firm’s flagship core retail and office funds, Webb said. The superannuation fund then worked with Lendlease on Australian co-investments, including the Two Melbourne Quarter office tower and Sydney developments Barangaroo and Darling Square. The fund has also invested in US industrial real estate with Fort Worth, Texas-based Hillwood Properties for the past few years.
First State Super manages A$6 billion ($4.4 billion; €3.8 billion) in property – 6.5 percent of its total portfolio, Webb said.