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Private Equity Eyes Ingenia Communities in Potential A$2.1B Move

Author

Noah Casaclang
March 15, 2024

Happy Friday! It's been a busy week in Aussie Real Estate.

Amidst the rush of trying to snag those last-minute Fred Again tickets and applying for graduate roles, we know staying up to date can be challenging. That’s why we’ve done our best to summarise it all (so you don’t have to!)

Lets dive in.

Story of the Week

🤝 Private Equity Eyes Ingenia Communities in Potential A$2.1B Deal

  • US Private Equity firm Warburg Pincus is exploring the acquisition of Ingenia Communities (valued at c. A$2.1B). Sources report that Warburg Pincus went as far as engaging Jefferies and Corrs as advisors.

  • Ingenia holds a portfolio of 37 holiday parks in NSW, VIC and QLD. The entire portfolio has 102 sites and is worth A$2.4B. Notably, the land lease communities sector enjoys an impressive 99% occupancy rate and annual rental increases averaging 9%.

  • David Di Pilla’s HMC Capital said that there was “significant” embedded value in Ingenia that had not been “reflected in the current share price.” HMC Capital holds a 7% stake in Ingenia.

  • Since November, Ingenia’s share price has risen by c. 25%. (AFR)

Capital Markets

📉 Unlisted Property Fund Investors Experience 12.7% Loss

  • Investors in unlisted property funds faced a 12.7% loss in 2023, primarily due to office asset turmoil, with values plummeting by 15.8%. Analysts predict a continued decline, especially for secondary office assets, with anticipated recovery taking 12-18 months. (AFR)

🏡 Australian Residential Home Values Soar to A$10.4T

  • Fresh data from the ABS shows residential home values in Australia surged to A$10,397B in the December quarter of 2023, up A$624B from the previous year, following a steady recovery from the pandemic-induced dip in September 2022. NSW leads with the highest mean price at A$1,184,500, followed by the ACT and VIC. (The Urban Developer)

👔 Blackstone's BREIT Lifts Investor Withdrawal Constraints

  • Blackstone's A$92bn real estate trust, BREIT, has lifted constraints on investor withdrawals for the month, indicating reduced pressure for cash. February withdrawals decreased by 26% from the previous month, fulfilling all requests and reflecting improved investor sentiment amid clearer property valuations. (AFR)

🏬 JLL Report Shows 89% Growth in BTR Project Pipeline

  • The build-to-rent sector experienced a significant surge in 2023, with the project pipeline growing by 89%, totaling 38,721 apartments at various development stages, per JLL's Build-to-Rent Australia: Q4 2023 report.

  • Despite challenges like construction costs and higher bond yields, investor interest remains high due to low rental vacancy rates and increasing demand for quality, long-term rentals. (The Urban Developer)

📦 Australia's Industrial Sector Nears A$300B in Value

  • The value of Australia's industrial property market has surged to nearly A$300B, (c. 34% of the Australian commercial real estate investment market), closely rivaling the office sector's worth for the first time, according to CBRE.

  • Global fund managers expect industrial property to surpass A$400B in value over the next decade, outpacing office and retail sectors. Warehouse rents have skyrocketed by 45% since 2021, largely due to ecommerce. (AFR)

The Aussie Housing Crisis

😢 Australia's Rental Affordability Hits 17-Year Low

  • Australia's rental affordability has plummeted to its lowest level in 17 years, with only 39% of rental properties considered affordable for typical-income households.

  • Renters in NSW, TAS, and QLD face the toughest conditions, while households at the 20th income percentile struggle to afford any rental properties. (The Urban Developer)

🫱🏼‍🫲🏾 Albanese Government announces $4B Indigenous Housing plan

  • Albanese's government has announced a A$4B plan to construct up to 2700 homes for Indigenous Australians in the Northern Territory over the next decade.

  • The initiative aims to halve overcrowding in the region, with a focus on remote communities. (The Urban Developer)

Deals and Projects

 📊 Takeovers

  • Warburg Pincus is rumoured to be looking at acquiring Ingenia Communities. HMC Capital, which holds a significant stake in the company, sees “significant” embedded value in Ingenia, which holds a portfolio valued at A$2.4 billion. (AFR)

  • Blackstone is reportedly enlisting Morgan Stanley and another investment bank to explore acquiring Airtrunk, a $5 billion company known for its hyperscale data centers across the Asia-Pacific. The sale process is led by Goldman Sachs and Macquarie Capital. (The Australian)

🛍️ Retail

  • Revelop has acquired Stockland’s Balgowlah, a prime Sydney shopping center, for an undisclosed sum. The site is valued at over $850 million. (The Urban Developer)

  • WA-based fund manager Westbridge has acquired Charter Hall Long WALE REIT's Redbank Plains Retail Centre in Ipswich for $23 million, marking the final asset for its Diversified Fund No. 4. (Australian Property Journal)

  • Developer Cadre has purchased a gateway Northern Rivers site in South Grafton for A$6.3M to be developed into a $70 million large format retail project. (Real Estate Source)

🛏️ Hotels

  • Singapore Exchange-listed Hiap Hoe has completed its A$40M purchase of the Great Eastern Motor Lodge in inner Perth, catering to fly-in fly-out workers in WA’s mining sector. The hotel has 198 keys on an 11,892 sqm freehold site with 180 parking spaces. (Australian Property Journal)

🏭 Industrial

  • UniSuper and ISPT have jointly acquired Burra Park, a 280ha logistics development site near the new Western Sydney International Airport, in an A$850M off-market deal. The partners plan to develop a 400,000sqm prime industrial estate with a completion value of A$3.9B. (The Urban Developer)

  • CapitaLand Ascendas REIT Management has sold three Brisbane industrial investments to AsheMorgan for A$73M. (Real Estate Source)

  • Global Medical Solutions has realised a 148% profit by selling an industrial property in Western Sydney for $45 million. (Real Estate Source)

 🌇 Alternatives

  • Singapore-based self-storage giant StorHub, which operates nearly 500 self-storage facilities throughout Asia, has raised A$460M in fresh equity to embark on a strategic expansion into the Australian self-storage market. (AFR)

  • Iglu has received approval for a new 18-storey tower in Sydney's south-east suburbs (near UNSW), set to accommodate 300 student beds. Construction is slated to begin within the next four months. (The Urban Developer)

  • Oxanda Education has acquired Double Bay's Roma Arcade for approximately A$21M, marking a net passing yield of c. 2.4% and offering development potential of up to six storeys. (Real Estate Source)

REIT Report

📈 ASX Update

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Did we miss something? Let us know - we might’ve covered it in our last Week in Review.

Enjoy your day! 💙

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