The Week in Review

Friday, 1 December 2023

Author

Noah Casaclang
December 01, 2023

Good morning.

Commonwealth Bank is gearing up to challenge Macquarie in Australia’s $49bn rental payment services market. Poised for launch next year, CBA's Smart Real Estate Payments platform aims to revolutionize how rental transactions are handled, offering services to both tenants and landlords. The strategic move by CBA is designed to simplify the rental payment process, cutting down administrative time and easing the challenges of making, collecting, and reconciling payments. The platform is currently in pilot phase.

In the News

🌴 Trouble in Paradise?

Stockland is challenging the registered trademark of 'Lifestyle Communities' by rival developer Lifestyle Communities in the Federal Court. The dispute arises in the lucrative land lease sector, which provides affordable housing for over 55s.

While Lifestyle Communities holds a trademark for its name, Stockland argues that the terms 'lifestyle community' and 'lifestyle communities' are generic industry terms. The legal resolution is expected to be complex, considering the general usage of these terms in the industry. (AFR)

🌐 Lendlease Euro Strategy Shift

Lendlease is looking to pivot its European operations towards acquiring buildings that can be converted from office to residential. The aim is to grow Lendlease's managed funds portfolio into a $70 billion business by 2026. Acquired properties will be enhanced and retained within this portfolio, with an emphasis on sustainability and yield. (AFR)

🗣️ WeDontWork

Several property owners of WeWork's extensive portfolio are contesting the company's decision to close numerous sites as part of its bankruptcy proceedings. They contest the company's lease rejection timeline and rules, which they claim unfairly favor WeWork. (AFR)

Deals, Deals, Deals

🏘️ Residential

  • In a deal led by Harry Triguboff, Meriton intends to lodge plans for a A$1.3bn project in Brisbane featuring 799 build-to-sell and 254 serviced apartments. (The Urban Developer)

  • Twynam Group is venturing into build-to-rent with a proposed 30-storey development featuring 271 apartments and commercial space in Sydney's North Shore. (The Urban Developer)

🛍️ Retail

  • HomeCo has divested from its Box Hill shopping centre for A$67.5m in off-market deal. (Shopping Centre News)

  • IP Generation has sold Torquay Village for A$50m to a private Malaysian investor. (Shopping Centre News)

  • Over A$200m of pub deals have traded over the last two weeks, highlighting a trend of family-owned pub assets being acquired by larger players. (SMH)

 🏢 Office

  • Melbourne's Hotel Lindrum will be topped with a 21 floor, A$200 million commercial tower developed by Time & Place. (AFR)

  • The Queensland Investment Corporation has received approval for its prominent $750-million, 40-storey office tower project located in the Albert Street Cross River Rail precinct. (The Urban Developer)

🏭 Industrial

  • Japanese property giant Mitsubishi Estate is looking for an opportunity in the Industrial and Logistics space. (AFR)

 🚜 Agriculture

  • Multi-billionaire Hui Wing Mau has sold a A$300m portfolio of cattle stations to the Alberta Investment Management Corporation and New Agriculture. (The Australian)

 🐶 Alternatives

  • Ray White Capital has raised $40m to buy and renovate 12 luxury pet resorts. (The Australian)

Proptech

💡 Battle for rental payments

  • The Commonwealth Bank of Australia (CBA) is set to rival Macquarie in the burgeoning $49bn rental payment services market. (AFR)

  • The Global Proptech Market Size is projected to reach US$72.39bn by 2030, at a CAGR of 11.6%. (GlobeNewsWire)

  • Virtual reality Proptech startup EnvisionVR has raised US$2.58m. (Startup Daily)

  • After raising US$600m, the California based modular housing startup Veev is liquidating its assets. (AP News)

REIT Report

📈 ASX Update

🤑 Hotel REITs with Significant Dividend Increases

1. Ryman Hospitality Properties Inc. (NYSE:RHP)

Despite suspending its dividend in early 2020, Ryman has made a significant comeback. With dividend increases up to $1.00 per share in 2023, a 300% rise, and a current yield of 4.03%, Ryman shows potential for further growth in 2024.

2. RLJ Lodging Trust (NYSE:RLJ)

RLJ Lodging Trust, maintaining its dividend payout during the pandemic, has increased its dividend to $0.10 in 2023, marking a 100% rise. With a forward funds from operations (FFO) payout of only 24.8%, RLJ presents an attractive growth potential.

3. Summit Hotel Properties Inc. (NYSE:INN)

Post-suspension in 2020, Summit Hotel Properties has elevated its dividend to $0.06 per share in 2023, a 50% increase. Given its low payout ratio of 27.9%, there's room for further dividend growth, making it a compelling option for investors.

4. Host Hotels & Resorts Inc. (NYSE:HST)

Host Hotels, despite a challenging period, raised its dividend from $0.12 to $0.18 per share in 2023, a 50% increase. With a resilient strategy and a current yield of 4.09%, Host Hotels demonstrates a commitment to shareholder value.

Market Study

🏦 80% of lenders now prefer industrial assets

We read though the CBRE’s recent Australian Lender Sentiment Survey and the latest Australia Capital Trends Report by MSCI Real Assets. Our key takeaways are below.

As we know, Office sector investments have significantly declined, hitting a decade low due to uncertainties in asset valuation and a reduced number of transactions. Both reports highlight a marked decrease in lender and investor interest in office properties, with only 10% of respondents considering it a preferred asset class for new investment, a sharp fall from earlier in the year. This decline is further emphasized by the stringent loan conditions for office developments, requiring substantial pre-lease commitments, unlike the more favored industrial properties.

Simultaneously, there's a notable shift towards alternative real estate investments, such as industrial assets, build-to-rent opportunities, and sectors like renewable energy, data centers, and childcare facilities. Nearly 80% of lenders now prefer industrial assets, and interest in alternative asset types has doubled. The tourism and healthcare sectors are bright spots, with the former expecting around 20,000 new hotel beds and the latter experiencing a strong 13.6% annual growth over the past decade. These trends reflect a changing dynamic in Australia's commercial real estate market, highlighting a diversification in investment focus amidst shifting market conditions and investor confidence.

Town Square

💰 Jobs Board

💯 Young Achievers

  • Congratulations to the talented students at the University of New South Wales for winning the 2023 Cornell PropConnex International Case Competition in New York! The victory marks the first Australian team to win the competition. 💪

Congratulations to the UNSW team for winning the 2023 Cornell PropConnex…