This concludes the first tranche of funding for Cedar Pacific's Seeded BTR vehicle in the region. Savills Capital Advisors and Savills Australia and New Zealand advised on this transaction and are now in the process of completing the capital raise.

Established in 2015, Cedar Pacific has a strong track record of developing and managing purpose-built residential rental assets, primarily in the student accommodation (PBSA) sector. Cedar Pacific has developed and managed approximately AUS$2.5bn over 18 assets totalling more than 10,000 beds in Australia and New Zealand. The Company has an additional four assets in development.

The partnership with Sumitomo Forestry expects to develop a significant portfolio of BTR assets across Australia and New Zealand in the coming years, bringing together Cedar Pacific's development expertise in the region with Sumitomo Forestry's deep understanding of sustainable timber building solutions and commitment to ESG principles. The joint venture will focus on developing Build-to-Rent communities that are not only well-designed and amenity-rich but also built with a focus on environmental sustainability and social responsibility.

The first targeted project, 50 Quay Street in Brisbane, is part of the State of Queensland Treasury's affordable BTR pilot program. The project, which has begun construction with Hutchinson Builders, incorporates 475 apartments overlooking the Brisbane River and includes 50% of the apartments offered at below market, affordable rents. The development is being constructed to a 5-star Green Star rating and will operate as net carbon neutral from day one.

This project is expected to benefit from Federal Government of Australia's announcement of a reduction in the managed investment trust (MIT) withholding tax rate for newly constructed residential BTR projects (after 1 July 2024). While full details have yet to be released, the intention is for foreign investors in qualifying jurisdictions (such as Singapore, Canada, Japan, Netherlands, Germany, the UK and US) to be taxed at a reduced rate of withholding tax (from 30% to 15%) on 'fund payments' (broadly, a distribution of taxable income subject to certain adjustments) in relation to BTR projects in Australia.

Bernard Armstrong, CEO of Cedar Pacific, says:"This partnership allows us to combine both companies' development expertise with leading-edge sustainability practices, creating communities that are not only desirable places to live but also contribute positively to the environment and communities in which they are located. We are honoured to partner with Sumitomo Forestry to develop high-quality BTR communities in Australia and New Zealand."

Yasuhiro Odagane, Managing Director of Sumitomo Forestry Australia, says:"We are committed to expanding our sustainable development business globally, and this partnership with Cedar Pacific represents a significant step forward."

Joe Guilfoyle, Co-Head of Savills Capital Advisors, says:"'BTR continues to provide investors with attractive risk-adjusted returns, given the favourable supply / demand dynamics and resilient cash flows. As a leading platform, with both BTR and PBSA expertise, we are delighted to have assisted Cedar Pacific in securing this first tranche of capital."

Conal Newland, Head of Operational Capital Markets, Savills Australia and New Zealand, says:"With record low residential vacancies of sub-1% nationally in Australia, rents continuing to increase, and housebuilding falling, we see BTR playing an increasingly important role in plugging this housing gap. We are pleased to have assisted Cedar Pacific in this new partnership and look forward to seeing new sustainable homes delivered across under-supplied markets."

For further information, please visit: https://www.savills.co.uk/services/investment/operational-capital-markets.aspx

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Savills plc published this content on 05 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 April 2024 07:54:04 UTC.