[+] Assemble, Super Housing Partnerships to Merge in $15bn Play

Creating affordable build-to-rent projects is a hard nut to crack, but Assemble’s Kris Daff may have just done that. The innovative build-to-rent developer’s Assemble has inked a deal to merge with affordable housing investment manager Super Housing Partnerships, with AustralianSuper and HESTA acquiring a majority 80 per cent stake in the business. It was an 18-month courtship, but the marriage of the two entities is finally official following the engagement of many lawyers, accountants and consultants, Assemble managing director Kris Daff says. The merged business, which will continue to be called Assemble, has set some lofty goals with its new chief executive Carolyn Viney at the helm. It aims to reach $5 billion in assets in three to four years, and triple that in 10 years to create 17,000 new homes and a $15-billion portfolio. “We have built a big platform to enable other institutional investors with the opportunity to invest in residential developments at industrial scale,” Daff says. An appetising prospect for superannuation funds looking for scalable exposure to the stable long-term investment. ▲ Assemble managing director Kris Daff spoke with The Urban Developer founder Adam Di Marco at the Build-to-Rent summit recently in Melbourne. But with an eye on the horizon, Daff says the vertically integrated end-to-end housing investment model would change up its strategy to achieve those growth ambitions. Daff says while they are focused primarily on delivering their existing projects, the model would shift to a bigger partnership approach into the future. “We are looking to tap into partnerships with good developers, governments and land owners to leverage our own skills in development, operation and investment to deliver more housing supply,” Daff says. “It makes sense for us and our growth strategy, rather than setting up our own acquisitions across other markets … we can focus on origination, delivery and management of assets.” Daff says Assemble will also look to deliver more affordable build-to-sell stock to market in addition to its build-to-rent, and innovative build-to-rent-to-own products, which put the developer well ahead of the pack. Assemble will continue to acquire sites, but Daff says it will make up between 20 and 30 per cent of the pipeline, whereas 75 per cent of projects will come from partnerships, similar to its collaboration on a 219-apartment build-to-rent project with the WA Government in the outskirts of Perth. While Viney and Daff would not be drawn on what their mandated investment return is for institutional investment partners, Daff did say it would vary from project to project based on location and other factors. ▲ Carolyn Viney speaking at Urbanity in 2023 on the Gold Coast. The wraps came off Australia’s first institutionally owned build-to-rent-to-own asset about five weeks ago, and there are three more in the pipeline. AustralianSuper was the cornerstone investor in the 199-apartment project at 15 Thompson Street, Kensington. “We’re going to continue to be at the pointy end of things … and we will continue to capitalise on our first mover advantage. It does take a long time to develop at scale in the lower income housing market and we do think we have a significant lead in this space,” Daff says. Daff says they model their business case for build-to-rent assets on a 10-year return and then a long-term hold return for investor partners, whereas the build-to-rent-to-own model is modelled on an eight-year return. “It’s not hugely different but it’s a more fixed-period with the build-to-rent-to-own asset,” he says. “But in build-to-rent in other markets it’s generally two to three-year holds, it’s a much shorter cycle to sell down.” ▲ Residents have moved into the build-to-rent-to-own project at 15 Thompson Street, Kensington after it opened a few weeks ago. Image: Tom Ross Viney says the platform will provide the opportunity for institutional investors to gain exposure to the long-term stable commercial residential asset class, that has until this point been unavailable at scale. That is something HESTA chief executive Debby Blakey knows only too well. “We’ve actually been focused on finding solutions for investment in affordable housing as far back as 2016,” Blakey says. HESTA set up impact investment funds eight years ago to try to address housing affordability issues and provide long term returns for its 1 million members. “The real opportunity in this [investment platform] is making these investments scalable,” Blakey says. “The Assemble model can really support HESTA to deliver strong returns for our members who give us a mandate in the way we invest as a super with impact. We see it as a tremendous virtuous cycle … it’s beneficial to the economy as well as the key workers [in these communities].” Blakey says the growing build-to-rent asset class is an opportunity to “redefine rental communities” and deliver affordable housing in locations where it is most needed. ▲ Residents have moved into Assemble's 38 Albemarle Street, Kensington affordable rent-to-buy project. The super fund chief executive says the risk return profile for residential assets at scale is compelling and she is expecting the newly merged Assemble will enable more institutional investors to back affordable housing projects into the future. AustralianSuper chief executive Paul Schroder agrees. “Through investments like this, super funds can play an important role in responding to the current housing supply crisis while delivering on our purpose for members,” Schroder says. “Assemble’s new capability helps solve a key challenge for institutional investors looking for scalable opportunities to invest in a range of housing choices to deliver appropriate risk-adjusted returns for members.” And with a significant pipeline of work and some serious upheaval facing the construction industry, particularly in Assemble’s home grounds of Victoria, the newly anointed Assemble chief executive says the construction delivery challenges are “not insurmountable”. “With institutional clients we do exactly what you would expect, we do really robust due diligence. You just need to work through these things really sensibly and we’ve had good relationships that will continue into the future,” Viney says. Assemble and Super Housing Partnerships are now colocated and Daff and Viney will take a co-leadership approach to the merged business as it looks to break ground in new territories and tackle housing supply at the coalface. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

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