8 July 2021, Melbourne
- First dedicated sustainable investment fund in the Build-to-Rent market
- First debt fund to elevate sustainability into its investment criteria
Qualitas $1 billion Build-to-Rent Impact Debt Fund (QBIF) announces its first transaction, the development of Cordelia – delivering Brisbane’s first high-density Build-to-Rent (BTR) development with sustainability at the forefront.
Cordelia will be developed by Arklife, a specialist emerging BTR developer and operator. Cordelia will be developed with sustainability in mind, setting a new benchmark for residential rental accommodations and supporting Australia’s transition to a low carbon future.
The BTR market continues to gain momentum in Australia, with more than 17,000 apartments across 49 projects in the pipeline to be delivered by 2024. With a strong BTR pipeline and growth set to continue, Australian institutional investors are seeing the appeal of the asset class and the benefits of being part of the future growth, and developers realise the long-term benefits of projects that meet the highest sustainability requirements.
QBIF is Australia’s first dedicated sustainable investment fund in the BTR market, developed with the aim of elevating sustainability outcomes within the BTR market.
Andrew Schwartz, Managing Director at Qualitas said: “Qualitas Build-to-Rent Impact Debt Fund is a true impact investment focused fund, and this project illustrates that we are looking beyond ticking ESG boxes. The fund seeks to exceed current sustainability goals, and we are constantly looking for deals that will have a positive impact on their environment, now and in the future. This deal highlights our commitment to our strategy of providing cost effective capital solutions to developers wanting to participate in the Build-to-Rent sector, as well as being aligned with delivering projects incorporating market leading sustainable design. While our fund is very much at the forefront of sustainability, we are committed to sustainable investments across all of our investments.”
Cordelia will be located on 17 Cordelia Street, South Brisbane and will consist of 265 residential apartments over 30 levels, while also adding 900m2 of office space and 260m2 of retail space to the area. The development will feature state of the art sustainable design principles and features, allowing for an outstanding diminished impact on the environment as it will deliver in excess of 35% reduction in GHG emissions compared to buildings built in accordance with the National Construction Code.
Cordelia is the result of strong collaboration between Qualitas, Clean Energy Finance Corporation (CEFC), Arklife and ADCO, leading to a first for Brisbane’s BTR market and a unique development with leading sustainability standards.
Cordelia will target a 5-star Green Star design and as built rating, an average NatHERS rating of 7.5-stars and a NABERS Energy for Apartments rating of 5 stars. Features such as high-performance double glazed windows, climate responsive design via passive design principles, thermal bridging, efficient centralised HVAC plant, energy shutdown switches, high efficiency lighting complemented with motion sensors, energy monitoring portals, ceiling fans in all apartments and solar panels on the rooftop, alongside high-end amenities for residents will make this one of Brisbane’s most sought-after rentals upon completion. Amenities will include a 25-metre rooftop lap pool, commercial size gym, working from home area/business centre, residents lounge, private dining rooms, wine room, library and sky gardens.
Mark Power, QBIF Portfolio Manager at Qualitas, said: “Cordelia is a terrific example of a well credentialed sponsor, developing an attractive purpose built Build-to-Rent project, which incorporates market leading sustainable specification and design principles. The Project will deliver a superior level of service and amenity to residents in the highly resilient Brisbane market, while also minimising carbon emissions and in turn outgoings. We are delighted to support Arklife in bringing their vision to life and believe that Cordelia is a perfect first investment for the Qualitas Build-to-Rent Impact Debt Fund.”
The Project comes with some additional up-front costs to establish this high-level of sustainability, however the developers have focused on finding innovative construction and new sustainable product solutions to bring the project to life. Combining these two approaches means that the additional costs to the project will be less than 1% of total construction cost, while delivering substantial savings in future. The focus on sustainability will deliver large benefits to both the developer and the residents in the future, and together with first class amenities deliver an outstanding experience for future tenants. For example, the rooftop solar panels will reduce common area energy consumption by 20% p.a. working hand in hand with the passive design aspects of the building, resulting in a significantly lower energy requirement for both heating and cooling, thereby reducing residents’ cost of occupancy.
“Qualitas is committed to ESG design and built form. We made the decision three years ago that through our private credit business we wanted to innovate and spread the word to the development industry that you can be rewarded for high levels of ESG design. We could see back then that BTR was a nascent industry and providing debt solutions for developers was difficult as traditionally debt packages were dependent on presales of apartments, which is not available in the BTR space. By making capital available for BTR at a cost-effective price, but requiring ESG standards to be achieved, we felt it was a great way for Qualitas to contribute to our agreed sustainability principles. We are very pleased that after three years in the planning to have achieved this outcome, together with a very capable and committed development partner,” said Schwartz.
The project has received strong backing from QBIF’s cornerstone investor, the Clean Energy Finance Corporation (CEFC), with QBIF providing the debt finance for the Project. The CEFC was established to increase investment in Australia’s transition to lower emissions, with access to $10 billion to invest on behalf of the Australian Government.
Ian Learmonth, CEO of CEFC, said: “The CEFC is committed to supporting innovative investment strategies like the Qualitas Build-to-Rent Impact Debt Fund that reduce carbon emissions and deliver commercial returns. Cordelia demonstrates that ambitious sustainability standards are financially and technically viable in Australia’s developing BTR sector, providing a cleaner, greener living experience for residents and unlocking further cost savings for BTR owners.”
Qualitas has more than $3.3 billion in assets under management and in excess of 14 years of experience in residential developments, across more than 187 transactions. Qualitas is able to utilise their depth of expertise to underpin significant capital commitment to the BTR sector, with a strong sustainability overlay. This commitment is demonstrated via the provision of a debt solution to developers through QBIF and via equity through its joint venture with GurnerTM.
The project is to be developed, operated, owned and constructed by Arklife and ADCO, and will form part of a portfolio of BTR assets they propose to roll out across the eastern seaboard of Australia. Arklife is an emerging specialist BTR developer and operator lead by Scott Ponton and ADCO is one of Australia’s leading construction companies.
Scott Ponton, Managing Director at Arklife, said: “After undergoing a thorough market tender process, arranged by Andrew McCasker at CBRE, we selected QBIF as it provided an innovative, cost effective capital solution, that provided funding for both the construction and stabilisation phases of the Project. We are pleased to partner with such a well-regarded Australian based fund manager on the development of Cordelia. Qualitas is really leading the way to drive the adoption of ESG design in the BTR market.”
Here is the full AFR article (subscription required) – https://www.afr.com/property/commercial/qualitas-fund-lends-120m-on-brisbane-btr-project-20210705-p5873i
For further information, please contact:
Kate Stokes, Head of Marketing and Communications
M: 0481 251 552
Scott Ponton, Managing Director
M: 0414 350 667
Clean Energy Finance Corporation (CEFC)
Ryan Rathborne, Associate Director & Joint Head of Property
M: 0421 810 200
This media release has been prepared by Qualitas Securities Pty Ltd (ACN 136 451 128) (Qualitas Securities), holder of Australian Financial Services Licence number 342242. Qualitas Securities and its related bodies corporate and affiliates constitute the Qualitas group (Qualitas).
The information contained herein is for informational purposes only and does not constitute an offer to issue or arrange to issue financial products. The information contained herein is not financial product advice. This document has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you should read the publicly available information carefully and consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is not an indicator of future performance.
No member of Qualitas gives any guarantee or assurance as to the performance or the repayment of capital.
All data in this document has been calculated using the most accurate sources available, however any rates or totals manually calculated may differ from those shown due to rounding. Figures may also differ from those previously disclosed due to adjustments made following period end.