US property giant Pembroke’s built-to-rent ambitions takes shape in Melbourne’s trendy Fitzroy

US property giant Pembroke has bought a build-to-rent development site in a trendy inner Melbourne suburb from fellow American funds house Greystar.

An artist’s impression of Pembroke’s planned build-to-rent development project at 155 Johnston Street, Fitzroy.

US property giant Pembroke has bought a build-to-rent development site in Melbourne’s trendy Fitzroy from specialist US funds house Greystar as the nascent industry consolidates.

Pembroke is banking on its record as a long-term investment specialist to set up a portfolio along the eastern seaboard where it already owns commercial buildings.

Pembroke regional director for Australia Joe Fitzpatrick said the company was buying Greystar out of the project which has an estimated value of about $200m – but it would continue a tie-up on the property with the specialist operator after it steps in to the site.

“We saw value in the relationship; the market’s relatively nascent at the moment,” he said.

Pembroke, backed by Boston-based fund manager Fidelity Investments, has not disclosed the value of the purchase but it has big ambitions.

Pembroke regional director for Australia Joe Fitzpatrick.

“Our mandate is really clear and active,” Mr Fitzpatrick said. “Australia is an alpha market. We’re actively working along the eastern seaboard – Melbourne, Sydney and then Brisbane as well – but the priority is creating critical mass in the cities that we have established commercial buildings and operations.”

Pembroke can take on approved sites and develop them, which positions it to buy properties that private owners are rezoning but lack the capacity to build and manage.

“We’re multi-generational investors. So it’s ­important for us to design the ­assets in our way to ensure we get longevity and fulfilment out of it,” Mr Fitzpatrick said.

An artist’s impression of an interior of the proposed development in Fitzroy.

Some smaller build-to-rent operators are struggling to get off the ground as building costs soar.

“There is an opportunity for groups that have the capacity to take on opportunities. The demand-supply story is clear,” Mr Fitzpatrick said.

The planned complex at 155 Johnston Street injects Pembroke into the local residential scene where build-to-rent is becoming more accepted, while other projects by companies such as Salta are being developed nearby.

Pembroke plans to develop a modern complex of more than 200 apartments, and Mr Fitzpatrick highlighted the importance of building more homes.

“Addressing a chronic shortage of housing is high on the Australian government’s agenda, and the BTR market in particular offers a huge opportunity for us at Pembroke as we double down on our global diversification strategy,” he said.

“Pembroke has a proven track record of delivering thoughtfully developed, high-quality, urban properties. Strategically this acquisition establishes a strong foothold for Pembroke in the Australian BTR market.”

Pembroke has appointed Greystar as project manager. Greystar managing director for Australia Matt Woodland said the project would “bring more housing supply that offers the lifestyle and service experience that Australian renters want and need right now”. There was “an urgent need for attainable and high-quality housing options”.

This 11-level building will sport rooftop amenity and a barbecue area, a residents’ lounge and co-working facilities, as well as a gym, bike storage and parking.

Pembroke head of investments Jack Clark said demand for high-quality residential properties in the world’s best cities was rising. “We are well positioned to respond to help meet this demand,” he said.

The company is targeting projects in Seattle, Washington DC, Boston, London, Munich, Hamburg, Tokyo, Sydney and Melbourne. The local purchase follows Pembroke buying build-to-rent residential properties in London and Washington DC.

Pembroke is a well-known investor locally. It bought into Melbourne’s office market with the purchase of T&G Building for more than $250m in 2016. It was sold by German fund manager SachsenFonds and the Liberman family.

Pembroke entered Australia in 2011 by buying 20 Martin Place in Sydney that it redeveloped into an A-Grade tower.

It also entered Brisbane with the purchase of the 70 Eagle Street office tower for $123m but it later sold that to resources tycoon Gina Rinehart.

Originally published as US property giant Pembroke’s built-to-rent ambitions takes shape in Melbourne’s trendy Fitzroy