GIC Selling Aussie Trailer Park Operator Serenitas to Mirvac JV for $643M

Singapore’s sovereign wealth fund has agreed to sell Australian trailer park operator Serenitas for A$1 billion ($642.76 million), cashing in the low-cost housing venture as homes become increasingly unaffordable in the country’s major cities.

Mirvac Group announced this past week that it had joined with local private equity firm Pacific Equity Partners to buy out Serenitas and its 27 land lease communities – as trailer parks are known in industry jargon – as the Australian property investment firm continues to expand its bets on rental residential as a more affordable alternative to home ownership. GIC had acquired what is now Serenitas from a Blackstone venture five years ago.

“Our expansion into the living sectors comes against a backdrop of critical housing undersupply, and tailwinds including rising population growth, record low rental vacancy levels and affordability challenges,” said Mirvac Group chief executive Campbell Hanan in the statement. “Our existing apartment and masterplanned communities product are beneficiaries of these fundamentals, and our build to rent portfolio and expansion into land lease are natural adjacencies to our residential capabilities.”

The deal comes as housing affordability in Australia reached its lowest level in the past three decades in June 2023, according to real estate data provider PropTrack, with Serenitas’ properties marketed towards retirees and empty-nesters as Australia’s over-55 population is expected to nearly double to 14 million by 2063.

Three-Way Split

Serenitas portfolio includes 4,200 occupied home sites across the cities of Perth and Albany in Western Australia, as well as in Brisbane and Melbourne. The company has approximately 2,000 more sites in the pipeline –  98 percent of which are approved for development.

To look after operation of the business, the Serenitas’ team of more than 100, including chief executive Rob Nichols, will continue to manage the company following the acquisition.

Under the terms of the agreement, Mirvac and Pacific Equity Partners will each own 47.5 percent of Serenitas, with Tasman Capital Partners – GIC’s co-owner in the company – maintaining the remaining equity stake.

Mirvac said it will invest in the venture by making an initial payment of around A$300 million, with another A$240 million to be paid on settlement and a final A$60 million deferred for 12 months. Settlement is expected in the third quarter of 2024.

Earlier this year Pacific Equity Partners had entered exclusive talks to acquire Serenitas at a price reported to be around A$900 million, with those discussions failing to result in an agreement.

The Singaporean fund, which is estimated to have $769 billion in assets under management, had teamed with Tasman Capital Partners in 2018 to acquire Western Australia-based National Lifestyle Villages from Australia’s Navis Capital and Blackstone.

GIC was reported last year to have engaged Goldman Sachs to market Serenitas, with representatives of the sovereign fund declining to comment in response to inquiries from Mingtiandi.

Rental Residential Catches on in Oz

For Mirvac, the Serenitas deal is an expansion of its bets on rental residential, known in Australia as Build to Rent (BTR), after launching an A$1.8 billion fund dedicated to the sector in June.

“This transaction immediately scales our exposure to the land lease communities sector across Australia and reinforces our position as the only residential developer in Australia delivering across the spectrum of housing typologies from rental housing, build to rent, land lease, house and land, medium density and high density living,” Hanan said. “This depth of capability leaves Mirvac well placed to benefit from the structural tailwinds supporting the broader living sector in Australia.”

With rising interest rates and high home prices pushing more Australians out of the traditional housing market, fund managers and developers are finding opportunities for return from a broad spectrum of rental residential investments.

In July, Daiwa House announced Australia’s largest purpose-built build-to-rent (BTR) project. The Japanese home builder has joined up with local developer Lendlease for the A$650 million ($410 million) Melbourne development, which is set to 797 apartments.

That deal followed Singapore’s City Developments Ltd making its official entry into Australia’s BTR sector in May with a pair of development projects in Brisbane and Melbourne.

Developers in Australia broke ground on more than 4,000 rental homes in 2022, according to MSCI, which was from less than 1,000 per year from 2017 through 2019.