M&G Jumps Into Australia Multifamily Residential Market With $337M Deal

M&G Real Estate has expanded its Asia Pacific rental residential investments into Australia with a A$450 million ($336.8 million) commitment to a build-to-core partnership with local developer Novus, marking the UK-based fund manager’s first move in the country’s multifamily sector.

M&G’s capital allocation is good for a 95 percent stake in the partnership, called Novus Build-to-Rent Trust, which will develop a portfolio of multifamily properties in key Australian cities with a focus on Melbourne and Sydney, the partners said Wednesday in a release. The trust is seeded with a 173-unit apartment project, Novus on Sturt, in Melbourne’s Arts Precinct.

M&G is making the latest transaction on behalf of the firm’s Asia Property Fund, which has concentrated its multifamily investment in Japan since the launch of the open-ended core vehicle in 2006.

“Having been active in the multifamily market in Japan for many years, we are very pleased to be working with a partner of Novus’s calibre in Australia, where we already have significant exposure to other sectors,” said Richard van den Berg, the fund’s manager. “We look forward to building our capability and providing our investors with access to the resilient income stream that Australia’s residential real estate market offers.”

Green Seed Asset

Founded just last April, Novus is a joint venture of former Mirvac executives Adam Hirst and Jason Goldsworthy and Aliro Group, a Sydney-based developer and fund manager.

Novus picked up the project site at 153 Sturt Street in Melbourne’s Southbank area for about A$20 million last year, with plans to build a two-building complex on the 1,800 square metre (19,375 square foot) plot, the Australian Financial Review reported.

Construction of Novus on Sturt is due to start later this month. The project is targeting a 7-star NatHERS rating, with the building powered by renewable energy and featuring solar PV panels, energy-efficient appliances, rainwater capture and integrated smart monitoring systems.

“Having undertaken an extensive process, we are pleased to have finalised an agreement with M&G Real Estate, a highly regarded global investor, to create and manage a high-quality, Australian multifamily portfolio,” said David Southon, executive chairman of Novus and Aliro Group. “Together, we are well positioned to execute on our compelling pipeline of opportunities, adding to an excellent seed asset already in place.”

Residential on a Roll

M&G’s maiden residential investment Down Under comes on the heels of last month’s $424 million acquisition of a 30-asset portfolio of Japanese apartment buildings from Blackstone.

The purchase of 1,575 units across Tokyo, Osaka and Nagoya was made on behalf of the Asia Property Fund, bringing the vehicle’s assets under management in Japan’s multifamily sector to JPY 109.3 billion ($942.6 million). The fund has $7.1 billion in AUM across all real estate sectors in Asia Pacific.

M&G’s previous multifamily deals in Japan include the 2018 purchase of a portfolio of residential buildings in Chiba, Fukuoka and Osaka for $83.7 million and the $50 million acquisition of two Osaka residential buildings in a deal announced last May.

In an online briefing in January, M&G executives highlighted Australia and Japan, along with Singapore, as the fund manager’s top real estate investment locations in Asia Pacific this year, citing bright recovery prospects in those markets.