Lendlease and First State Super look to US multifamily assets

Lendlease and First State Super have announced they will establish a new investment platform to develop and hold multifamily (meaning residential for rent) assets in US gateway cities, with each business committing US$500 million in equity to the new vehicle.

The platform would offer a US$2 billion portfolio of geographically diverse multifamily assets in New York, Chicago, Boston, San Francisco and Los Angeles.

Lendlease would act as the platform’s development, construction and investment manager, with the vehicle being seeded with two existing Lendlease multifamily projects in Chicago and Boston that would ultimately be worth more than US$400 million.

“This new multifamily investment vehicle is consistent with our strategy of leveraging Lendlease’s integrated property capabilities to deliver high quality urban regeneration projects that enhance people’s lives while simultaneously creating value for our shareholders and partners,” Lendlease Americas chief executive, Denis Hickey, said.

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The two companies pointed out the strength of the US multifamily sector when announcing the investment. The sector was valued at over US$3 trillion and has delivered higher and less volatile returns than most US real estate sectors for the past quarter century, and a major shift to renting has seen more than six million renter households created in the US over the last decade.

First State Super head of income and real assets, Damien Webb, was excited the fund was expanding into a market and sector which he believed had “very attractive” long-term fundamentals.