This article is from the Australian Property Journal archive
LOWY family-backed Assembly Funds Management (AFM) is making a move into the land lease sector, kicking off with two sites in Victoria and aiming to have more than 10 communities worth over half a billion dollars.
The fund manager is teaming up with Elka Capital on the portfolio, which will have 1,500 to 2,000 homes across the east coast of Australia. Further sites are being evaluated in Victoria and NSW. Each community will provide between 150 to 250 new homes.
The land lease community model allows homeowners to acquire property while leasing the land from the community operator, and is tax and stamp duty efficient as a result. In return for the ongoing lease payments, the operator maintains the community and provides communal areas and staff for residents.
“The land lease community business model is aligned with our high conviction strategy in the living sector – via our private equity real estate fund series – and complements our other similar investments,” said chief investment officer at AFM, Tim Meurer.
“We believe in sub-sectors that have strong underlying real estate fundamentals. The land lease community sector in particular is a beneficiary of positive demographic trends and provides an affordable alternative to the housing market, which is undersupplied.”
“The number of Australians aged between 65 and 84 will more than double in the next 40 years, implying a growth rate of approximately double the wider population. This is creating a large and persistent undersupply in the seniors living space.” he said.
Elka Capital, led by Tom McDonald and David Laing have expertise in the living sector through their prior roles in real estate, investment banking, investment management, and transactions.
“Our investment will assist to alleviate the chronic under supply of quality housing for senior Australians while assisting with cost of living pressures by providing accessible, secure, and low- maintenance homes to residents,” McDonald said.
AFM has been looking to raise $100 million for the second close of diversified property fund ADPF2, which also focuses on countercyclical opportunities. The balance of the fund’s equity will be raised over the course of 2025 as further opportunities are identified, AFM said.
