This article is from the Australian Property Journal archive
BLACKOAK Capital is launching a new $100 million fund, Lumenate SDA Investment Trust II, backing the construction of Specialist Disability Accommodation (SDA) for NDIS participants.
The fund is being launched in response to the shortage of housing suitable for the needs of many NDIS participants, with over 25% of the country’s SA4 regions having no SDA accommodation supply.
Currently there are around 15,000 Australians with a serious disability waiting for housing even with funding in place for accommodation in their NDIS plans.
This leaves many of those waiting living in unsuitable aged care facilities, hospitals, and outdated “group home” facilities.
Lumenate SDA Investment Trust II will raise $100 million to deliver high-quality, purpose-built housing options that better enable independence.
“Our first priority will be to expand the supply of single-storey houses and villas in WA, before broadening the portfolio to other states. The Fund has an overall objective to develop 50 projects, which will provide best-in-class accommodation for 220 NDIS participants,” said David Zimmermann, CEO at Blackoak Capital.
The investment thesis for SDA is simple and clear — we have bipartisan support for the Commonwealth’s commitment to funding accommodation for the most vulnerable over a long-time frame. This guarantees ongoing demand from people with government-guaranteed purchasing power, for a resource that is undersupplied.”
The fund is targeting a projected equity Internal Rate of Return (IRR) of over 13.0% over a 10-year investment term, with quarterly distributions of 10% per annum and targeting very low levels of third-party debt.
With Cushman & Wakefield appointed as the capital advisor for the process.
“From an investor perspective, not all SDA projects are created equal. Over the last few years, inexperienced developers have entered this space, assuming that SDA projects would be simple and promising in some cases unsupported return expectations. This has unfortunately been a disservice to the disability community, by undermining the Commonwealth government’s policy of making private capital available to improve disability housing provision,” said Alan Herrman, partner, Advisory+ at Cushman & Wakefield.
“While there is real opportunity in SDA, investors need to dig into the details to avoid any pitfalls. These details include detailed location and demand data, build quality, whether the developer has a relationship with reputable SILs and operators, and whether the developer is building the specific housing typologies that NDIS participants say they are looking for.”
