Gurner & Qualitas Add $2bill of capital to BTR Equity

22 February 2023

The GQ Multifamily Build-to-Rent platform (GQ) owned by multi-billion-dollar developer GURNER™ and ASX-listed leading Australian alternative real estate investment manager Qualitas, has been bolstered by another $2 billion of capital capacity after closing their second fund raising.

The second fund has been fully committed to by a global institutional investor and when combined with the first GQ fund takes the GQ total gross assets under management to $3.2 billion.

This second fund raise comes after the platform initially secured $1.2 billion in gross assets under management in the first fund, fast-tracking its first tranche of Build-to-Rent (BTR) assets totalling 2,000 apartments in 2022.

The majority of GQ’s first fund has now been deployed into four prime assets totalling circa 1,420 apartments which are either under construction or set to commence construction by Q2 2023. The platform is also readying for the completion and opening of its first asset in early calendar 2024 with the initial portfolio consisting of:

  • Beach House St Kilda, Melbourne – 297 apartments
    • Under construction
  • Southbank, Melbourne – 394 apartments
    • Under construction
  • Parramatta, Sydney – 391 apartments
    • Construction commencing Q2 2023
  • Melbourne Inner North – 333 apartments
    • Demolition early 2023

This latest capital injection will see the GQ platform increase to a future pipeline of approximately 3,500 apartments across Sydney, Melbourne and Brisbane. The second fund will have a focus on Sydney, with the view to growing GQ’s already established New South Wales pipeline.

The $3.2 billion in combined acquisition power puts GQ well on its way to creating a portfolio of $5 billion of total asset value, representing over 5,000 apartments under management by 2026.

The GQ platform is focused on market-leading returns, prime locations and a product that GURNER™ is synonymous for, backed by Qualitas’ deep network of global investors and investment management capability.

GQ recently appointed Crema Constructions to construct the $350m, 394-residence build-to-rent project in Southbank, where demolition works were completed late-last year.

The platform’s St Kilda project, Beach House, is also underway and progressing ahead of schedule, with construction now above-ground up to level five of the structure.

Gurner CEO, Tim Gurner said, “ When we first launched the GQ platform in 2021 we set out to lead the sector with some pretty ambitious growth plans. We are now well ahead of our forecasts in terms of pipeline and funding, with four seed sites already secured and a huge amount of further capital ready to deploy.

“ We have a large number of sites under our control that will form part of the second fund and future funds as we continue to grow our platform”

“ The GQ partnership is an extremely exciting platform in partnership with Qualitas, that is backed by both business’s unique skillsets and vast industry expertise, and fully funded with $3.2 billion in capital.

“ This puts us in a market-leading position to have one of the largest BTR pipelines in Australia, while still allowing us to be nimble enough to jump on opportunities quickly and aggressively.

“ This latest round of funding means we have a huge amount of dry powder to utilise as the right deals arise. We are actively focused on the Sydney market as our primary target, in addition to Melbourne, where we believe the most opportunities will be in the coming years.

“ With a lot of uncertainty in the world and market fragmentation currently, alongside the significant movement in interest rates, capital costs and construction prices, we believe that all capital cities but Sydney especially will experience a 15-20% correction in land price in the coming 12 months so we will be ready to jump on any opportunities that arise and will be keeping a keen eye on that market in particular,” he said.

Qualitas global head of real estate and co-founder Mark Fischer said, “Institutional ownership of build-to-rent apartments is not a new concept in other parts of the world, such as North America, where institutional ownership of residential stock can be around 11%, compared to Australia where the industry is only now gathering momentum. We see huge opportunity for the build-to-rent market in Australia and this new commitment by a global institutional investor to the second fund supports this and demonstrates the scalability of the opportunity.

“Our ambition is to be a dominant player in the Australian build-to-rent market and with this latest investment we are on our way to achieving this. The additional $2 billion capacity gives GQ the dry powder necessary to capitalise on the interesting deal flow we expect to see during 2023 and beyond as markets recalibrate. We expect the deal flow from the off-market networks of both Qualitas and GURNERTM to allow the GQ platform to deliver market leading returns to investors.

“We are proud to have not only been one of the first platforms to complete a capital raise of scale, but also one of the first to substantially deploy that capital. To now close out our second follow on capital raising highlights the momentum in the GQ platform – as we continue to grow it in a disciplined and diligent manner.”