APAC-focused private equity real estate investment group Pheonix Property Investors (Pheonix) and long-standing development company Abadeen Group (Abadeen) have recently announced a strategic joint venture to invest $250m in equity funding towards developing a series of boutique residential projects in Sydney over the next five years.
After accounting for leverage in the form of external construction debt financing, the Platform will deliver over $1b in gross revenue across 15-20 projects.
A core focus of the Platform will be sites that yield between 10-50 apartments, located in established and desirable neighbourhoods within 10km of the CBD and targeting an average of $100m in gross revenue when completed.
“We are very confident in the owner-occupier boutique market. As we have seen housing prices escalate, this historically places pressure on the premium apartment market. The lack of supply, difficulty in creating, and gaining approvals for boutique sites in prime locations ensure scarcity of the product.”
Justin Brown, Abadeen Group
Joseph Tack, Executive Director of Aberdeen, says the Platform is the culmination of a three-year strategic plan to build a pipeline of prime infill sites to deliver high-quality bespoke projects to owner-occupiers. “We are fortunate that Pheonix shares our vision for the continued growth of this boutique, high-end market,” he says.
“Pheonix is a partner that understands development risk and can make informed investment decisions quickly. The relationship with Pheonix enables us to source high-quality opportunities in a competitive environment, with a focus on amalgamations and sourcing off-market transactions.”
“Our latest acquisition involved the direct approach and amalgamation of 21 strata lots across three buildings, which has taken over seven months to negotiate,” Joseph explains.
Trent Winduss, Director and Head of Australian investments in Pheonix’s Sydney office, says, “Our strategic partnership with Abadeen is the realisation of a long-considered investment thesis to build a scalable residential development business targeting boutique, quality and desirable apartment living for owner-occupiers in highly sought-after neighbourhoods in Sydney.”
“We believe Abadeen is the right partner in helping to realise that thesis, its depth of development experience, vertically integrated project and development management expertise, and first-class market acumen,” Trent comments.
Since formalising the venture in June 2021, the partnership is off to a rapid start with five active projects and a sixth recently secured. The projects are located in Crow’s Nest, Naremburn, Cremorne, Mosman and Neutral Bay - which have a combined projected gross revenue in excess of $300m.
The six projects will utilise $93m of the capital rise (accounting for just over a third of total commitments), with the remaining $157m available for future projects that meet the agreed investment criteria.
DA approvals have been obtained by Abadeen for the Crows Nest and Neutral Bay projects (branded Koyo and Enso respectively and designed by acclaimed architect Koichi Takada). Koyo comprises 27 predominantly three-bedroom apartments with luxury finishes and extensive local amenities, perfect for downsizers.
The Platform was established in June 2021 with three seeds assets secured by Abadeen in early 2020. Since its formation, the joint venture has acquired a further three projects in the Lower North Shore, demonstrating confidence in the market for sites that have the required attributes.
Contracts have been exchanged to acquire an asset at Clifford Street Mosman to create 30 apartments and associated retail space on a site acquired from the State Government, and a corner site at 2 Sutherland Street Cremorne to develop 14 predominantly three-bedroom residences which offer bay views to the North and over Cammeray Golf Club to the West. Contracts have been recently exchanged on a sixth asset location in Neutral Bay which is yet to be disclosed.
Abadeen and its affiliate Platform Project Services will carry out the development management and project management of all assets acquired under the joint venture. Justin Brown, Founder of Abadeen, comments, “Abadeen is extremely fortunate to have a highly skilled dedicated team focussed on the premium apartment space and believe we will be able in partnership with Phoenix, to produce a leading standard for our purchasers”.
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