Red Cross building snapped up by build-to-rent giant

A former Australian Red Cross building in North Melbourne has been sold to real estate investment firm Sentinel, which plans to transform the site into apartments under a build-to-rent model.

The purchase of 23-47 Villiers St will be Sentinel’s second build-to-rent (BTR) apartment complex in Melbourne, following its 172-apartment project, The Briscoe, in West Melbourne, which is expected to open later this year.

Sentinel, the Australian arm of the US firm, is proposing to build 350 apartments across two buildings at the North Melbourne site as part of its Australian build-to-rent venture with Dutch pension fund manager PGGM.

Under the build-to-rent model, tenants can enjoy numerous benefits, including longer term leases, transparent rental pricing, and access to a range of amenities designed to enhance community living.

Sentinel’s Australian managing director Keith Lucas said it was a “meaningful opportunity to deliver a significant boost in housing choice for the area that will support the rapidly growing health and education precinct and more broadly, Melbourne’s housing needs”.

“We’re looking forward to leveraging our experienced and established build-to-rent platform to transform this well-located inner-city site into a vibrant and sustainable community with high-quality rental apartments, a wide range of resident amenities, and a professionally managed rental experience,” he said.

PGGM’s senior director of private real estate Jikke de Wit said the development would “support the creation of quality and low carbon housing that is well-positioned to benefit other healthcare professionals, whilst generating healthy, long-term returns for our clients”.

“We primarily invest on behalf of those who work in the health sector, so we are very pleased that our investment in this project,” he said.

JLL Melbourne managed the sales campaign and transaction, with the site selling for an undisclosed sum.

“After a rigorous purchaser selection process on behalf of the vendor, Sentinel was deemed the most appropriate counterparty for the transaction as well as providing highly favourable commercial terms for the vendor,” JLL’s Josh Rutman said.

We are delighted to see Sentinel grow its development pipeline in Australia as other major build-to-rent players continue to compete aggressively to secure large-scale sites where operational scale can be achieved.

Last year developer Mirvac opened Liv Munro (a build-to-rent tower) next to the Queen Victoria Market, and in recent months Lendlease has proposed to build a 46-level tower accommodating 560 residential apartments including build-to-rent at the southern end of Queen Victoria Market.

Mr Rutman said as the “challenges mount for traditional local developers, the timing for BTR groups to pursue inner-city landholdings has never been more opportune”.

“The solution to the current rental crisis won’t come easily (or quickly) but as BTR moves from a niche product to the mainstream rental option it is in other countries, it will create a new path for the property industry to deliver more diverse housing options for our rapidly growing population.”

The purchase of the Villiers St site, which is located in Melbourne Biomedical Precinct, grows Sentinel’s total pipeline in Australia to more than 1600 rental units.

An Australian Red Cross spokesperson did not reveal the reasons behind the sale of the building after settlement occurred in June but added the Australian Red Cross “is now leasing back the building and will continue to occupy the space until we locate an alternative fit-for-purpose office space”.

Under Sentinel’s plans, the new apartments will target carbon neutral certification and a 5-Star Green Star rating from the Green Building Council of Australia. Upon completion, it will be operated under Sentinel’s Australian property management brand Kinleaf. •

Caption: The site of the Australian Red Cross building 23-47 Villiers St has been sold to Sentinel.