The Lowy Family Group-backed Assembly Funds Management, in a joint venture with developer and operator Elka Capital, has already bought two development sites in northern Victoria for what it says will become a 10-plus land lease community portfolio worth more than $500 million.
The move by the Sydney-based fund manager run by former Westfield Chief Operating Officer Michael Gutman follows that of:
- alternative real estate fund manager GreenFort Capital and Gaw Capital buying two land lease communities in Queensland's Gympie region, as part of plans for an $800 million portfolio;
- Macquarie Real Estate Partners committing $2.85 billion to the land lease sector and announcing it will be the operator, not just an investor.
In May, ASX-listed Stockland announced a $1 billion capital partnership with Invesco Real Estate to jointly develop land lease communities. In February, Lifestyle Communities also launched a $275 million raising to support its further growth into the land lease sector.
And in October 2023, diversified property group Mirvac and Pacific Equity Partners Secure Assets agreed to pay $1.01 billion for a 47.5% stake each in land lease operator Serenitas.
This latest investment shows that over-55s land lease sector remains among the hottest areas of property as land costs are low in the regional areas that are being targeted, and the estates can be staged to match demand.
Who is Elka Capital?
Elka Capital is led by executives Tom McDonald and former Stockland and Ryman Healthcare development manager David Laing who have expertise in the area as real estate and banking executives. They are billing the land lease model as tax and stamp duty efficient, as it allows homeowners to acquire property while leasing the land from the operator. In return for lease payments, the operator runs the estate.
“We are currently exploring a number of sites,” Tom said.
Assembly Chief Investment Officer Tim Meurer said the land lease community business model was aligned with the company’s “high conviction strategy in the living sector”.
“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 under-supplied,” he told The Australian.
“The number of Australians aged between 65-84 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 he was not bothered about the sector attracting investment.
“We still see a fair bit of runway,” he said, noting the new sector’s relatively low penetration rate compared to the rest of the world.
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