The RBA is growing increasingly worried that the housing crisis that will last years. Mirvac and Pacific Equity Partners are betting it will.
It’s no coincidence that as RBA governor Michele Bullock was explaining the central bank’s concern about the resilience of the housing market in the face of surging interest rates, Mirvac chief executive Campbell Hanan was using the same themes to explain the $1 billion bet on residential property he’s made alongside private equity giant Pacific Equity Partners.
Baby boomer buyers pay no stamp duty, no exit or entry fees and can tap government rent assistance in some cases. On the other side of the transaction, Mirvac and PEP get three bites of the return cherry: developer margins, rental income and a fee when properties are resold. Mirvac and PEP effectively get to ride two megatrends via this deal: the ageing population, which will see the number of people aged over 55 rise from 7.5 million to 14 million in 40 years time, and the housing shortage, which Mirvac’s Hanan describes as a collision of several forces: population growth, low levels of rental stock, and the pressure on construction resources caused by huge infrastructure projects.
“We see this as a really interesting opportunity to play across a large spectrum of housing typology in Australia, where the underlying fundamentals of under supply and growing population need to be met.”On face value, the deal structure looks a little convoluted: Mirvac and PEP will own 47.5 per cent each, with the remaining stake held by the current owner of the business, private equity firm Tasman Capital Partners.
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