KUALA LUMPUR (June 21): UEM Sunrise Bhd is planning to develop the first ‘Build-to-Rent’ (BTR) project in Melbourne, Australia with an estimated total transaction value of about A$277 million (RM881 million), in partnership with Greystar Real Estate Partners.

In a Bursa Malaysia filing on Wednesday (June 21), UEM Sunrise said that its indirect wholly-owned subsidiary UEM Sunrise (Collingwood) Pty Ltd, as trustee for the UEM Sunrise (Collingwood) Unit Trust (the vendor), has on June 21 entered into a contract of sale with Evolution MIT Services Pty Ltd, as trustee for the GS Collingwood Property Trust I.

GS Collingwood is an investment vehicle managed and controlled by a subsidiary of Greystar.

The purpose of the contract is for the vendor to sell a property measuring 5,390 sq m or 1.33 acres in Hoddle Street, Collingwood, Melbourne, to GS Collingwood for a consideration of A$45.15 million.

Concurrently, UEM Sunrise (Collingwood Development) Pty Ltd (the developer) has on even date entered into a Fund Through Agreement (FTA) with GS Collingwood to facilitate the development of the property for a BTR development.

UEM Sunrise said that the FTA will see the investor agree to appoint the developer to undertake the construction and development of the property for a total payment of A$232.18 million plus goods and service tax.

The total estimated transaction value for the proposals is A$277.33 million, said UEM Sunrise in the filing.

The agreement will see Greystar as the investor and eventual owner-operator of the proposed BTR development through a fund-through structure, with UEM Sunrise as the developer and delivery partner, according to UEM Sunrise’s statement on Wednesday (June 21).

Greystar is an integrated global real estate company with expertise in property management, investment management, development and construction services in institutional-quality rental housing, logistics and life sciences sectors.

It manages and operates more than US$275 billion of real estate in 238 markets globally.

This is the first BTR project by a Malaysian developer in Australia. The proposed development is expected to include approximately 400 apartment units across two buildings, with a mix of studios and one-, two- and three-bedroom apartments suitable for multi-generational living.

“The proposed BTR development provides cash inflow to UEM Sunrise, assisting the company to continue its proposed expansion in Australia while still being able to realise development profit from the property.

“It provides an opportunity for the company to explore a new asset class while still capitalising on its delivery strength and expertise in large-scale apartment developments,” said UEM Sunrise.

The proposed development is UEM Sunrise’s third milestone in their expansion in the Australian market, after the completion of their flagship projects, Aurora Melbourne Central and Conservatory.

Planning documents are expected to be submitted in July 2023, while construction is anticipated to commence in mid-late 2024. The development is expected to be completed in the second half of 2027.

UEM Sunrise’s net profit declined to RM15.35 million for the first quarter ended March 31, 2023 (1QFY2023) from RM19.02 million a year earlier as revenue fell to RM240.78 million from RM416.45 million.

As at end-March, its short-term borrowings was RM2.17 billion against cash and bank balances of RM1.1 billion.

Shares of UEM Sunrise finished up 1.89% at 27 sen on Wednesday, giving the property developer a market capitalisation of RM1.37 billion.