Melbourne-based Lighthouse Infrastructure has reached a A$300 million ($207.6 million; €203.3 million) first close for its second specialist disability accommodation investment fund.
Known as Australian Disability Accommodation Projects Trust 2, the fund drew commitments from Australian institutional investors in the superannuation and insurance sectors. The equity raised will provide up to A$500 million for projects when levered, which the firm intends to invest in homes for more than 1,000 people through Australia’s National Disability Insurance Scheme. While the fund primarily aims to fund the construction of new homes, it will also look to acquire and refurbish existing properties.
Speaking to Infrastructure Investor, Lighthouse Infrastructure managing director Peter Johnston said that while ADAPT2 is an infrastructure fund, the institutional investors backing the vehicle were largely real estate investors looking for an alternative to residential property. Much of the growing interest among institutional investors in the SDA sector appears to stem from traditionally real estate-focused investors genuinely looking for an alternative, Johnston added.
“There is a degree of interest now from Australian institutions in alternative real estate and SDA has fallen into that bucket. [Investors are seeing it] as an alternative to residential property… so we’re seeing an emergence of residential allocations,” he noted.
“Having a targeted and focused investment opportunity within SDA is useful for [real estate-focused institutional investors] from a portfolio construction perspective. [In terms of] who has committed to ADAPT2, they are also real estate investors… they wanted a narrower channel and a narrower focus.”
The vehicle follows the firm’s first fund in the SDA sector, ADAPT, which was established in 2018 and has invested roughly A$250 million in 136 homes across 73 locations across Australia, providing accommodation for 400 NDIS participants.
While ADAPT is a subset of the firm’s open-end Lighthouse Infrastructure Fund Trust, ADAPT2 is a stand-alone vehicle. According to Johnston, the size of ADAPT2, which is open-end and has no specific cap, will be shaped by “an opportunity set, an investable universe and investor appetite”.
“We do expect other investors to come on [board] when we’ve invested a substantial portion of this capital and further capital might come from existing investors who’ve supported it [as well as] new investors taking an interest in a larger pool of assets,” he said.
“It’s a significant step to see institutional capital stepping up at this level for a sector that needs institutional support. It’ll probably end up as an industry no greater than [roughly] A$12 billion in Australia – it has a natural limitation of about that size – but we’ve got to get it funded and I think institutional investors are the best way to do that.
“We would expect that our success here will beget other successes for both ourselves and others in trying to generate that institutional pool of capital that will then be applied to disability housing.”
In November, Lighthouse Infrastructure partnered with one of Australia’s largest community housing providers, investing A$59 million in housing for key workers in Sydney.