Lighthouse targets affordable housing with new funding model

Following its first deal, Lighthouse MD Mitch King tell us its model has attracted institutional investor interest, as it looks to scale it up.

Melbourne-based Lighthouse Infrastructure has partnered with one of Australia’s largest community housing providers, investing A$59 million ($44 million; €38 million) in housing for key workers in Sydney.

Unveiling a funding model it hopes to roll out across the country, the firm is joining forces with New South Wales community housing provider SGCH in a deal that will see it invest in the acquisition of 85 apartments in western Sydney. The apartments are within close proximity of both Westmead Hospital and Western Sydney University and will be rented to low-income essential workers in emergency services, health and education.

Speaking to Infrastructure Investor, Lighthouse Infrastructure managing director Mitch King said the firm would provide unitranche funding to SGCH Keys, a registered charity owned and managed by SGCH, which will be used to acquire the apartments.

The firm’s funding model aims to address the lack of affordable housing, which has been exacerbated by the effects of the pandemic. Focusing on newly built accommodation, the model will eventually be scaled further by partnering with community housing providers in other states, King added.

“Our analysis suggests and supports the fact that there’s a growing lack of affordability in Australia’s major cities and, for that matter, in many of our rural towns as well… We feel there’s a significant opportunity for this model to be rolled out, right across the country,” he said.

“Because we’re an institutional fund manager, [the funding model] provides good certainty for developers who are approaching completion of homes and apartments, to have the certainty that our mandate and capital brings with it. This has certainly been the case in the first transaction and, with the support of the likes of SGCH, it provides the certainty for these transactions to be completed at scale.”

According to King, the firm has already identified a number of precincts within the Sydney market for rolling out the funding model further.

“There’s a good pipeline of new accommodation or soon to be completed accommodation, not only in Sydney, but in most of the capital cities [in Australia],” he said.

“We’ve had a good deal of interest from both our existing clients and other institutional investors about the model and supporting the further allocation of capital in support of this model.”