Lighthouse to launch A$1bn affordable housing fund – exclusive

MD Peter Johnston tells us the GP's partnership with specialist firm SGCH has proven its affordable housing funding model is scalable.

Melbourne-based Lighthouse Infrastructure is looking to launch a specialist fund focused on affordable housing, following the success of its partnership with one of Australia’s largest community housing providers.

Lighthouse managing director Peter Johnston told Infrastructure Investor the firm was looking to raise as much as A$1 billion ($668 million; €647 million) for the specialist vehicle. It will aim for a first close in March.

Lighthouse joined forces with New South Wales community housing provider SGCH last year, investing A$59 million in affordable housing for key workers in Sydney. It recently committed a further A$61 million in funding to SGCH Keys, a registered charity owned and managed by SGCH. According to Johnston, the partnership had proven the firm’s funding model for affordable housing was scalable, with the potential to be rolled out successfully across the country.

“[Increasing Lighthouse’s investment] was always the intention… We are looking to scale this as an investment platform,” Johnston said. “We’ve come up with a model that will produce attractive returns and I think what’s needed, and what the economy needs essentially too, is a scaled investment opportunity.

“Our first investment was always designed to be the first, not the only, and this is just a repeat. The nature of the model is, it’s not necessarily specific to us and SGCH… The discussion we’re having now with the institutional investment community is about creating a specialist vehicle.”

The firm’s initial investment saw the acquisition of 85 apartments in western Sydney, within close proximity of both Westmead Hospital and Western Sydney University, rented to low-income essential workers. Its most recent investment will be used to acquire 76 apartments in the suburb of Parramatta, which will be rented to low-income essential workers in sectors such as emergency services, health and education, with the tenancies managed by SGCH.

“These investments are held within a diversified portfolio fund at the moment,” Johnston said. “To get them to the possible scale that’s relevant for super[annuation] and relevant for the industry, we’re now looking at a specialist fund and, with a successful raising there, we’ll be rolling out around the country, expanding with SGCH but also with other community housing providers.”

In July, Lighthouse reached a A$300 million first close for its second specialist disability accommodation investment fund, Australian Disability Accommodation Projects Trust 2, which drew commitments from Australian institutional investors in the superannuation and insurance sectors. At the time, Johnston told Infrastructure Investor the investors backing the vehicle were largely real estate investors looking for an alternative to residential property.