The Australian Financial Review
Jul 11th, 2022
by Nick Lenaghan
OCP Asia has injected $200 million into the specialist disability accommodation sector to fund a portfolio of housing projects earmarked as seed assets for a prospective ASX listing.
The finance from OCP Asia, a Singapore, Hong Kong and Sydney-based investment manager, represents one of the largest single investments yet into a sector that is underpinned by federal support for tenants and forecast to expand into a $12 billion asset class.
The debt will be applied to the acquisition and development of a portfolio of more than 40 sites over the next four years, through a partnership with local disability accommodation provider NDISP and Social Impact Funds Management (SIFM).
Across 40 sites, as many as 200 or more purpose-built units will be developed, creating a portfolio worth $250 million to $300 million. The Hong Kong lender in turn will have an option to recapitalise the portfolio through SIFM’s SDA Real Estate Investment Trust, which is aiming to list on the ASX in 2026.
OCP partner Dan Simmons said the portfolio would initially focus on Queensland, where two sites in Townsville and Rockhampton have been funded, before rolling out into other states and territories.
“We are pleased to be providing the first pool of institutional capital that is dedicated to funding desirable fit-for-purpose SDA housing in regional centres, an under-served market where there is strong demand from NDIS participants,” he said.
With rental income backed by the National Disability Insurance Scheme, the niche accommodation sector has blossomed into a $2.5 billion asset class and could expand a further fivefold to meet the needs of an estimated 28,000 young people, according to an industry report last year. NDISP co-founder Jon Johnson said the forecast shortfall in places could even rise to 50,000.
The investment from OCP Asia – the Hong Kong platform house has been a busy investor in the Australian market – joins a series of increasingly sizeable positions taken in the growing sector by institutional players.
Late last year, Goldman Sachs Asset Management committed a $137 million equity investment to disability housing investor Synergis. Other early-mover institutional investors include Macquarie and Lighthouse Infrastructure, along with listed platforms such as Arena REIT as well as social impact-focused investment platforms.
The SDA REIT proposed by SIFM is targeting a portfolio of more than $1 billion. It has agreements already for more than $500 million worth of disability housing and plans to fill out the portfolio by rolling up existing funds, developing new assets and pursuing acquisitions.
SIFM chief executive James Brooker said the regional portfolio backed by OCP Asia would cover an area of the market that had been under-invested. “We have no doubt there will be high ongoing demand for these quality properties,” he said.