Bureta Park Build to Rent

View all portfolio companies
DATE OF INVESTMENT 30 March 2022
LOCATION Bay of Plenty
SECTOR Housing
STAGE Expansion
IMPACT FOCUS Social/Environmental

Profile

Bureta Park Build-to-Rent (“BTR”) is an 89-townhouse development in the Tauranga suburb of Otūmoetai. The homes are targeted to be Homestar 8 rated, a first for a development of this scale within the region and will be centrally located to avoid contributing to urban sprawl and the negative social and environmental repercussions of it.

The property adjacent to Countdown Bureta Park and will be comprised of 70 x 2 bed townhouses and 19 x 3 bed townhouses. The development has three distinct stages: land development, construction, and rental period.

Upon completion, a portion of the homes will be allocated to affordable housing and/or Community Housing Providers. To build a community, leases will be a minimum of 3 years, with up to 7 years available. Our development partner will sell 45 homes to the market to increase supply for first homebuyers.

 

Impact

One of Purpose Capital Impact Fund’s focus areas is affordable housing. This development increases affordable housing stock in Tauranga for both renters and first homebuyers alike.

Purpose Capital has raised a syndicate of impact investors who share the same outcome desires for the community and residents. If the investor base for a project like this were to be purely commercial, then this development may have no, or limited, allocation of affordable housing, higher emissions, and reduced quality of living for residents.

Tauranga’s prevalent housing strategy of developing houses at the fringe areas is contributing to urban sprawl, congestion, car-centric communities, pressure on infrastructure, and fragmenting of social connections. This investment provides a first step for Purpose Capital in leading systemic change in the housing space by providing long-term capital and prioritising social and environmental outcomes.

New Ground Capital, our construction and property management partner, shares our impact desires and is dedicated to improving experiences of renters in NZ through professional rental management. Residents are offered lease terms of between 3 and 7 years to provide security. Providing all obligations are met, New Ground Capital will never ask a resident to vacate before the end of term.

Homestar ratings indicate an easier to keep warm, healthier, cost-effective, and environmentally friendly home. This development is targeting a Homestar rating of 8. As power bills generally contribute to the second largest household outgoing (behind rent/mortgage), reducing this bill has a positive effect on household budgets and, therefore, reduces the likelihood of financial hardship.

Transaction Summary

In March 2022, the Fund acquired an equity stake in New Ground Living (Bureta Park) Limited for consideration of $3.0m as part of a $4.0m impact investment syndicate which holds 100.00%. This investment acquires the underlying land and finances the land development phase. The Fund’s impact investment partners are Bay Trust and other regional individual impact investors.

We expect to be raising another $14.0m in capital in Q4 of 2023 to finance the construction phase and we welcome expressions of interest from interested potential investors.