Presentation Summary
The BwB Talk Series gives our network around the world the opportunity to engage with and learn from innovative leaders in impact, finance, and the environment. The deep sustainability knowledge and experience shared across the series provides new perspectives, strengthens our market intelligence, and fuels the generation of new ideas.
In July, we were delighted to have Mark Moore, Business Development Director at Invesis, an international infrastructure investment and development firm with over 25 years of experience in sustainable infrastructure, join us to discuss one of his company’s recent projects in Australia.
Mark began with a brief introduction to Invesis, including its history, geographical reach, involvement in PPPs, and key investment sectors.
He explained that the firm’s first project in Australia was the Cross River Rail Project, a metro development that is currently in its construction phase and includes the provision of new rail infrastructure for a line running under Brisbane River and the city’s CBD.
Mark then provided a comprehensive overview of Invesis’ most recent initiative in Australia – the Ground Lease Model 2 (GLM2) Housing project, a large-scale social and affordable housing programme in the State of Victoria.
“One of the key things that Housing Australia* and, in particular, the Victoria State government want to see through these projects is a high deliverability in terms of ESG. They are looking for economic and environmental benefits,” said Mark. He added that these authorities don’t just want high levels of sustainability during the construction period, but for the entire 40-year period of the project partnership and beyond. “They want local communities, local residents and tenants to have the ability to be involved… and to get added value from the project than just the provision of housing units.”
Mark explained that many of the Ground Lease Model 1 consortium members are also part of GLM2, which allows the whole team to benefit from lessons learned on the earlier project – carrying over positive experiences while enhancing or improving practices in some areas. As an example of this latter aspect, Mark highlights the introduction of specialist tenancy management companies to support both women and Aboriginal communities. “It was felt that GLM1 probably didn’t pay too much attention to the specific needs of these groups and that for GLM 2 this needed to be addressed,” he said.
After sharing information on key financials, Mark provided insight into design considerations, particularly the importance of providing indoor and outdoor community spaces for people to come together, and making best use of site aspects to ensure, for example, developments include plenty of bright, open areas.
Next, Mark spoke about the project structuring for GLM2: “It’s very similar to what we would consider a typical PPP”. He discussed the financial structuring, the role of mezzanine investors, refinancing plans, and the importance of effective communication with Invesis’ Board and shareholders.
He also highlighted some of the issues and considerations surrounding land for the project and site location.
“There is a lot of land available in Australia, but a lack of ‘serviceable’ land. You can go to the outskirts of Melbourne and pick four relatively easy and accessible sites, but there’s no drainage infrastructure, there’s no road infrastructure. Therefore, the Victoria State government is keen to look at reusing brownfield, inner city, urban sites.”
Question Time
Mark’s fantastic presentation was followed by a lively Q&A session, with lots of interesting questions from the BwB team who were keen to benefit from Mark’s expertise and experience.
Kartikeya Aggarwal, BwB Analyst, asked Mark to speak about some of the existing or anticipated challenges for the project.
Mark explained that it was necessary to move social and affordable housing tenants from the existing rundown properties on the site to temporary accommodation while the development takes place. “One of the key challenges will be bringing these people back. There will be nice new buildings, but it’s also about trying to build a new community spirit,” he said. “Most of these sites are within existing communities so, first, it’s making sure the new residents can come together as a group, but then also spreading that out to become part of the wider community. We’ve spent a lot of time thinking about creating that ‘togetherness’.”
Tommaso Buso, BwB Associate, asked Mark to compare the GLM2 model to similar projects in the US.
Mark’s view is that the Australian model is influencing the way America is starting to look at such projects and the potential benefits. He noted that a key issue in the US is the challenge of obtaining the free land. “It’s very rare in America to get free land. However, what we’re finding is lots of smaller councils and cities that are sitting on land and have workers who live one or two hours away, or even in another state, that commute in every day. These cities are increasingly keen to create accommodation for people closer to where they work. I think we’re going to see more movement on this over the next couple of years.”
Mark also discussed the environmental impacts of the GLM2 project, including its net-zero goals.
“One of the key elements of our net zero goals is that we are trying to have an all-electric development. This includes looking at various options such as solar panels, signing up to electricity providers who provide renewable energy, and, potentially, battery storage.”
Mark added that Invesis has submitted a bid for a new AUS$1 billion hospital development just outside Melbourne that will be the country’s first all-electric hospital.
“We are seeing a big move away from fossil fuels in Australia.”
Luke Ireland, BwB Project Manager, asked Mark about Invesis potentially expanding into New Zealand projects. Mark provided insights into the political and economic factors influencing PPPs in New Zealand and compared the country’s PPP pipeline with that of Australia.
Mark explained that there are clear signs of the new government in New Zealand examining options for improving the nation’s infrastructure, including ways in which the private sector could participate in delivery and financing. “New Zealand has just 10 or 11 existing PPP projects. But we are starting to see the bones of a potential pipeline developing. There have been lots of companies hosting events where they are really trying to encourage and bring to the fore that these opportunities might develop.”
The discussion continued with a question from Rohith Mahendarker, BwB Senior Analyst, on return profiles for equity investors. Mark explained that the GLM2 project is unique within Invesis’ portfolio as it is the company’s only social infrastructure project that has a demand risk element, and that this has an impact on the level of expected returns.
The session closed with Mark sharing some insights on the project handover experience and the potential future shape of PPP projects in the UK.
Many thanks to Mark for a highly informative and interactive session!
*Housing Australia is Australia’s independent national housing agency.
Comentarios