Specialist Disability Accommodation sector seeks investors

Blackoak hopes that the call for investors will raise $100 million for the development of 220 new SDA homes in Western Australia by 2026. The company explained that high-quality dwellings will help promote independence for individuals living with disabilities.

This is the second time Blackoak Capital has developed an SDA project and is currently delivering 12 SDA houses and 30 villas for 61 Australians through their first Lumenate SDA Investment Fund in 2021.

In Australia, about one in six people live with disabilities, and around 15,000 are waiting for adequate housing despite having funding for accommodation approved in their NDIS plans – with current undersupply nationwide.

The shortage has left disabled people to live in unsuitable properties, such as aged-care facilities, group homes and hospitals.

According to 2021 NDIS data there are about 28,000 SDA places needed across the country, but only 8,000 places available. Further projections estimated that 36,000 Australians will need SDA housing by 2042.

Blackoak Capital’s chief executive officer David Zimmermann said the investment fund will first focus on Western Australia’s SDA shortage by supplying single-storey houses and villas before expanding to other states.

In search of investors, the fund wishes to ensure over a 10-year investment term, a projected equity internal rate of return (IRR) of over 13 per cent (calculated pre-tax and before performance fees), with quarterly distributions of 10 per cent per annum and targeting very low levels of third-party debt.

Zimmermann said the investment fund is “simple and clear” and has the support of the Commonwealth’s commitment to funding accommodation for the most vulnerable over a long time frame.

“This guarantees ongoing demand from people with government-guaranteed purchasing power, for a resource that is undersupplied.”

“We also know the federal government is committed to improving the NDIS and recognises that well-constructed SDA is ultimately a cost saver because it reduces dependency on support services,” Zimmermann said.

To design their SDA homes, Blackoak consulted with people living with a disability to suit their specific needs. As a result, houses include design areas in the bedroom for wheelchairs to park and charge, and for gardens to have less grass and more hardstands.

The SDA dwellings are also more sustainable with solar and battery packages to reduce carbon footprint and utility bills – averaging eight stars under the NatHERS rating system.

Partner, Advisory+ at Cushman & Wakefield Alan Herrman said that investors should do their research before investing and only consider meticulously planned SDA investment projects.

“Not all SDA projects are created equal,” Herrman said.

“Over the last few years, inexperienced developers have entered this space, assuming that SDA projects would be simple and promising in some cases unsupported return expectations.

“This has unfortunately been a disservice to the disability community, by undermining the Commonwealth government’s policy of making private capital available to improve disability housing provision,” Herrman said.

Herrman added investors should research location and demand, build quality, and whether the developer has a relationship with reputable SILs and operators and is building the specific housing that is in part with NDIS participant’s needs.

“While there is real opportunity in SDA, investors need to dig into the details to avoid any pitfalls,” he said.