SINGAPORE: An international investor is now weighing its options on a possible $1 billion disability housing bet.

KKR is preparing to review options for its disability housing investment Synergis, an early mover in the government-backed sector and believed to be worth as much as $1 billion.

The buyout giant’s real estate dealmakers started interviewing investment banks last month, asking for their ideas and experience in the living sector, which has proved to be a hotbed of activity over the past decade, said people familiar with the discussions but not authorised to speak publicly.

While appointing an adviser does not launch a sales process — KKR has had the investment for less than three years — the successful firm is expected to be asked to conduct periodic reviews of the private equity giant’s options. Those could include a sale, recapitalisation or sharemarket float, the sources said.

KKR’s decision to hire an investment bank is unsurprising given M&A interest in the niche specialist disability accommodation (SDA) sector. Rental income is backed by the National Disability Insurance Scheme, and the $2.5 billion addressable market is projected to grow fivefold to meet the needs of the 28,000 eligible NDIS participants, according to an SDA Investor Think Tank report.

While Synergis is not a developer, it works with established operators to invest in all classes of SDA property. This ranges from high physical support to fully accessible, robust and improved liveability. Its funds are closed-ended and managed by Social Infrastructure Investment Partners (SIIP), a joint venture between Federation Asset Management and Social Ventures Australia.

Macquarie and Lighthouse Infrastructure, along with listed platforms such as Arena REIT, have tipped into the high-yielding asset class. Craig Carracher, co-founder of The Living Company, which develops institution-owned housing under brand names Scape and Aveo, also said that he was “engaged in discussions about specialist disability accommodation solutions.”

Synergis’ portfolio spans Queensland, NSW, Victoria and South Australia, and has a “demonstrable pipeline of between $200 million and $300 million per year”, sources said. Estimates for the business range between $800 million and $1 billion.

KKR acquired its shareholding from Goldman Sachs Asset Management in 2023.