13 Apr Venturing into new models for renting
This week we announced a joint venture with investment managers Invesco. As part of the scheme they have purchased a majority stake of the PLATFORM_ portfolio, which includes 580 build to rent apartments, which we will continue to manage. The deal is worth around £116m and is a non-exclusive partnership initially lasting 10 years. This deal marks the strength of both our business model but also in the build to rent sector as a whole. PLATFORM_ has been one of these market-leading companies that are reimagining the way we live.
The UK’s rental market has, for far too long, been an insipid monocultural affair. As the rental sector has grown we have pushed for a greater variety and diversity in the market. This week’s announcement is the culmination of that effort.
The agreement between PLATFORM_ and Invesco will be the first instance of purpose-built rental portfolio gaining institutional investment. The portfolio is around 75 percent stabilised. It has also already proven the premium available to “best in class” build to rent operators. We’re seeing rents at over 10 percent above the market on account of the service, amenities and high quality specification on offer.
With an estimated £50-90bn worth of equity already looking at the UK rental market we are certain that transactions will only get bigger – provided that stock can be delivered quickly and to an institutional grade. The government’s housing white paper also signalled a shift away from ownership and towards a more professionalised rental sector. All signs point towards a build to rent sector that is growing nicely, having taken its time to get going.
With student housing now entering maturity as an asset class, build to rent will have some years to go.
However, what’s notable is that interest in the emerging sector isn’t just focused on the heady world of London. Our sites are spread across the country and focused on the growing commuter hubs such as Crawley and Stevenage. As with recent activity from M&G, L&G, LaSalle and Grainger, much of the recent activity seen in the market is across the West and the North.
The demand for professional and well-managed homes is growing and so the possibility for healthy, stable returns in the face of political and economic uncertainty remains.
With 17% of the population currently renting (and having more than doubled since the early 1990s) we see a real opportunity for this disruptive model of tenure. Pressures on the amateur buy to let landlord has markedly increased over the last year. Although they provide a vital service for renters we see build to rent as a better model for all involved.
This joint venture underscores PLATFORM_’s commitment to turning that model into a reality. We hope to take professionally managed homes to towns and cities across this country, as we have already done with our five current sites. The market is ready, tenants are calling out for a better option and PLATFORM_, with the support of Invesco, are going to build it.