Apache Capital announces promotions to support strategy pivot for single-family platform Present Made

Nuveen Real Estate partners with Apache Capital to deliver Present Made’s single-family housing development with Cambridge University’s Estates Division

Nuveen Real Estate, one of the largest real estate investment managers in the world with $152 billion of assets under management, has formed a joint venture (‘JV’) with UK-focused real estate investment manager Apache Capital to fund single-family build-to-rent (‘BTR’) housing across the UK. All sites will be developed and operated for the long-term by Present Made, Apache Capital’s wholly owned single-family BTR platform.  

The JV will operate on a programmatic basis, with each site assessed individually. Nuveen Real Estate and Apache Capital will work together to continue to source other opportunities to grow Present Made’s portfolio.   

The first site to be funded will be Present Made’s 373-home development in Eddington, Cambridge, which is being delivered in collaboration with the University of Cambridge and benefits from full planning approval. The scheme forms a key part of the University’s 150-hectare North West Cambridge masterplan, which includes 3,000 homes (of which 50% are for University key workers as affordable housing), 2,000 student beds, 100,000 sq. m. of employment space and 5,300 sq. m. of retail.  

Alongside high-quality housing built exclusively for rent, Present Made of Eddington will provide a range of amenities and shared spaces, including a communal pavilion, gym, yoga studio, private dining room, bike café, games room, cinema and co-working space. This will make Present Made of Eddington Cambridge’s first purpose-built and designed rental housing development with on-site professional management and amenity provision.  

The Present Made team will provide round-the-clock resident support, be responsible for all maintenance as well as running a year-long calendar of social and wellbeing activities. These will include zero waste pop-ups, cycling and running clubs, cultural celebrations, live music, art classes, cooking classes, charitable events and talks from inspirational people.  

Start on-site at Present Made of Eddington is expected later this month. Bennett Construction has been appointed as main contractor, with practical completion expected in late 2025. Alternative lender BentallGreenOak has provided a development loan facility for the project.  

The scheme is targeting Code for Sustainable Homes Level 5 and will be compliant with the new Part L Building Regulations, which will see a dramatic enhancement to energy efficiency and reduction in CO2 emissions.  

Jasper Gilbey, Head of Housing, Alternatives and Strategic Transactions at Nuveen Real Estate, said: “Single family housing remains one of our core investment strategies within the living space – underpinned by a chronic undersupply of high quality professionally managed rental accommodation. Our partnership with Apache Capital provides us with a great opportunity to satisfy the growing tenant demand in strategic growth markets like Cambridge and we look forward to realising this exciting project together.”  

Limor Shklaz, Director of Housing, Alternatives and Strategic Transactions at Nuveen Real Estate, said: “Present Made of Eddington will provide a distinctive rental offering that will be the first of its kind in Cambridge. Central to this offering will be the core principles of community, sustainability and wellbeing. The design and development of the scheme will apply leading practices for energy efficiency, renewable energy and water conservation, while achieving a biodiversity net gain – ultimately to the benefit of our residents.”  

John Dunkerley, Chief Executive Officer at Apache Capital, said: “With Nuveen Real Estate as a funding partner, we are looking to replicate the success of our prime multi-family strategy to create a market-leading single-family platform in Present Made. Our flagship development in Eddington will push the boundaries of quality in both design and operations, creating a community that will support the University’s wider ambitions with the North-West Cambridge masterplan.”  

Alan Penfold, Managing Director at Present Made, said: “Between Nuveen Real Estate and the University of Cambridge’s Estates Division, we have two best-in-class partners to support the delivery of Present Made of Eddington. There is growing demand for high quality rental housing outside of city centres that provides both a lifestyle and a home, which we are looking to satisfy through Present Made, with Eddington serving as ‘proof-of-concept’ through the quality of its consumer offering.”  

Matt Johnson, Head of Development for North West Cambridge at the University of Cambridge, said: “Eddington is an exemplary neighbourhood home to a growing and diverse community of residents, students, businesses and service providers. Through our work with leading development partners, we are continuing to deliver much needed homes, across a range of tenures, which can support the continued growth of the Cambridge eco-system. Present Made will deliver high quality homes for rent providing residents with homes that support sustainable lifestyles, flexibility and choice. We look forward to welcoming the residents of Present Made to the community.”   

Martin Sheridan, Managing Director in BGO’s European Debt team: “BGO are very pleased to be supporting the Nuveen and Present Made JV in building out this prestigious and innovative single-family housing development in Cambridge. The transaction is consistent with our debt investment thesis of backing high quality institutional sponsors in delivering best-in-class properties with a laser focus on sustainability, wellbeing and the community. We have worked with the wider Apache group on multiple multi-family deals over the years and are excited to play a role in their new single-family housing platform as well.” 

Alan Penfold has been promoted to managing director of Present Made, the single-family build-to-rent housing platform of Apache Capital, an investment manager focused exclusively on UK living real estate.

Penfold, who had previously been an executive director at Present Made, will work closely alongside Apache Capital’s CEO John Dunkerley and chairman Mervyn Howard following the departure of founding partner Richard Jackson. 

Penfold spent four years as a director at Apache Capital before moving over to Present Made and brings over 15 years’ experience in housebuilding. Before joining Apache Capital, he held land and development-focused roles at Barratt Homes, Bellway Homes and Crest Nicholson. 

Under Penfold’s leadership, Present Made will broaden its strategy to include working with other developers, including volume housebuilders, as part of plans to rapidly scale the platform.

The Present Made team will be involved in the design and delivery of all schemes to ensure they meet the company’s ESG criteria and brand standards concerning amenity and service provision. Present Made will operate all sites for the long term and is targeting a net zero carbon operational model. 

Launched in 2021 by Apache Capital, Present Made secured its first planning consent in Summer 2022 to develop a 373-home neighbourhood in Eddington in partnership with the University of Cambridge. 

Alan Penfold, managing director at Present Made, said: “My ambition is to build on the excellent work that has been done so far in establishing Present Made as a leading player in the single-family build-to-rent space. 

“The key to success for any operational business is scale and right now we see a major opportunity in working with other delivery partners to rapidly grow our portfolio of sites. 

“We see our emphasis on all aspects of masterplanning and ESG, combined with strong branding that is underpinned high levels of service and high-quality design, as both a key differentiator and source of value creation.

“This conviction will be reflected throughout all our developments, including those delivered in partnership with third parties, all of which we will own, manage and operate for the long term.”

John Dunkerley, Apache Capital CEO, said: “Having been involved with Present Made since concept stage and with a solid background in housebuilding, Alan is perfectly positioned to take the business to the next stage. He brings to the table a wealth of experience and will build on our 15-year track record of delivering high-quality, professionally managed housing.

“From student accommodation through to senior housing and multi-family build-to-rent, our approach has been to work with best-in-class partners to create a leading market product that sets new benchmarks for quality, and we will continue this through with Present Made.

“The market conditions right now favour counter-cyclical asset classes like build-to-rent and we want to work with those looking to diversify into what is a fast-growing sector.

“By accelerating the growth of Present Made through the right partnerships, we can achieve scale faster and drive operational efficiencies without compromising on the qualities that will ensure our investments perform strongly over the long-term.”

Harrison Street, Apache Capital and NFU Mutual Expand Joint Venture Portfolio with Moda Living in UK’s Largest Regional Build-to-Rent Deal

Apache Capital (“Apache”) has expanded its build-to-rent (“BTR”) joint venture (“JV”) with Harrison Street, one the leading investment firms exclusively focused on alternative real assets, and NFU Mutual, to fund Moda Living’s Great Charles Street, a 722-home BTR development in Birmingham, UK.

The JV, which was formed in 2018 to fund premium BTR developments across the UK, now includes six assets, representing a total of 3,050 homes. In addition to Great Charles Street, current projects include Moda, The Mercian, also in Birmingham, Moda, The McEwan in Edinburgh, Moda, The Lexington in Liverpool, Moda, New York Square in Leeds, and Moda, Holland Park in Glasgow.

The announcement marks the largest regional BTR funding deal completed in the UK. Moda will develop, manage, and operate the £302m (GDV) Great Charles Street, which is set to begin phased delivery in October 2025 and will prioritize leading ESG certifications.

The development is one of the largest regeneration projects in Birmingham City Centre and within walking distance to key leisure destinations. Once completed, it will offer 722 homes for rent, ranging from spacious studios to three-bedroom apartments with exclusive views over one of Birmingham’s oldest districts, the Jewellery Quarter.  

Residents will benefit from a range of luxury finishes and amenities, including a rooftop terrace and BBQ areas, gym with personal training and classes, bicycle storage, washing and repair station, residents’ lounges, private dining, cinema room, meeting rooms and co-working space and secure parking, as well as a 24-hour concierge and onsite security.

New public realm and green spaces at ground level will provide new walking and pedestrian routes, as well as community facilities, including retail and leisure units, at the former brownfield site, which has been undeveloped for more than 50 years.

Paul Bashir, Chief Executive Officer of Harrison Street’s European business, said, “We’re thrilled to expand our partnership with Apache, a leading investor in the premium UK build-to-rent space and Moda, a leading developer in the UK and pioneer in the build-to-rent sector, to bring this development to Birmingham. The Birmingham market is backed by strong demographics, with the greatest concentration of businesses outside of London and home to many leading universities. This transaction underscores our continued efforts to invest in premium BTR assets in leading markets across Europe.”

John Dunkerley, CEO at Apache Capital, said, “Today’s announcement – the largest regional build-to-rent funding deal to date – underlines our conviction in build-to-rent as a major institutional asset class. It also demonstrates the enduring appeal of our highly amenitised, highly serviced model, which has been proven by the success of our first Birmingham asset, The Mercian. In Harrison Street, NFU Mutual and Moda Living, we have a set of experienced partners that have helped us build a market-leading platform and we are pleased to have expanded it with this transaction.”

Johnny Caddick, CEO at Moda Living, said, “This is a huge moment for Moda Living, securing what is the market’s largest ever regional deal for a BTR asset. It’s testament to the teamwork of our team and partners Harrison Street, NFU Mutual and Apache Capital that have worked tirelessly to overcome multiple headwinds and get this over the line. Birmingham is a key city for Moda and another scheme with all the fundamentals that create an incredible place for residents to live. We look forward to working with Harrison Street, Apache, Birmingham City Council and other key stakeholders to get this fantastic project out the ground.”

Ian Ward, Leader, Birmingham City Council, said: “This is a hugely exciting project, breathing life and community back into a key central site which has been unused for more than 50 years. Moda’s development at Great Charles Street will deliver much-needed new homes to Birmingham and will be central to the ongoing transformation of the city centre. I look forward to working with Moda, Harrison Street, NFU Mutual and Apache Capital as they deliver this exciting new chapter for the Jewellery Quarter.”

Will Jordan, Partner at Knight Frank, said, “This is a landmark deal for the UK’s BTR market. As the biggest agreement ever signed outside of London, Moda, Harrison Street, NFU Mutual and Apache have blazed a trail in what is a huge show of confidence for a market that continues to go from strength to strength despite challenging economic headwinds. We’re delighted to have advised the parties to help them reach this fantastic milestone, and we look forward to seeing Great Charles Street delivered in what will be a majorly beneficial addition to the Birmingham skyline.”

Tom Bostock, property investment manager at NFU Mutual, whose headquarters are in the West Midlands in nearby Warwickshire, said, “We are pleased to expand our build-to-rent joint venture with Apache Capital and Harrison Street. High quality, purpose-built rental accommodation such as our Great Charles Street development provides long term steady income streams while helping major cities like Birmingham attract and retain talent. The regeneration of the site is underpinned by an intense focus on ESG that is in line with our corporate vision, illustrated through the socio-economic benefits for the local community and a wide range of carbon cutting measures at the construction and operational phase.”

Harrison Street’s European strategy encompasses alternative investments in student accommodation, senior housing, build-to-rent residential, and life sciences real estate. The Firm’s build-to-rent experience in Europe includes 16 assets totalling approximately 5,650 units across the UK, Spain and Ireland. The portfolio includes eight assets in the UK with over 3,000 residential units developed to date in partnership with experienced local developers and operators. 

206-bed student housing scheme sold to Singaporean investor City Developments Limited.

Sale price reflects an exit yield of 4.81% – a new record for the Southampton student accommodation market.

Transaction follows two benchmark-setting deals in Cambridge and central London by Apache Capital.

Apache Capital has sold the last purpose-built student accommodation scheme in its portfolio.

The UK-focused investment manager, which specialises in living real estate, has sold Cumberland Place to City Developments Limited, a Singapore-based investor and developer for over £30 million, representing an exit yield of 4.81 percent and exceeding the target sale price. 

Completed in 2018, the high quality student housing development is situated in the heart of Southampton, being a six-minute walk to the north west of Southampton Solent University’s East Park Terrace campus and a 16-minute journey by public transport to the University of Southampton’s Highfield campus.

The property, which is fully let and has achieved 100 percent occupancy year-on-year, comprises 206 direct-let student beds arranged over 12 storeys. On-site amenities include a gym, screening room, 10th floor sky deck and common room with panoramic views of the city across to the Isle of Wight.

Apache Capital had previously sold its student accommodation assets in Cambridge and central London to Cambridge City Council and a Greystar-led joint venture respectively, with both transactions setting new sector benchmarks for exit yields. The exit yield for Cumberland Place is believed to be a new record for the Southampton market.

Now fully divested from purpose-built student accommodation, Apache Capital will focus on delivering the remainder of its £4.1bn build-to-rent (BTR) portfolio.

The investment manager has a prime multi-family housing joint venture with developer-operator Moda, as well as a wholly owned single-family housing platform, named Present Made – the UK’s first branded, vertically integrated single-family BTR platform.

John Dunkerley, CEO and Co-Founder of Apache Capital, said: “Today’s announcement gives City Developments Limited a high quality, high performing asset that is underpinned by a strong location, good design and premium branding.

“The success of our purpose-built student accommodation assets, reflected in the sale price achieved in all three disposals, is a vindication of our strategy to pursue a highly amenitised, service-driven model in the UK’s emerging build-to-rent sector.”

Jamie Snary, Executive Director Asset Management and Operations at Apache Capital, said: 
“Cumberland Place has consistently performed strongly since its completion in 2018 with full occupancy being achieved year on year as well as consistently strong rental growth.

“As with all our assets, whether in our multi and single-family build-to-rent pipelines or our previous student accommodation investments, Cumberland Place was designed from the outset with the end user, the resident, in mind.

“This strategy has once again borne success with year on year re-booker rates exceeding market norms and consistently positive resident feedback and this is reflected in the sale price that has been achieved.”

Hugo Noble, Director of alternative specialist MTRE, who handled the sale on behalf of Apache Capital, said: “The sale of Cumberland Place reaffirms the appetite for well positioned, high quality student accommodation assets remains strong despite the current wider market conditions.

“The calibre of the investor interest was reflected in the pricing achieved and through the number of bids received, further highlighting the robustness of the purpose-built student accommodation sector in turbulent economic conditions.”

Apache Capital and Moda secure planning consent for 392 BTR homes in York

Plans have been approved for a new build-to-rent community on the former Heworth gasworks site in York. The development is part of Moda’s £2.5bn prime multi-family build-to-rent portfolio with investment partner Apache Capital.

Market leading developer and operator Moda Living has been successful with a Reserved Matters planning application, following the granting of outline approval for the whole site in 2020.  The plans include 392 new homes in a mix of studio, one- two- and three-bed homes, along with extensive state-of-the-art amenity spaces including private dining rooms, 24/7 gym and fitness centre, a cinema room and a 24-hour concierge, to create a health and wellbeing-focused community and address the shortage of quality homes for rent in York. With a community green at its heart, the neighbourhood will also deliver new landscaped green space open to the public.    

The neighbourhood will have a focus on sustainability, health and wellbeing and using cutting edge technology to create a community.  

In addition to a 24h gym and fitness centre equipped with market leading fitness equipment, residents will have access to a host of wellness focused products and services to support their healthy lifestyles. A bespoke regular programme of events, designed and run by Moda’s in house operations team, will complement the services and facilities and help to build a community of people living their happiest, healthiest lives.

Moda’s commitment to health and wellbeing across its portfolio means it has the most top-level certifications from the leading global healthy building accreditation body, Fitwel, in the world. Heworth Green will target this certification by prioritising health and wellbeing in all elements of its design and operation.

CEO of Apache Capital John Dunkerley said: “This is an important next step in the growth of our prime multi-family portfolio, with a model focussed on premium quality and service, and high amenity provision in core regional economies. Our operational schemes have illustrated the resilience of the class A multi-family model in a sector already attracting heightened interest from income-seeking investors, and Apache Capital and Moda have set the standard within it.”

Works are expected to start early next year, adding to the £1.5bn of Moda Living projects on site across the UK. 

The plans were approved at City of York’s Planning Committee on 3 November 2022.

Apache Capital, Harrison Street and NFU Mutual refinance first asset in prime multifamily portfolio with Moda

• Deutsche Bank provides £70m investment loan for Class A multifamily asset in Liverpool, UK

• Deal demonstrates ability for high quality assets to secure debt financing despite challenging market conditions

• Apache Capital has previously sourced debt funding from Goldman Sachs, LaSalle, Wells Fargo, BentallGreenOak and pbb Deutsche Pfandbriefbank

Leading UK real estate investment manager Apache Capital, which specialises in the living sectors, together with Harrison Street, one of the leading investment management firms exclusively focused on alternative real assets, and insurer NFU Mutual, have successfully refinanced The Lexington, a flagship Liverpool asset in its UK wide build-to-rent (BTR) platform with developer-operator Moda Living.

A £70m facility from Deutsche Bank refinanced the legacy development loan with a new investment loan.

The £115m GDV scheme was the first operational development in Apache Capital, Harrison Street and NFU Mutual’s joint venture, which launched in 2018 to fund delivery of Moda’s high quality, amenity-rich BTR portfolio in core cities across the UK. The portfolio is being developed and operated by Moda.

The 325-home BTR asset, which has reached stabilisation on a let and reserved basis, having pre-let 40% of the apartments at the time of opening in September 2021, is located on the Liverpool waterfront within a wider regeneration project. Initial construction started in September 2018 and was completed on time and budget in August 2021 despite the challenges posed by COVID-19.

Other schemes within Apache Capital, Harrison Street and NFU Mutual’s prime multifamily portfolio with Moda include The Mercian in Birmingham – the city’s tallest completed residential tower and subject of Goldman Sachs’ first ever UK BTR development loan – as well as New York Square in Leeds, The McEwan in Edinburgh, and Holland Park in Glasgow, where construction has commenced. Operational assets have consistently registered strong leasing performance. 

In addition to the prime multifamily pipeline with Moda, Apache Capital has a separate single-family BTR platform (Present Made) and had previously invested in purpose-built student accommodation and senior living. 

John Dunkerley, Co-founder and CEO at Apache Capital, said: 

“The fact we were able to complete this transaction despite the challenging market conditions reflects both the quality of the product delivered by Moda and the enduring appeal of residential for rent as an asset class.

“We firmly believe our highly amenitised and serviced model with Moda will prove resilient, with both existing and prospective customers coming to appreciate the benefits of living in an a professionally managed modern apartment building that is more energy efficient than a home in the traditional private rented sector, and comes with a host of onsite amenities, special resident services as well as other benefits that are included within the monthly rental payment.”

Paul Bashir, Chief Executive Officer of Harrison Street’s European business, added: 

“The successful refinancing reflects Harrison Street’s commitment to identifying attractive, high-quality BTR opportunities in markets backed by strong demographics.  We look forward to continuing our partnership with Apache and working with market leading developer-operator brands  such as Moda as we continue to execute on our strategy and generate value for our investors.”

Johnny Caddick, Chief Executive of Moda Living, said:

“Moda develops and operates next generation rental homes across the UK, our focus is on providing high quality homes with exceptional customer service, market leading wellbeing and integrated tech. Moda, The Lexington has outperformed the Liverpool market and is now reaching stabilisation within just one year of opening. Its continued performance is testament to the brand, the support of our investment partners and the highly provisioned rental experience we deliver across our living sector platforms.”

About Apache Capital:

Apache Capital is an investment manager focused on residential real estate for rent with a proven track record of creating value through funding, developing and operating its assets under management. 

Apache Capital aims to raise the standard of living for all generations across the UK, building a portfolio of digitally-enabled, consumer-focused brands that deliver for investors and create a more thoughtfully designed, more convenient and aspirational lifestyle for customers.

Investing for the long-term, Apache Capital’s philosophy has been to focus on demographically and structurally supported asset classes and the company is behind sector-shaping investments across purpose-built student accommodation, senior living, multi-family and single-family housing.

Apache Capital. Invest in Living. Website: www.apachecapital.co.uk

Media contacts:

Tom Roberts/Matt McLoughlin

Blackstock Consulting (A Montfort Communications company)

tom@blackstock.co.uk / matt@blackstock.co.uk 

About Harrison Street:

Harrison Street is one of the leading investment management firms exclusively focused on alternative real assets. Since inception in 2005, the firm has created a series of differentiated investment solutions focused on demographic-driven, needs-based assets. The firm has invested across senior housing, student housing, healthcare delivery, life sciences and storage real estate as well as social and utility infrastructure. Headquartered in Chicago with offices in London, Toronto, San Francisco and Washington DC, the firm has more than 220-employees and approximately $50 billion in assets under management. Clients of the firm include a global institutional investor base domiciled in North America, Europe, Middle East, Asia and Latin America. Harrison Street was awarded Best Places to Work by Pensions & Investments for seven consecutive years (2014-2020) and was recognized by PERE as the 2021 Alternatives Investor of the Year, North America and 2020 Global Alternatives Investor of the Year. For more information, please visit www.harrisonst.com

Media Contacts:

Nathaniel Garnick/Grace Cartwright

Gasthalter & Co.

+1 (212) 257-4170

harrisonst@gasthalter.com   

About Moda Living:  

Founded in 2014, Moda Living is a leading UK developer and operator of rental communities providing a full range of integrated services to source, deliver and operate market leading institutional grade assets. The business has a UK-wide pipeline of more than 20,000 homes with a combined GDV in excess of £6.5bn and over £1.5bn of live construction on site. 

Moda operates a family of living sector platforms with leading global institutional investment partners.  Moda’s vertically integrated model designs, builds and operates next generation spaces to live, work and play. Moda continues to push the boundaries of style, service and innovation to craft considered, diverse residential communities providing different products at different price points for different lifestyle requirements.  

Moda’s core brand foundations focus on outstanding customer service, unparalleled health & wellbeing and integrated digital infrastructure with real time ESG reporting to provide an optimum rental experience and a better quality of life.

BTR sector set to keep growing as economic situation worsens

By Adam BransonThu 27 October 2022

Experts say well-managed rental homes will be seen as stable option as interest rates rise and recession looms

A decade ago, hardly anyone had heard of the build-to-rent (BTR) sector. How things have changed. Today, BTR has become a favourite pick for investors, with billions in institutional capital going into the sector.

What’s more, BTR’s growth is set to increase markedly, according to research published by the British Property Federation (BPF) and Savills last week. The organisations predict that the number of completed BTR homes could increase five-fold to reach 380,000 by 2032.

If that were to transpire, the sector would be worth some £170bn. It would also mark a fundamental shift in the private rented sector (PRS).

Today, BTR homes represent just 1.5% of PRS stock, but the BPF and Savills say the share could increase to 8% in just 10 years’ time. So, why is the BTR sector proving so popular? And what might get in the way of its development?

The research was undertaken to mark the 10th anniversary of the Montague Review, which was commissioned by then housing minister Grant Shapps. It aimed to identify barriers that were preventing institutional investment in purpose-built homes for rent and to come up with solutions.

“Demand for high-quality homes for rent is only going to increase”

Jacqui Daly – Savills

Ultimately, the review’s recommendations included more support for BTR in national planning policy and local plans, the release of more land for development and the standardisation of tenants’ rights, all of which the government adopted.

They certainly seem to have worked. As at Q3 2022, £30bn has been invested into the BTR sector, delivering 76,800 completed homes, according to BPF and Savills. A further 163,400 units are in the planning and delivery pipeline.

“The Montague Review was a significant moment that gave birth to the BTR sector as we know it today,” says Ian Fletcher, director of policy at the BPF. “Ten years on, we can say the review achieved its core aim of unlocking long-term institutional investment into homes for rent.”

Jacqui Daly, director of residential research at Savills, agrees. “When the Montague Review was undertaken in 2012, UK housing delivery was at its lowest level since the post-war period and uncertainty in the lending markets post global financial crisis was suppressing delivery from traditional housebuilders,” she says. “What is clear is that the demand for high-quality, professionally managed homes for rent is only going to increase.”

Shallow trajectory

So, the rise of BTR has been remarkable and could yet be more remarkable still, but it has to be said that growth to date hasn’t lived up to previous expectations, according to Ashley Perry, investment director at Apache Capital. He points out that Savills’ competitor Knight Frank previously predicted total investment volumes would hit £50bn by 2020. Two years on from that prediction and the sector is still £20bn short. “The trajectory is shallower than anticipated,” he says.

However, Perry believes BTR will continue to grow.

“The financial situation is going to push more people into the PRS”

Ashley Perry – Apache Capital

After all, home ownership has been declining in the UK since around 2003, with more people renting for longer. In such a situation, a sector that provides secure tenancies in modern, well-maintained homes is an attractive option compared with the wider, largely unregulated PRS.

What’s more, the expected recession is likely to be long and potentially deep, according to the Bank of England, which will inevitably mean fewer people making the move from renting to owning. Again, BTR will look like the more stable option if ownership is off the table.

“I’m not saying that everyone’s suddenly going to be renting rather than owning,” says Perry. “But the financial situation that’s already impacting everybody is going to push more people into the PRS.”

Rising interest rates

Robert Sloss, chief executive officer at HUB Residential, says that a key issue at the moment is rising interest rates, which are highly unlikely to go into reverse any time soon given the UK is seeing inflation hovering around the 10% mark and despite the looming recession. “The age of very low interest rates is over,” he says. “That’s going to maybe push people more towards renting. [People will be] naturally drawn towards BTR product because you’re going to get something decent that’s run professionally and so on.”

The BTR sector should also benefit from the fact that it is increasingly understood by local planning authorities. According to the BPF and Savills report, 47% of local authorities now have BTR in their housing pipelines, versus just 20% in 2017 – a remarkable turnaround in just five years. Dan Batterton, head of residential at Legal & General Investment Management, attributes this to the Montague Review.

“A really important thing that came out of it a few years later was a definition of what BTR actually is,” he says. “It sounds really boring, but it allowed planning committees and planning authorities to define BTR and have policy specific to it. It allowed government to think about BTR in a tax and legal sense differently. I think it really helped. It’s a new business model that is working. Investors seem happy, more money is coming in and it is growing.”

Building momentum: according to the BPF and Savills, 47% of local authorities now have BTR in their housing pipelines – up from 20% in 2017

In addition, Batterton says the rise of BTR has meant that more units, especially in dense urban areas, have been delivered than would otherwise have been the case and that should continue. Most traditional housebuilders, he adds, worry about building residential blocks in city centres because if the market turns they will be left holding hundreds of units they can’t sell. BTR developers have no such qualms.

“They’re not particularly attractive for a build-to-sell developer, where he’s got the risk of being left with a load of apartments in one location and he’s going to receive 400 apartments completed on the same day and suddenly has to sell them all,” says Batterton. “I do think a lot of the building that’s happened wouldn’t have happened if it was just left to those build-to-sell developers. I think that is genuine new supply that we’re providing.”

For Stephen Young, senior investment manager at Kajima, however, the reason that the BTR sector has got to where it is today and will continue to grow comes down to a series of macroeconomic factors that taken together provide confidence to investors. “There are forces in place that have been several decades [in the making],” he says.

“We have the lack of affordability of ownership; we have a lack of public investment in affordable homes. We therefore have more and more people being caught up in the private rented sector, and the status quo is not very good – there’s a lack of standards and regulation. There’s an obvious opportunity to improve it, so we see BTR as a good macro-supported business model.”

Experts say well-managed rental homes will be seen as stable option as interest rates rise and recession looms

Present Made secures committee approval for UK’s first purpose-built family rental housing development

·       KKR and Apache Capital to invest £610m in purpose-built apartments designed for rent in core cities across the UK 

·       The collaboration will deliver over 4,000 high quality rental homes as part of a £1.7bn development pipeline

·       Properties will be developed and operated by Moda Living

[November 22, 2021] — KKR, a leading global investment firm, and Apache Capital, a leading investment manager focused on UK residential real estate, announced that KKR and Apache Capital have established a joint venture to create a UK build-to-rent (‘BTR’) multifamily housing investment platform.

KKR and Apache Capital will invest £610m to fund the delivery of BTR projects in core cities across the UK that will be developed and operated by Moda Living (‘Moda’), with sites already identified in Birmingham, Brighton and Hove, and London. 

The developments will deliver over 4,000 apartments that are purpose-built and designed for rent as part of a £1.7bn development pipeline. The homes will be built to the latest design specifications, with high levels of on-site amenities and service provision for residents.

Rosa Brand, Director at KKR, said: “We are excited to work alongside Apache Capital, and Moda Living, both highly experienced strategic partners with excellent track records, over the long term, to deliver a best in class portfolio in the build-to-rent residential sector, which remains a thematic priority for KKR”.

John Dunkerley, CEO and co-founder of Apache Capital said: “Our strategic partnership with KKR demonstrates the growing maturity of the UK build-to-rent sector, which continues to attract global institutional capital thanks to its favourable demand-supply dynamics and defensive, counter-cyclical characteristics.

“This collaboration is consistent with our strategy of creating a premium product marked by high levels of service and amenity provision and we look forward to seeing the projects completed.”

Tony Brooks, Managing Director at Moda Living, said: “With the backing of Apache Capital and KKR we will deliver the next generation of build-to-rent neighbourhoods that will set new standards for style and service while meeting the growing demand for high quality rental housing that is responsive to modern lifestyles”.

The joint venture between Apache Capital and KKR follows the success of Apache Capital and Moda’s second operational multifamily BTR scheme, Moda, The Lexington, in Liverpool, where 60 percent of apartments are already leased two months after launch. Moda’s flagship scheme, Moda, Angel Gardens, in Manchester, is fully stabilised, having set new sector benchmarks for rents achieved.

KKR’s investment was made via KKR Real Estate Europe Partners Europe II, a US$2.2 billion fund dedicated to value add and opportunistic real estate investments in Western Europe.

Q&A with Apache and Present Made’s Richard Jackson

BTR News talks to Richard Jackson, Co-founder and Managing Director at Apache Capital and Co-founder and CEO at Present Made.

Richard Jackson, Co-founder and Managing Director at Apache Capital and Co-founder and CEO at Present Made. Apache Capital’s strategy has been to be an early mover in emerging living sectors – and to create some of the first best-in-class, institutional-grade products. BTR News talks to Richard Jackson, Co-founder and Managing Director at Apache Capital and Co-founder and CEO at Present Made about single-family housing and investor appetite, Present Made’s ESG agenda, and the immediate priorities and plans for 2022.

Can you explain how single-family rental is different to multifamily housing and why it has taken this long to arrive in the UK?plans for 2022 and beyond to follow what has been a highly successful 2021.

“Multifamily housing refers to city centre apartment blocks – typically built specifically for rent-  like what we are doing through our joint venture with Moda Living that has secured backing from KKR, Harrison Street and NFU Mutual.

Single-family rental refers to a number of types of offering:

  1. Investors acquiring pre-existing properties that have not been essentially buy to let at scale.
  2. Forward funding housebuilder schemes that have minimal amenity, before converting them into rental communities
  3. True purpose-built and designed single family rental homes like what we are delivering with Present Made.

The US and UK single-family rental markets are very different. Ours is predominantly forward funded housebuilder stock, whereas in the US the genesis was more about buying existing stock, particularly in the earlier stages of its development where investors aggregated scale through the acquisition of housing as part of non-performing loan portfolios. More new build single-family housing in the US is currently being developed.”

What is investor appetite like for single-family housing?

“Multifamily housing refers to city centre apartment blocks – typically built specifically for rent-  like what we are doing through our joint venture with Moda Living that has secured backing from KKR, Harrison Street and NFU Mutual.

Single-family rental housing – like residential for rent more broadly – is increasingly being seen as an alternative to fixed income by institutional investors thanks to the promise of long term steady income streams with defensive, counter-cyclical qualities.

Attractive demand supply dynamics – with demand for good quality rental homes far outstripping supply – also supports future rental and capital growth.

Higher inflation makes rental residential more attractive as Build to Rent operators can reset rents more regularly due to shorter average lease renewal times compared to commercial property sectors. This means Build to Rent is better placed to capture rental growth, but the key question is whether wage growth keeps up with inflation. 

Why did you choose to deliver a purpose-built and designed product over forward funding housebuilder schemes or acquiring existing stock?

“Higher inflation makes rental residential more attractive as Build to Rent operators can reset rents more regularly due to shorter average lease renewal times compared to commercial property sectors. This means Build to Rent is better placed to capture rental growth, but the key question is whether wage growth keeps up with inflation. “

Our experience in multifamily housing with Moda and in student accommodation before that has shown purpose-built and designed assets tend to perform better over the long term. As a vertically integrated business, Present Made has the ability to create value at each stage of an asset’s lifecycle.

Apache Capital’s strategy has always been to be an early mover in emerging living sectors and create some of the first best-in-class, institutional-grade products, supported by strong branding and operations, that sets new benchmarks for performance and pricing. It’s what we have done with our assets with Moda and previously in student housing. That’s what we intend to do with Present Made.

Why did you choose to deliver a purpose-built and designed product over forward funding housebuilder schHow does Present Made respond to the ESG agenda?emes or acquiring existing stock?

We’ve got a corporate focus on sustainability, which is embedded into every stage of the design, construction and operational stages of the process. 

We’re targeting a net zero operational model and homes will be precision engineered in a factory environment to create higher quality homes with fewer defects. By using modern methods of construction (MMC) we can deliver more energy efficient homes at a faster pace and with less waste, energy consumption and disruption to local communities. 

The homes are just one part of it though. All Present Made communities are developed through a landscape led masterplan designed around people, not cars, and with highly activated public realms. Sustainability and wellbeing are at the core of each of our developments, with internal and external amenities designed to encourage and foster community creation. 

Finally, we feel that we must look beyond our role in the real estate industry and consider ways in which we can encourage change in society more broadly. We’re a founding shareholder in Action Funder, which is a social impact enterprise opening up funding opportunities for grassroots business and community initiatives. 

How does Present Made sense with Apache’s other strategies?

“There’s no conflict with our JV with Moda as we’re targeting different demographics, typologies, locations and price points, and we’re committed to building out of the rest of our multifamily pipeline with them following the recent investment from KKR. 

We’ve since exited student accommodation and currently we’re not actively exploring other opportunities in senior living, having not long stabilised our central London retirement village that we delivered as part of our JV with Audley.”

Can you tell us about Present Made’s plans/immediate priorities for 2022?

“Our focus is on building out our initial £1.6bn development pipeline that will see over 3,000 smart homes delivered across the South East of England, with the first few sites – like Eddington and Mill View – concentrated in the Oxford-Cambridge Arc.

We are also looking to grow our team further as we fund these developments, sourcing additional debt financing.”