US build-to-rent giant Greystar is in talks with Inhabit to buy or co-invest in a 3,300-home portfolio of rental sites in several UK cities.
The Inhabit portfolio includes sites in Manchester, Birmingham, Leeds, Bristol, Liverpool, Glasgow as well as Aberdeen (pictured) and is understood to have a gross development value of around £1bn.
A deal would be one of the largest investments to date in a portfolio of PRS sites and marks Greystar’s first foray outside London.
Inhabit was set up as a PRS company in early 2016 with Ana Nekhamkin at the helm and was seeded with seven sites. The PRS wrapper made the sites attractive as a potential portfolio deal, and since launch Inhabit has been working on getting planning consents for those sites without them.
Portfolio plays and consolidations of this kind are becoming increasingly attractive in the UK rental market, giving investors keen to access scale a ready-made portfolio of sites and early entrance and exit routes.
Tie-up with Lendlease
At the beginning of the year Canadian investor Oxford Properties took a stake in Delancey and Qatari Diar’s Get Living, before CPPIB announced a tie-up with Lendlease a few weeks later. At the end of March, Lone Star revealed it had appointed advisers for a potential sale of Quintain and its 5,000 rental homes at Wembley, north London.
The sector is following the path of the student housing market before it, which has attracted billions of pounds of investment through portfolio deals.
The Inhabit portfolio includes seven city-centre sites with 3,500 apartments in total. Alongside the rental homes are more than 1,000 student beds, 75,000 sq ft of shops and leisure space and a hotel.
Greystar is in talks to buy the residential, not the student elements, and would not necessarily buy all of them (see below). Other parties are still in discussions with Inhabit.
Michael Kovacs and Brandon Hollihan – the pair that run investment group Castleforge – are both listed at Companies House as directors of Inhabit Residential.
Distressed pricing
They set up Castleforge, then Mercers, in 2010 to take advantage of distressed pricing in the real estate market. They had worked together previously at Westbrook Partners, and raised £235m in a second UK-focused property fund in July 2016, Mercer Real Estate Partners II. It changed its name to Castleforge in 2017.
Since entering the UK market in 2013, Greystar has built up a property portfolio of both student housing and rental accommodation valued at £4.5bn.
Although most units are for the moment student beds, Greystar has become one of the UK’s most active build-to-rent investors, and a deal would almost double the number of its homes.
It has nearly 4,000 homes under construction, including 400 flats in Millharbour in east London; 1,965 homes on the former GlaxoSmithKline HQ site in Greenford, west London; 846 homes on the Post Office site in Vauxhall, SW8; and 546 flats in the world’s tallest modular tower in Croydon.
It has 177 operating flats in Bradstowe House in Harrow and 172 flats in central London across three sites – Fulham Riverside, Aldgate Place and Nine Elms Point – which it bought as part of a portfolio from Barratt.
Eastdil Secured is advising Castleforge.
Inhabit’s known sites
■ Manchester, 10-12 Whitworth Street: 330 apartments, planning granted
■ Liverpool, Heaps Rice Mill: planning for 800 homes and 12,000 sq ft of leisure and retail.
■ Leeds, City reach: plans submitted, 818 build-to-rent homes, 240 for-sale homes, 309 student beds, 9,902 sq ft of commercial space
■ Glasgow, Candleriggs Quarter: planning for 504 homes, 377 for rent, a 124-bed hotel, 597 student beds
■ Aberdeen, Broadford Works: plans just submitted for 590,000 sq ft development of 460 homes as well as 430 student beds.
■ Bristol and Birmingham
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