Los Angeles-based investment manager Oaktree Capital Management is investing more than £300m in a UK serviced-apartment start-up.
The group is providing the cash to recently launched business CLSA to help it build a portfolio of owned and operated serviced flats across the UK.
It will be Oaktree’s first major investment in the sector in the country.
The business has been active in the UK alternatives sector, however, and in 2010 backed the launch of student digs investor Knightsbridge Student Housing, which is now working towards establishing a £1bn portfolio.
Sources said the private equity group was keen for CLSA to mirror the success of Knightsbridge Student Housing and that Oaktree would “scale up” its initial £300m investment in the business.
CLSA is run by Max Thorne, who left his role as senior vice president of development at European serviced apartment group BridgeStreet last December after more than a decade with the company. He is joined by Simon Scott from Watkin Jones’ student accommodation division.
Neither CLSA or Oaktree would comment on the plans, but industry sources said it was easy to identify the attraction of the market for Oaktree.
Average rents on serviced flats in London increased by 25% last year to £1,214 per week, with occupancy levels climbing to 90%, according to CBRE.
And with a 20,000-room shortfall in short-term accommodation in the capital, those figures are expected to continue to grow.
“There is great demand and a shortage of serviced apartment supply in London. It is an outstanding opportunity for a branded product to enter the sector in the UK because it simply does not exist at the moment,” said CBRE residential investment consultant Andrew Pratt.
“The market, particularly in the major UK cities, has capacity to grow and develop to become an interesting alternative asset class for investors. New entrants, including Oaktree, have aspirations to become sector leaders by owning the properties and operating them through a brand recognised for quality of product, service and value.”
annabel.dixon@estatesgazette.com
