From React News. Cooper Rose Real Estate acted on the Liverpool acquisition:
Big US investor partners with Packaged Living to build £1bn BTR portfolio
3 Nov 2022 | by Guy Montague-Jones
Joint venture buys first site in Liverpool
What USAA Real Estate creates joint venture with Packaged Living to build £1bn build-to-rent portfolio
Why Move builds on USAA Real Estate’s BTR investments in the US and adds new dimension to Packaged Living’s business
What next Alongside the new joint venture, Packaged Living will continue to buy sites to be forward funded by others
USAA Real Estate has struck up a joint venture partnership with Fiera Real Estate-backed Packaged Living to assemble a £1bn build-to-rent portfolio, React News can reveal.
Best known in Europe for its investments in the logistics sector through John Cutts’ Mountpark, USAA Real Estate has $35bn in assets under management. It is a seasoned investor in the BTR market in the US, but the deal with Packaged Living marks its first foray into the sector in Europe.
The joint venture will seek sites for the development of between six and 10 BTR schemes in leading towns and cities. It is expected that the portfolio will have an end value of about £1bn when built out.
Packaged Living will be responsible for acquisitions and the development of the schemes. It has already bought the first site for the joint venture – an office property in Liverpool that the developer will look to redevelop into a 400-home BTR scheme with an end value of about £150m.
The site, formerly named Ovatus, was due to host the city’s tallest tower.
The plot has detailed consent for a 27-storey residential tower, along with pre-application plans for a 50-storey building, 10 storeys higher than West Tower, the city’s current tallest. The Estate Office was brought in to sell the plot last year by its former owners Prospect Capital and Wilcocks & Wilcocks, as revealed by React News.
For Packaged Living, the deal with USAA Real Estate comes a year after it entered into a joint venture partnership with Aviva Investors in the single-family rental market.
However, this is the company’s first joint venture in the multi-family market where it has up to now partnered with investors, including Invesco Real Estate and CDL Hospitality Trusts, in forward funding deals on individual developments.
Ed Ellerington, founder and managing director of Packaged Living, said: “We’ll continue to buy land on an opportunistic basis, gain planning with existing partners and develop via forward funding with institutional investors. However, our partnership with USAA provides an alternative capital source and route to market via a build to core fund, stabilising schemes and creating a scaled portfolio of multifamily schemes across the UK.
“We see attractive returns created from yield compression between funding and stabilised yields, further enhanced when part of a wider portfolio of assets.”
The size and type of scheme that the new joint venture will look to bring forward will be similar to what Packaged Living has already developed with others. Schemes will typically have between 300 and 500 homes and there will be a strong focus on energy efficiency.
Growth potential
Justin Hildebrandt, executive managing director and head of Europe at USAA Real Estate, said he saw plenty of scope for growth in the UK market.
“The total number of units in the UK is similar to Palm Beach in Florida (73,934) and if you take everything in the pipeline, you get the same level as Portland, Oregon (215,632). The numbers are so low and the opportunity is so great that I feel very confident in the growth potential over the coming decade.”
USAA Real Estate used to be part of USAA, a Texas-based Fortune 500 company that insures and invests on behalf of US military families, but in 2019 a controlling stake was sold to the management team and Paxion Capital. USAA retains a significant minority stake.
Contact Giles Cooper