Redwood Consulting recently announced the £330m joint venture agreement made between longstanding client Universities Superannuation Scheme (“USS”) and Places for People. The joint venture is to invest in the UK private rented sector (PRS).
Supported by Redwood Consulting, the announcement of the deal was featured in a number of publications, including EG, Property Week, CoStar, Professional Pensions, PropertyEU and IPE Real Assets.
USS will provide the core funding for the partnership, whilst PfP Capital will act as Asset Manager, with Touchstone, Places for People’s specialist property management business, managing the portfolio on a day-to-day basis.
PfP Capital announced its intention to launch a fund in March 2017, to invest in a diversified portfolio of PRS assets across the UK. Following dialogue with a range of investors, USS was selected as PfP Capital’s preferred partner, funding the whole of the original investment target with Places for People holding a 10% stake in the joint venture.
The JV will acquire a seed portfolio of residential assets from Places for People for c.£150m, with an option to acquire a further c.£10m of similar assets post completion. The portfolio includes a range of modern, mid-market properties, a high occupancy rate and wide geographical spread across the UK.
The remaining commitments will be used for acquisition of further PRS assets across the UK. These will be sourced from a combination of guaranteed offtake from Places for People’s in-house c.15,000 home development programme, third-party acquisitions from UK housebuilders and developers, as well as acquisitions of high-quality existing PRS portfolios.
PfP Capital’s management team has extensive hands-on experience of growing and managing a large portfolio of assets. The joint venture will be managed by Tim Saunders, Fund Director at PfP Capital.
USS’s investment into PRS further complements its strategy of acquiring properties that are able to generate long-term stable returns, as demonstrated by its acquisitions of the PINE unit trust portfolio of nurseries and continued investment within the Supported Housing Investment Limited Partnership.
Tim Saunders, Fund Director, PfP Capital, said: “The new joint venture reflects the strong levels of interest from the institutional investor community in the UK private rented sector. There is a clear opportunity for experienced investors, developers and managers to take advantage of the significant potential for future growth from PRS. Through the seed portfolio, the joint venture will benefit from an attractive income yield from day one and we look forward to working closely with USS to invest the additional capital in strategic opportunities around the UK. Equally, in USS, we are thrilled to partner with such a high-profile investor, whose own experience will be hugely valuable moving forward.”
Alex Turner, Deputy Head of Property at USS, said: “USS is committed to investing in real estate assets of long term value, providing a secure income with significant potential for growth for the benefit of our members. This new joint venture establishes our foothold in the PRS sector, which has experienced strong growth in recent years with a bright long-term outlook. Our relationship with PfP Capital and their knowledge of the sector will enable the joint venture to identify well-priced assets across the country.”
PfP Capital was advised by Rothschild, John Forbes Consulting, Greenberg Traurig, Eversheds, Deloitte and Savills and USS was advised by Gowlings, JLL, GVA, PWC and Carey Olsen.