BTR - Native Group growth, BTR taskforce and Investec loan for Rugby scheme

Native Group has announced the creation of Native Residential as a new business entity, as well as announcing a range of promotions and new appointments.

Native Group describes Native Residential as the UK’s fastest-growing independent Build-to-Rent operator. It will continue to be under the oversight of Guy Nixon, chief executive and founder, and will have its own business structure, team and growth plan. It will sit alongside its sister company Native Places, led by the managing director Olivia Immesi.

Native Residential and Native Places' parent company Native Group - which has more than £2.5 billion of assets under management on behalf of institutional, private equity, local authority and high-net-worth investors - will continue its focus 'on delivering consistently strong revenue outperformance and operational excellence for all of Native’s asset categories'.

This totals more than 4,800 units across BTR, Aparthotels, and Serviced Apartments. 

Native Residential, which currently has 2,000 units operational with a further 2,000 units in its contracted pipeline, says it is on track to have increased by double its employees to 116 by the end of 2022. This will include a dedicated head office team tasked with 'driving rapid growth through operational excellence'.

In addition, a new Native Residential senior leadership team has been created through a series of promotions, including Rajiv Mehta being promoted to Operations Director (UK), Helen Aldridge promoted to Director of Marketing & Communications, Simon Wilkinson promoted to Commercial Director and Alec Newton promoted to Origination Director.

There were also a number of new appointments, including:

• Ushir Patel, Head of Residential Finance (hired from Knight Frank)

• Jake Matthews, Head of Facilities (hired from Grainger)

• Richard Clogg, Head of Operations South (hired from Get Living)

• Dougie Orton-Wade, Head of Operations North (hired from Allsop)

Native Residential says its growth has been supported by a series of new clients including Ridgeback Group/AIMCo, Invesco, City Developments Limited, and Woking Borough Council.

Guy Nixon said: “It’s a hugely exciting time to be operating in the BTR market as demand for good-quality rental accommodation continues across the UK.

“As an independent BTR operator, supporting a growing number of institutional, private equity, local authority and high-net-worth investors in the sector, we’re excited to see the scale of the business and the depth of its expertise growing along with the exceptional quality of the people we’re bringing into the business to support this growth.”

He added: “By separating Native Residential from Native Places, we have created a highly skilled and dedicated team which will go from strength to strength as build-to-rent continues to solidify its reputation for providing long-term stable returns for investors.”

Alec Newton, origination director at Native Residential, said: “Build-to-rent as an asset class has evolved into a sophisticated product. With increasing levels of supply starting to appear in numerous markets, Native Residential is setting itself apart by combining the strengths of our talented workforce and consistent operating procedures; creating communities with soul that generate predictable and sustainable income flows.

“Utilising demographics, trends, data and research, Native Residential embraces market intelligence to design and operate assets which outperform. Operational excellence can only be achieved by combining specialised disciplines across revenue management, cost control, systems integration, brand, digital marketing, community building, ESG and compliance.

“As consumers benefit from more choice, it is increasingly important to focus on the customer. This should be the principle consideration for investors.”

LRG launches BTR taskforce

National Property consultancy Leaders Romans Group (LRG) has launched a BTR taskforce, Three Sixty Space. This follows the recent appointment of Andrew Jones as Group Director, Corporate Lettings & Build to Rent.

Three Sixty Space brings together 'wide-ranging expertise from across LRG, including land acquisition and disposal, planning, sustainability, new homes development, lettings agency, property management and block management'.

It is designed to provide a consistent service to support the increasing number of investors, developers and property managers who make BTR one of the UK’s fastest-growing property asset classes.

According to the British Property Federation, which runs a quarterly BTR map tracking new activity, there has been exceptional growth in this sector, 14% per annum from 2021 to 2022, and no less than 4% for the last reported quarter.

Further analysis reveals that, in 2021, BTR accounted for 6% of all housebuilding while investment topped £4 billion.

The sector has evolved fast, from mainly providing city-centre apartment blocks for young professionals to substantial BTR suburban communities with shared services and facilities, which cater to all age groups and demographics. 

The BPF's Who lives in Build-to-Rent? Report (2021) found that, last year, 70% of investment had been absorbed by schemes outside London, highlighting the growth of the sector in the regions.

Andrew Jones said: ‘Recent research among global institutional investors has found that 70% anticipated being active within BTR suburban communities in the next five years: a substantial increase from the 42% currently active. The sector’s potential is almost unlimited, as counter-urbanising maturing Millennials seek family homes in serviced communities and benefit from the opportunity to move from one home to another at little cost as their family grows."

"This innovative, service-based product will compare favourably with most of the stock currently available for rent, and its popularity will enable BTR suburban communities to attract additional investment and grow at pace."

He added: "But unabated expansion will require the values of traditional BTR to be maintained. LRG’s specialist BTR taskforce was constructed on the basis of consistency. The service, which spans land and planning, specialist management and lettings, strategic advice and data analysis, provides services to investors, housebuilders and PRS operators throughout the process.

"From land acquisition and Local Plan allocations, to understanding local markets and providing service to fix a dripping tap, LRG spans a vast range of expertise, enabling us to provide that much-needed consistency.’

The White Paper BTR suburban communities: the next stage in the evolution of Build to Rent will be available via Three Sixty Space soon.

Investec closes £19.3 million loan for Rugby BTR development

In other BTR news, Investec has announced that it has provided Edmond de Rothschild Real Estate Investment Management, the real estate investment management business within the Edmond de Rothschild group, with a 39-month, £19.3 million development loan.

This is to support its construction of a 357-unit BTR scheme in the famous town of Rugby, Warwickshire.

The scheme, known as Charolais Gardens, will offer a mix of high-quality one and two-bedroom apartments, which will include a concierge, gym, resident’s lounge and wellness garden. It is due to complete in January 2023, with a first phase handed over for occupation in October 2022.

Situated in a prominent town centre location, residents will be able to take advantage of 'excellent train links', with London Euston and Birmingham New Street stations under 45 minutes journey time from Rugby station, which sits close to the development.

The loan represents Investec’s first with Edmond de Rothschild, which has made the investment through its Residential Investment Fund UK. This fund, created in 2008, has a strategy which focuses on the development of 'affordable BTR assets' in UK regional cities. At present, the Fund holds 11 assets, with three already stabilised and income-producing.

The BTR sector has witnessed rapid growth in recent years, and there has also been a more recent growth in the popularity of suburban BTR. In 2021, this part of the sector saw a record £3.1 billion invested into it, with 20,000 homes under construction and a further 30,000 with planning approval.

Despite the challenging macroeconomic background, the sector has performed strongly, with operators continuing to report strong lettings activity amid challenges around affordability in the housing market, as well as changes in the way people are choosing to live. This has helped to underpin ongoing demand.

Jonathan Long, head of corporate real estate at Investec, commented: “This transaction demonstrates our conviction in high quality, affordably priced Build to Rent schemes that benefit from excellent transport connectivity. The government’s Levelling Up agenda, impact of the Covid-19 pandemic and the sector’s defensive characteristics have seen accelerated investment in, and demand for, rental homes outside of London. Establishing new relationships with high quality counterparties such as Edmond de Rothschild is a key part of our growth strategy and we look forward building a long-term partnership.”

James Whidborne, head of fund management residential UK at Edmond de Rothschild, added: “This transaction is further evidence of the appetite for regional Build to Rent from a variety of both equity and debt providers. As a house, affordable UK residential is one of our strongest convictions. We hope this is the start of a strong relationship with Investec as we continue to grow our platform and create and launch a series of products investing in this space.”