From Build-To-Rent to Built-To-Rent: from Assumptions to Reality

From Build-To-Rent to Built-To-Rent: From Assumptions To Reality

Society of Property Researchers | BTR 26 March 2019

From Build-to-Rent to Built-to-Rent: From Assumptions to Reality Chair: Speaker:

Alex Moss, Director Julia Middleton, Research Consultant Cass Real Estate Research Centre Dataloft

Moderator: Panellists:

Charles Fairhurst Cléo Folkes, Founder Jonathan Monnickendam Andrew Moffat Dr Robin Goodchild Fairhurst Associates Property Overview Ltd Development Debt Consultancy LIS Real Estate Consultancy University of Aberdeen Bus. School

Society of Property Researchers | BTR Cass Real Estate Research Centre Building the bridge between theory and practice

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From Build-To-Rent to Built-To-Rent: From Assumptions To Reality

Today we will be using Sli.do to collect questions and to perform a live poll. To join the conversation:

• Log in to the Cass Guest WiFi • WiFi code: 91gqjvym

• Open your browser on your mobile or tablet • Go to sli.do • Enter the event code #E381

• Please note that this event is being recorded today

Society of Property Researchers | BTR 26 March 2019 From build-to-rent to built-to-rent

Dataloft Rental Market Analytics (DRMA)

Julia Middleton March 2019

BTR growing … but only a drop in ocean

Build to rent • Gathering momentum • 30,000 units operational • Another 110,000 in the pipeline

• 4.5 million households PRS • BTR = less than 1%

• 1.4 million tenant references over 5 years Dataloft dataset • c.24% of market

• c.30,000 new lines a month

Source: BPF, EHS 2

Understanding rental growth Rents grew in most cities Top Peterborough performers Brighton Leicester Coventry

Local picture important Consistent factors

Rents fell in 7 cities 3

Rental growth outlook A starting point for investment objectives 1 London 2 Reading 3 Coventry 3 Slough 5 Leeds 6 Southampton 7 Milton Keynes 8 Bristol 9 Cambridge 10 Brighton 4 Local rental markets Hayes

Established market

Series of trade-offs Locality vs amenity

How far to tempt

higher paying tenants?

Rental premium?

What is rent? Emerging market 9.3% Cover costs: gross to net rental Wider market always relevant premium not a monopoly JLL

6 Watch the affordability ceiling

31% line by line gross income 31% 33% London Hayes Limited local variance overall High earners 22% vs low earners Top earners 39% Affordability ceiling Low earners

6 Who to build for?

Majority young Evolve with Average age: Market needs? professionals product London 31 Family homes but not exclusively Hayes 36 49% London FAMILIES Hayes

28% 27% 25% COUPLES SHARERS 24% 21% COUPLES SINGLES 6% FAMILIES 18% SHARERS SINGLES

Most tenants are local

Renters move Majority less BTR tempt tenants Trade off between short distances than 5 miles from further? location/amenities

20% 25% 14% 24% London Hayes 26% 60% 30% 79% Up to 5 miles Up to 5 miles

Most tenants are local

Huge potential market Established rental market Tenants stay local

Affordability ceiling

Optimise Widen target demographic your Rental growth = earnings growth business model Appropriate premium? Cover costs? Not a monopoly unless brand power? 10 Unless otherwise specified source is Dataloft Rental Market Analytics

Disclaimer: This report is produced for general information only. While every effort has been made to ensure the accuracy of this publication, Dataloft Ltd accepts no liability for any loss or damage of any nature arising from its use. At all times the content remains the property of Dataloft Ltd under copyright, and reproduction of all or part of it in any form is prohibited without written permission from Dataloft Ltd.

Date of publication: March 2019 Analysis, editorial, design, graphics and charts by Dataloft. From Build-To-Rent to Built-To-Rent: From Assumptions To Reality •Premium Rent Rental Growth

•Gross to Net

•Yield

Society of Property Researchers | BTR | Development Debt Consultancy 26 March 2019

How best to suit your development for rental?

 Make management part of design and analysis process

 Create a base scheme and spec

 Look at each project on its own MERITS  Analyse the true requirements for MAINTENANCE  Be careful how you MEASURE success

 Look for improvements in spec or service which increase net rent

Society of Property Researchers | BTR | Development Debt Consultancy 26 March 2019 Leading UK Institutional Investors in Build-to-Rent

Society of Property Researchers | BTR 26 March 2019

PRS investors platforms and listed platforms  Investors with their own Platforms  ADIA/Fizzy Living  Henderson Park/Greystar  Annington Plc  Heitman  Argent/Related  Ivanhoe Cambridge/Residential Land  CDL  Knight Dragon/Greenwich Peninsula  Lancashire Pension Fund/ Hayes & Heylo Housing  Country Gardens  Lone Star/Quintain  Dorrington Plc  Malaysian investors/Battersea  Get Living  Pears Family  Dandara Group  PfP Capital/USS  ECO World/be-here  PSP Investments/Greystar/Greenford  Essential Living/M3/WSIB  R&F Properties/VNEB  London’s historic estate/Grosvenor  Westrock/Platform  Harrison Street/Apache Capital  The Wellcome Trust

Society of Property Researchers | BTR | Fairhurst Associates 26 March 2019

PRS investors platforms and listed platforms  Listed or REITs

 BL/CapCo/Landsecs/Intu/Unibail-Rodamco-Westfield

 Civitas Social Housing REIT

 Grainger Plc

 Residential Secure Income (ReSI)

 Telford Homes/M&G/Invesco

 The PRS REIT/SIGMA

 Triple Point Social Housing REIT

 Watkin Jones plc

Society of Property Researchers | BTR | Fairhurst Associates 26 March 2019

Panel Discussion. Please send us your questions via sli.do, #E381 Chair: Speaker:

Alex Moss, Director Julia Middleton, Research Consultant Cass Real Estate Research Centre Dataloft

Moderator: Panellists:

Society of Property Researchers | BTR

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Joint SPR / ULI Seminar: Green Buildings – Are There Financial Benefits? – Tuesday 2nd April 2019

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Society of Property Researchers | BTR 26 March 2019