Apache Capital’s strategy has been to be an early mover in emerging living sectors – and to create some of the first best-in-class, institutional-grade products. BTR News talks to Richard Jackson, Co-founder and Managing Director at Apache Capital and Co-founder and CEO at Present Made about single-family housing and investor appetite, Present Made’s ESG agenda, and the immediate priorities and plans for 2022.
Can you explain how single-family rental is different to multifamily housing and why it has taken this long to arrive in the UK?
Multifamily housing refers to city centre apartment blocks – typically built specifically for rent- like what we are doing through our joint venture with Moda Living that has secured backing from KKR, Harrison Street and NFU Mutual.
Single-family rental refers to a number of types of offering:
- Investors acquiring pre-existing properties that have not been essentially buy to let at scale.
- Forward funding housebuilder schemes that have minimal amenity, before converting them into rental communities
- True purpose-built and designed single family rental homes like what we are delivering with Present Made.
The US and UK single-family rental markets are very different. Ours is predominantly forward funded housebuilder stock, whereas in the US the genesis was more about buying existing stock, particularly in the earlier stages of its development where investors aggregated scale through the acquisition of housing as part of non-performing loan portfolios. More new build single-family housing in the US is currently being developed.
What is investor appetite like for single-family housing?
Single-family rental housing – like residential for rent more broadly – is increasingly being seen as an alternative to fixed income by institutional investors thanks to the promise of long term steady income streams with defensive, counter-cyclical qualities.
Attractive demand supply dynamics – with demand for good quality rental homes far outstripping supply – also supports future rental and capital growth.
Higher inflation makes rental residential more attractive as Build to Rent operators can reset rents more regularly due to shorter average lease renewal times compared to commercial property sectors. This means Build to Rent is better placed to capture rental growth, but the key question is whether wage growth keeps up with inflation.
Why did you choose to deliver a purpose-built and designed product over forward funding housebuilder schemes or acquiring existing stock?
Our experience in multifamily housing with Moda and in student accommodation before that has shown purpose-built and designed assets tend to perform better over the long term. As a vertically integrated business, Present Made has the ability to create value at each stage of an asset’s lifecycle.
Apache Capital’s strategy has always been to be an early mover in emerging living sectors and create some of the first best-in-class, institutional-grade products, supported by strong branding and operations, that sets new benchmarks for performance and pricing. It’s what we have done with our assets with Moda and previously in student housing. That’s what we intend to do with Present Made.
How does Present Made respond to the ESG agenda?
We’ve got a corporate focus on sustainability, which is embedded into every stage of the design, construction and operational stages of the process.
We’re targeting a net zero operational model and homes will be precision engineered in a factory environment to create higher quality homes with fewer defects. By using modern methods of construction (MMC) we can deliver more energy efficient homes at a faster pace and with less waste, energy consumption and disruption to local communities.
The homes are just one part of it though. All Present Made communities are developed through a landscape led masterplan designed around people, not cars, and with highly activated public realms. Sustainability and wellbeing are at the core of each of our developments, with internal and external amenities designed to encourage and foster community creation.
Finally, we feel that we must look beyond our role in the real estate industry and consider ways in which we can encourage change in society more broadly. We’re a founding shareholder in Action Funder, which is a social impact enterprise opening up funding opportunities for grassroots business and community initiatives.
How does Present Made sense with Apache’s other strategies?
There’s no conflict with our JV with Moda as we’re targeting different demographics, typologies, locations and price points, and we’re committed to building out of the rest of our multifamily pipeline with them following the recent investment from KKR.
We’ve since exited student accommodation and currently we’re not actively exploring other opportunities in senior living, having not long stabilised our central London retirement village that we delivered as part of our JV with Audley.
Can you tell us about Present Made’s plans/immediate priorities for 2022?
Our focus is on building out our initial £1.6bn development pipeline that will see over 3,000 smart homes delivered across the South East of England, with the first few sites – like Eddington and Mill View – concentrated in the Oxford-Cambridge Arc.
We are also looking to grow our team further as we fund these developments, sourcing additional debt financing.