Friday, October 24, 2014
Countrywide plc (“Countrywide”), the UK’s largest property services group, and Hermes Investment Management (“Hermes”), the £27.4billion* investment manager are delighted to announce a new strategic partnership in order to create the pre-eminent residential property investment fund (the “Fund”) operating in the UK Private Rented Sector (“PRS”).
The partnership will combine the complementary skill sets of Countrywide, the UK’s largest lettings and property management company,and Hermes Real Estate, a recognised industry leader with both an innovative and long term approach to responsible property investment and over £6 billion* of Real Estate assets under management.
The Fund vehicle has been established with an initial £95 million of seed equity, inclusive of three assets in Manchester, Birmingham and Nottingham, and will seek to raise further capital and bank debt to fund investment. It will invest in existing residential assets and will also forward commit to acquire new developments throughout the UK.Furthermore, the Fund will support the building of much needed high quality, well maintained and professionally managed homes in places where they are needed most.
This proposition aims to provide institutional investors with a real estate exposure that offers potentially compelling net yield combined with long term capital growth, as well as complementing existing real estate and credit assets. Moreover, it is an opportunity aiming to leverage current demographic trends and the institutionalisation of the residential lettings market.
Commenting Graham Bell, Finance Director, Countrywide, said:
“As the UK’s largest residential property services company with over 1,000 branches, the size and scale of Countrywide means it is uniquely placed to play a leading role in building and managing a large residential investment vehicle.
“The Fund leverages Countrywide’s platform to overcome the main barriers to institutional investment in residential property, namely difficulty in finding areas with both attractive and sustainable yields, managing operating costs and sourcing attractive assets. Countrywide’s proprietary data and on-the-ground knowledge generated from over 12,000 employees working in their local property markets, allows us to identify specific areas which combine strong economic growth potential and attractive yields. Our integrated letting and property management platform, with over 65,000 properties let and managed, allows us to drive operating performance and minimize gross-to-net erosion. Finally, both our Lambert Smith Hampton division and our large Land & New Homes team give us access to an extensive network of relationships across the UK which allows us to source attractive investment opportunities.
“We have chosen to partner with Hermes because they think about the opportunity in UK residential property in the same way, and on the same scale, as we do at Countrywide. As an industry leader with an outstanding track record, they have immediate access to significant investment capital combined with an excellent international client base for future fund raising.”
Chris Taylor, Chief Executive, Hermes Real Estate, said:
“The investment thesis within the residential sector for long term investors remains compelling with a major imbalance between supply and demand; the major constraint to institutional investors has been the lack of a quality operator and access to stock. We are excited about the opportunity to grow the Fund to be the leading UK Private Rented Sector investment vehicle available.
“Our strategic partnership with Countrywide, and the complementary skill sets that we both bring to the table, will provide a best in class operating platform and crucially unique UK wide access to private rented sector stock. Moreover, this collaboration is consistent with our innovative approach to delivering what our clients require from their real estate allocations, by focusing upon delivering long-term, sustainable and attractive income returns.”
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