Chicago’s CA Ventures has revealed plans to invest £1bn in build-to-rent projects across Europe in the next five years.
The real estate giant aims to invest £200m in development costs in the UK in the first year and is on the hunt for regional opportunities.
CA Ventures has set a target annual spend of £200m-£250m over five years, rising to £380m-£400m by 2025.
“Our main focus is the UK,” says Carlo Matta, head of Europe at CA Ventures. “It is the most advanced market in Europe. It is the most liquid and is on the minds of investors.
“We are looking at Birmingham, Manchester, Liverpool and Glasgow, all those major secondary cities. London is very attractive for us, it is just difficult to find land and it has a difficult planning regime.”
The UK benefits from a larger number of target cities compared to the European market, which CA Ventures will seek to break into from its headquarters in London.
Expansion plan
Matta says the team will seek to expand from five employees to 15 within a year to support this expansion.
The developer has hired Tim Phillips as head of residential to lead the division. Phillips was previously a director at Lothbury Investment Management and has 14 years of experience in real estate.
The team will be looking to acquire consented land and develop schemes of around £70m-£100m, with two or three deals a year.
But Matta has no concern of oversupply. “There is a demographic shift from ownership to rental, that will continue,” he says. “The interest from institutional capital will increase.”
CA Ventures entered the UK market two years ago seeking student accommodation opportunities. Last year, it announced plans to invest £500m into student accommodation in the UK and Ireland by 2021.
“Since the beginning, we had the idea of bringing in the PRS business. We have settled in London, set up offices in Europe and we have a substantial pipeline in student housing. Now is the moment to push the PRS side of the business,” says Matta.
In the US, the developer has amassed a $2bn portfolio. Matta says the business is following the residential strategy from its 15 years of experience. “We started with student, then we expanded into PRS and senior living. I think Europe will follow a similar trajectory.”
However, he warns that a senior living expansion may still be a few years off: “Senior is still in the making. It is still very early, we are looking at one or two years before we can say when or if we will bring it in.
“The idea is not to spread too thin. Already student and PRS will be a major endeavour, in terms of creating a team and looking at the opportunities.”
CA Ventures will export its vertically-integrated approach from the US, which sees it develop, fund, stabilise and manage residential schemes. For now it has yet to secure any sites, but behind the scenes it is underwriting schemes and developing its own UK platform to manage them.
The move comes as US investors and developers continue to flock to the burgeoning BTR sector, with the likes of CBRE’s Trammell Crow Company, Atlas, and Cortland all entering the market in recent years.
In 2019, £2.4bn was ploughed into UK BTR, according to CBRE, bringing the sector’s total investment to around £10.9bn. While the year saw a 22% dip on 2018 figures, CBRE pointed to a healthy start to 2020, with a further £1.5bn of deals under offer.
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