Brett Lashley and Wes Fuller of Greystar have already deployed £2bn in the UK student housing market. Now they are planning to make a splash in London’s private rented sector. Portrait by Jon Enoch
You have to watch the quiet ones. As Brett Lashley and Wes Fuller nervously wait to be photographed, the UK and executive managing directors of Greystar Real Estate Partners – the latter has flown in from the US ahead of a permanent move to the UK – admit they are more than a little camera shy.
The pair are modest too – particularly on the subject of what is next for the UK arm of the student accommodation company. But the facts speak for themselves. They have deployed more than £2bn since setting up in London 18 months ago.
First off, Fuller isn’t making the move alone. He is bringing three senior directors from the US business to help capitalise on opportunities in Europe. “We are bringing more resources because we have accumulated a significant portfolio and the opportunity for growth is large,” he says at Greystar’s London HQ on Great Winchester Street, EC2.
This bulking up of the business comes off the back of an already rapid entrance to the UK market. Over that period Greystar has built up a 600-strong workforce in the UK; 100 at a corporate level, only around five of whom came from its HQ in Charleston, South Carolina, and another 500 to manage its portfolio.
Its UK student housing portfolio stands at 22,700 beds across 52 assets and 18 markets. Recent investments include a £600m deal for Nido London’s 2,375-bed portfolio with PSP Investments and its £500m joint venture purchase with Goldman Sachs of Knightsbridge Student Housing’s 6,000-bed Westbourne Portfolio. —–
Now, having built an enviable empire in this sector, Greystar is preparing to expand into the UK private rented sector, just as it has done in the US. And its grand plans look set to shake up the market on this side of the pond.
A model for London’s future
Fuller and Lashley have built up a business model that could hold the answer to the future of London’s housing market. If high-quality and well-operated rented residential product is developed, it has the potential to take the stigma out of renting rather than owning in the UK market.
What makes Greystar different is that it is not just an investment manager but also an operator and a developer. Its investment management arm has more than $11bn (£7bn) of capital under management which it has invested into buying rental housing in the US, Canada and Latin America, which is what it intends to replicate in the UK.
It manages money for a multitude of investors, both in segregated accounts and commingled funds. So far it has only invested in the UK in partnership with Goldman Sachs and PSP.
Into each deal it also makes a significant minority investment so it has some “skin in the game”. Greystar, which is led by former co-founder of Starwood Capital, Bob Faith, is 70% owned by its management.
“Globally, we have a series of investment vehicles with different mandates. For example, we have a series of value add discretionary funds in the US, we have club structures, we have separate accounts and we have one-off joint ventures,” says Fuller.
Greystar will continue to work with the same investor duo it has already teamed up with in the UK but will also bring over new partners.
“The pool of investors that we will be working with here is going to grow as the scope of our acquisition activities begin to include other residential asset classes,” says Lashley.
Greystar has relationships with the likes of Prudential Real Estate Investors, Pimco and REST Industry Super.
But this is not about making a fast buck. There are no IPOs or a grand exit on the horizon.
Here to stay
To work successfully across the UK student accommodation sector and PRS, the duo will want to establish a business that is here to stay. “We are not here to just buy, sell and then go away. We are here to build a long-term sustainable business and we are making substantial investments to ensure we have a world-class operating platform,” says Fuller.
“Our business model allows us to participate in the market in different ways, whether it’s investing, developing, operating our assets or serving as the operator for other clients.”
Lashley adds: “We are focused on two things: acquiring attractive assets and operational execution.”
This means the company is still looking to bulk up, despite the flurry of student deals that have already happened.
“You can’t be an investor on behalf of institutions without releasing some of those investments,” says Fuller. “We are not static investors where we just buy something and park it; we are active investors who look to create value in many different ways.”
Prodigy to PRS
Greystar’s student housing portfolio in the UK runs as Prodigy Living, a brand that is unique to our shores, and one which it plans to develop and will be key to further UK expansion. “We have found that property branding in the UK is better and more effective than the US,” Fuller says.
And now it is not just students Greystar will be accommodating. Its catchment is 18- to 45-year-olds, ranging from students and young professionals to bankers working 90-hour weeks.
It aims to provide an affordable, rental product, which Greystar says has the potential to take the heat out of the UK housing market – particularly in the capital: “London is a dynamic city that needs more housing,” says Fuller. “What we do is provide housing. When you provide more housing into a stock it better balances the supply and demand dynamic. That presents a tremendous opportunity to add more purpose-built rental housing to the composition of the London housing market.”
Greystar arguably has an edge over other players trying to get into the UK PRS thanks to its vast expertise in managing and developing similar product in the US, where it manages nearly 400,000 residences. That, combined with its ability to draw in capital, could be a powerful combination.
Last September, Fizzy Living’s founding director Mark Allnut joined the firm to help its PRS push, but building a portfolio with critical mass will take time.
“It’s more about the strategic locations throughout London that have the right underlying demand and fundamentals to make PRS a success. It’s not going to be every area. It’s going to be a collection of areas in which the right ingredients are there to have a successful PRS asset,” says Fuller.
And as with Prodigy Living, ingredients are key to a scheme’s success, where each one will be built with a particular catchment in mind. Fuller compares the expertise to that of being a retailer.
“Designing and programming purpose-built rental housing is a unique exercise. That is part of the science in what we do.”
Lashley adds: “In Canary Wharf, for example, people work long hours, so the types of amenities they want are different. They want things like cold storage, because they are at work when their groceries get delivered, and various onsite services that make life outside of the office more enjoyable.”
These deals, when they come, will follow a similar vein to the structure in which Greystar has capitalised on its student housing investments, where it will be acting on behalf of a particular investor, or a group of investors.
It also opens the door to development projects, the final of the firm’s three arms, as well as investment management and operating, which it has yet to explore on UK shores. As an experienced developer in the US, and with the additional expertise on the way over, this is on the horizon, although Fuller stresses that this is not the immediate focus.
“We have not developed property ourselves in the UK yet, but we are active developers in the US and I suspect we will be active here in the near future,” he says.
Development has not been on the UK agenda just yet as it has been quicker to scale up by buying stock rather than developing in the first instance.
“Ultimately it is something we will replicate here,” says Lashley. “On student and PRS.”
Plans are big, but the residents remain at the core of the business model.
“There are some key traits that have helped our business be successful, largely around delivering great service to residents,” says Lashley.
This is what could change the culture of home ownership. The pair’s British-style modesty shows that they may have come further than they realise.
Fuller is sure of one thing, though. “Greystar is going to be in this business for a very, very long time.”
