Greystar is preparing for a significant push into Europe across new markets, tenures and investment in single-family housing, as it seeks to replicate the success of its US business on the other side of the Atlantic.
The multifamily behemoth is ploughing billions into European rental, most recently with a €1bn (£854m) value-add fund to complement its core strategies and a further €1bn dedicated to develop-to-core in Germany and Austria.
In an exclusive interview with EG, Wes Fuller, executive managing director for global investment at Greystar, says: “Look at the US, it’s no different than what we are trying to build in Europe.
“We are building out our regional network of local teams. We are building out our ability to invest, to build student housing, multifamily, senior housing and single-family rental. We are building out our investment strategies, we can develop assets and we have a significant pipeline.”
Over almost 30 years, Greystar has amassed a global portfolio of 165,900 homes under ownership, almost matching the entire UK build-to-rent market, which was most recently estimated at just over 188,000 homes. Greystar’s third-party business brings homes under management to 740,200, making it the largest multifamily operator in the US.
The company employs 20,000 people and has spent the past eight years growing a team of 650 across the UK, the Netherlands, Spain, Ireland, France, Germany and Austria.
“We are not sitting here in the US, trying to develop a product in Europe – we are a European business with expertise in each of these local cities,” says Fuller. Across the continent, the company has around 33,500 homes in operation, 7,800 under construction and 13,600 in the pipeline.
“Our business is never about doing one thing,” Fuller adds. “Not only do we invest across a geographic spectrum, we invest across a risk spectrum. We are developers investing in the opportunistic side of the business, we also buy core-plus assets, and this [latest] vehicle is a value-add strategy.”
Deep pockets
Greystar Equity Partners Europe I is the company’s first discretionary, pan-regional residential strategy. In the US, Greystar is currently on GEP XI, after raising $2bn (£1.4bn) in the final close for the 10th fund. “That gives you an indication of our long-term plan,” says Fuller.
“Investors want exposure, not just in the US, but a global exposure, like they have in logistics and industrial, like they have in offices. What we are really trying to do is provide great investment opportunities across the world to match those desires of investors in the cities where we think there is high demand and low supply.”
Fuller claims the fund is one of the few pan-European residential vehicles backed by “a vertically integrated model”.
“Common feedback from investors was, ‘We are under-allocated in residential, we are particularly under-allocated in European residential and we have been challenged to find a way to efficiently deploy capital in the region.’ This particular vehicle was intended to solve that challenge,” he says.
With €725m raised in the first close of GEPE 1 and more to come, Greystar has deep pockets as it scours Europe, looking for new opportunity.
Winning strategy
The focus will be on student and multifamily, but the fund does allow for senior living and single-family housing, and co-living and flexible affordable housing is also on the horizon. Scale is important too.
“Scattered markets hadn’t been a winning strategy for us, but having a concentration of people and efforts to find great opportunities, then building and operating the right way, is what led to our performance” says Fuller.
In the UK that means expansion to Birmingham, Manchester, Edinburgh, Glasgow, Liverpool and Bristol. “Those are all cities I would hope over the next decade Greystar will have a presence in,” he adds. But that’s not to diminish Greystar’s appetite for London: “We are incredibly bullish on London, the quality of life, the business enterprise, the people. We are very bullish on London’s recovery and we will continue to invest heavily in the city.”
As Greystar grows, Fuller is thinking about a broader range of customers. “Rental housing has a variety of types of residence. It’s not one target demographic, it’s the whole range of renters,” says Fuller. That includes flexible housing, varying sizes and pricing. “We are believers that there is a lot of demand for apartments efficiently-sized and at an attainable price. We think that’s a big part of the demand segment.”
For now, that doesn’t mean expanding to social housing. But Fuller is open-minded for the future. He adds: “I’ve learnt at Greystar to never say never.”
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