Apex Airspace is nearing a deal which will see it raise £15 million, valuing the start-up residential developer at £50 million. The London-based residential developer, which specialises in building modular homes on top of existing buildings, has shortlisted around 20 investors and is looking to give away around 30% of the company.
The £15 million equity raise is sought for working capital, and to accelerate a growing pipeline.
Commenting on the plan, Haroon Bhatti, Investment Director at Apex, said “We have some serious interest from a few parties and are looking to close this process in the next eight weeks. In the UK we are being introduced to capital funds via N+1 Singer, as well as some who are approaching us directly.”
The Apex story
Twelve months ago, architects and design practice HTA were commissioned by Apex Airspace to produce a report to look into the potential for new housing on top existing stock across the capital. Some of the results and figures are listed below. In short, the potential is huge.
Our pitch to investors has been received very positively as we are producing the one thing that is so short in supply, land.
Haroon Bhatti, investment director: Apex Airspace
In an age of diminishing brownfield land, green belt seen as sacrosanct, political upheaval around demolitions of estates, as well as viewing corridors and conservation areas, developers have to think outside the box. Or in the case of airspace, on top of it.
Apex completed on a small two unit “proof of concept” scheme in Camden, NW1, in 2015. It is also due to complete very soon on a scheme in Maida Vale, W9. It’s now looking to accelerate with a pipeline approaching 550 homes, across 20 sites, with a total GDV of 175m. Ultimately, it plans to build more than 1,000 new homes over the next five years.
Tesco tie-up
Apex are also in conversation with both the GLA and DCLG about how the concept could be rolled out further to deliver a scaled response.
The company is also in advanced legal discussions with Tesco over a pilot project, which would see an extra two floors of modular housing built above a supermarket.
Tesco’s plan to overhaul its vast estate could raise as much as £1.5 billion, around one-third of which could come from rooftop development. A deal on the first scheme, a “proof of concept” project in London is likely to exchange in the next month or so.
The bigger picture
Apex look to be the first out of the blocks. Will other players follow and are Apex concerned? Bhatti says “the potential of the market is huge”, and that the industry could easily accommodate more players doing similar projects.
Could and should local authorities be building homes in this way?
For most local authorities, government cuts have wiped away their skills and resources needed to pull off such plans. Apex can essentially provide homes, and give payment to the council for doing so. A win-win from their point of view, struggling with the wherewithal to do it themselves.
Apex pay a minimal option payment, then up to another 50% when planning is achieved and the rest at completion. The company is currently in discussions with six London boroughs, where they are actively looking at council owned sites in order to gauge development potential.
Below are the main figures from the recent HTA study, looking into the potential opportunities rooftop developments could bring:
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