Rockspring enters UK PRS sector in US JV

European fund manager Rockspring has entered the UK's private rental sector (PRS) through the joint venture acquisition of a development site in the southern English coastal city of Southampton.

Acting on behalf of a separate account client, Rockspring partnered with Chicago-based Atlas Residential for the purchase of the 144,540 sq ft (13,370 m2) site from Southampton City Council.

The project will deliver 211 one-and-two bedroom apartments situated within walking distance of leisure and retail areas at the city's marina and Oxford Street.

The contracted developer, Hampshire & Regional, is due to start work on site immediately. The total development costs of the project are estimated at £36 mln (€50 mln). The scheme will be developed in several phases over the next two years, with the first phase completing in the fourth quarter of 2017.

The transaction represents both Rockspring’s first move into the private rental sector and Atlas’ first venture within the UK.

'The supply and demand metrics of the private rented sector are a compelling rationale for any investor, as operational, bespoke and purpose-built assets are increasingly rare and difficult to acquire,' said Richard Bains, head of Rockspring's UK business.

US partner
Atlas Residential is one of the largest private rental sector operators in the US, having owned and managed over 75,000 apartments with a transaction value of over $7 bn (€6.1 bn).

Jonathon Ivory, managing director at Atlas UK, said, 'We are very enthusiastic about entering the UK market and adding Southampton to Atlas’ existing residential management platform. Our view of property management is highly amenity and customer service “centric” and we look forward to delivering that philosophy to the UK apartment renter, whom we believe will react very positively to it. We look forward to expanding our UK footprint with our partners at Rockspring and capitalising on this emerging, yet rapidly growing, asset class.'

Rental revolution
Investors and developers – both home-grown and international - are waking up to the opportunities offered by the nascent PRS sector in the UK. A recent report by the British Property Federation (BPF) and law firm Addleshaw Goddard claims that the UK is on the verge of a rental revolution with around £30 bn (€43 bn) of institutional investment earmarked to build and manage new homes for rent.

The list of names of companies seeking to enter the sector is growing. UK-based institutions such as Hermes, RBS and Legal & General, but also foreign players like Patrizia, Lothbury, Middle Eastern investor Apache Capital Partners and Canada’s Kennedy Wilson are all getting in on the act. Bahrain-based Apache formed a £1 bn joint venture with Moda Living in May to establish a regional PRS platform under which five schemes totalling 5,000 units will be developed in Manchester, Birmingham, Liverpool and the South East.

See also Patrizia targets further push into ‘attractive’ UK PRS sector