New fund manager PfP Capital launches fund with 1,379 units valued at £150m
Places for People is the first housing provider of its kind to establish a fund management business
Places for People Group (“Places for People”), one of the largest property management, development and regeneration companies in the UK, has unveiled its new fund management business PfP Capital and announced plans for its first fund targeted at the UK private rented sector (“PRS”). This is the first time an organisation, which originally started as a housing association, has established a distinct fund management capability, and underlines Places for People’s long track record of successful innovation.
The new fund will acquire 1,379 residential units from Places for People, valued at around £150m (“the Seed Portfolio”). As such, unlike PRS funds focused on build-to-rent, the PfP Capital PRS Fund will deliver an immediate gross rental yield of over 7% and a net rental yield of circa 5%.
The PRS Fund will expect to invest a further £150m, in acquiring other properties similar to those in the Seed Portfolio, to grow the portfolio of PRS assets to over £300m in the short to medium term. This will be achieved through a combination of guaranteed offtake from Places for People’s in-house c.15,000 home development programme, third party acquisitions from UK housebuilders and developers, as well as acquisitions of high-quality existing PRS portfolios.
The Seed Portfolio comprises institutional-grade PRS assets that generate an estimated net rent per annum of circa £7.7m. The Seed Portfolio has a range of modern, mid-market properties with an average age of nine years, a high occupancy rate of circa 96% and wide geographical spread across the UK. The fund’s acquisition strategy will be to target asset allocation across the UK reflecting population density by region as well as the strength and depth of local rental markets.
Places for People will retain a substantial investment in the fund and, as a not-for-dividend organisation, intends to recycle the secondary capital raised back into the group’s business activities to accelerate its contribution both to the delivery of new homes and other social impact projects.
PfP Capital’s management team has extensive hands-on experience of growing and managing a large portfolio of assets. The new business is led by Chris Jones, Managing Director, and Tim Saunders, Fund Director, who were instrumental in establishing PfP Capital. Chris has been with Places for People for over two decades and was previously Tax & Treasury Director. Tim joins from Touchstone where he was Chief Executive, managing its sale to Places for People in 2012. He has over 20 years’ experience in the private rented sector.
PfP Capital has retained Rothschild to advise on the establishment of the fund. Interested investors should contact Rothschild for more information.
Chris Jones, Managing Director, PfP Capital, said: “Places for People has been investing in PRS for over 20 years and we have an impressive track record of property asset management that delivers low void rates, rental growth and value creation. Launching a fund management business is an elegant solution to the challenge of growth for housing associations and positions Places for People to acquire and develop new assets to support our future commercial and socially-driven objectives.”
Tim Saunders, Fund Director, PfP Capital, said: “The new fund presents institutional investors with an opportunity to partner with a socially-conscious fund manager. We can offer an attractive income yield from day one. We will embark on proactive asset management of the properties within the fund’s portfolio and there is an opportunity to enhance returns through reinvestment by disposing of select broken blocks. There is significant potential for future growth and we will be seeking acquisition opportunities to grow the fund’s portfolio to around 2,500 units through offtake from Places for People’s c.15,000 unit development pipeline and opportunistic acquisitions from housebuilders and developers.”