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INSTITUTIONAL PRS INVESTMENT AND BUILD TO RENTMICHELA HANCOCK, SENIOR DEVELOPMENT DIRECTOR

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THAMES ESTUARY GROWTH DAY

MICHELA HANCOCK, SENIOR DEVELOPMENT DIRECTOR

mhancock@greystar.com

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WHAT IS GREYSTAR?

Greystar is a global leader in rental

housing with expertise in property

management, investment management

and development.

Since entering the UK market in 2013,

Greystar has built up a rental portfolio

worth £2.8 billion by investing in new

housing and student accommodation.

Greystar has three multifamily

developments underway in the UK:

• Greenford in West London

• Sailmakers in Canary Wharf

• Nine Elms

In addition, Greystar owns and operates

a boutique student accommodation

brand – Chapter – which provides

premium student living in the best

London locations. Chapter has 4,456

student beds across eight sites.

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UK OBJECTIVES POST BREXIT

Whilst Greystar acknowledges that Brexit meanschange within the UK, Greystar remains committedto achieving its stated UK goals:

• Become one of the UK’s largest operators ofrental housing

• Increase its London portfolio to 10,000 rentalunits within four years – this includes doublingour Chapter student accommodation portfolio

So far in 2017, Greystar has announced threeacquisitions; Nine Elms, Chapter White City andthe Quill.

Source: Office of National Statistics, Moody’s Analytics

• GDP growth has remained positive, albeit slower than many would desire, in the past three post-Brexit quarters

• A notable difference in the UK’s economy is it’s inconsistency in the largest drivers of its growth, whereas the US in recent years has been

driven by personal consumption

• Since the June 2016 Brexit vote, the pound has depreciated ~10%, making its products less expensive and spurring inflation

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Components of Real GDP Growth

Personal Consumption Govt. and Non-profit

Domestic Investment Net Exports

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THE BIG PICTURE IN THE UK

LONG-TERM THINKING: POPULATION TRENDS ARE POSITIVE

Source: Office of National Statistics, Moody’s Analytics

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Population Distribution

(Top city as % of country)

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Age Distribution

Outer Ring – US / NYCInside – UK / London

• Whilst the US outpaced London in population growth in the early 2000’s, London hit an inflection point in 2007 and has outperformed since

• The age distribution of its population is largely consistent with the US, having larger young adult and nearly retired age cohorts

• London possesses an outsized share of the UK population and recent gains indicate a continuance of this trend

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1. Household requirements are estimated based on household characteristicsSource: English Housing Survey

• The private rented sector has nearly doubled its market share in the UK since 2000, and London has experienced a similar trend

tacking on 11% over the last 10 years

• The current private rented sector is insufficient with inefficient building design and woefully out-of-date stock—half of which being

built prior to the end of WWII

GROWTH OF PRS IS NEEDED

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1918 1932 1946 1960 1974 1988 2002 2016

Trends in Tenure

Owner Occupied Private Rented Social Rented

23%

28%

49%

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17%

60%

Social Renter

Private Renter

Owner occupied

London Trends in Tenure

2005 2015

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34%

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16%

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50%

PRS Building Age

16%

41%

39%

45%

41%

14%

Supply Mix Demand Mix

Housing Stock v. Household Requirements1

1 BR 2 BR 3+ BR

Available for

small

households

Desired by

small

households

Homeownership rate

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WHERE IS PRS BEING BUILT AND WHERE ARE THE

THAMES ESTUARY HOTSPOTS?

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GEOGRAPHICAL OVERVIEW AND HOTSPOTS

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There are 95,918 build-to-rent homes in various stages of completion, compared to 69,824 in Q1 2017 (37.4% increase).

Whilst London still leads the way in completed PRS units, the regions now have more build-to-rent homes under construction: 12,316 compared to 11,696 in London.

Popular regional PRS locations include major cities such as Manchester, Liverpool and Birmingham.

Key hotspots in the Thames Estuary region include Barking, which has several schemes underway, and the London boroughs of Greenwich and Lewisham also have major developments in construction.

*All figures taken from the British Property Federation

WHAT ARE THE OPPORTUNITIES FOR PRS IN THE

THAMES ESTUARY REGION?

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OPPORTUNITIES FOR PRS IN THE THAMES ESTUARY REGION

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Greystar has previously worked in the Thames Estuary region with its

Chapter Lewisham student accommodation scheme.

Looking ahead, there are a number of areas that remain on Greystar’s

watch list, including the London Boroughs of

• Newham

• Havering

• Greenwich

• Bexley

• Barking and Dagenham

All of these areas offer locations that fulfil Greystar investment

criteria...

Chapter Lewisham

GREYSTAR RENTAL HOUSING INVESTMENT CRITERIA

Source: CBRE, Bloomberg, Greystar

Se

rvic

e Integrated leasing and maintenance services for a hassle free experience

Dedicated on-site staff to respond to residents needs quickly

Continuous quality monitoring, allowing employee incentives to be tied to service metrics

Consistent property branding to distinguish property attributes and service

Focused on 1-2 bed units as well as studios, targeting single-living young professionals

Purpose-designed, fully furnished flats of high specification

Best in class amenities targeted to specific customer base. Examples include resident lounges, fitness

center, business center, pool, cycle storage and maintenance facilities, cold storage, etc.Pro

du

ct

Strong transportation links into the city crucial for professionals commuting daily to work

Close proximity to lifestyle amenities such as shopping and leisure

Attractive neighborhood and regeneration areas, characterized by high housing values, incomes, and

educational attainmentLo

ca

tio

n

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LOCAL GOVERNMENT POLICY APPROACHES

Historically build-to-rent has

not enjoyed a specific

distinction within local planning

frameworks.

However, as build-to-rent

becomes an increasingly

deliverable tenure of housing,

local government is beginning

to change its approach.

WHAT KIND OF ‘PLACE’ CAN BUILD-TO-RENT CREATE?

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KEY CONSIDERATIONS

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Every business model is different but at Greystar our goal is to create a lifestyle

that adds value for our residents.

Key considerations that are paramount to the long term viability, efficiency and

success of build to rent include:

• Understanding the local market and the specific needs of the customer

• Amenities designed with their needs and preferences in mind

• Build in flexibility, with open spaces where people can work, relax, chat with

friends or entertain

• Amenity spaces that are designed to create the feeling of home

• A management team to plan resident activities and events

• Customer feedback and reviews that allow for continuous improvements

• Communication is the key to providing excellent customer service

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DESIGN & PLACEMAKING

Key Principles

Purpose designed & built for long-term rental

Buildings remain in long-term single-ownership, under single

management

Design includes internal and external resident amenities, including gyms,

shared roof level clubrooms & terraces, etc.

Generous apartment sizes and ceiling heights exceed LHDG standards

No single bedrooms – to suit families and/or sharers

Sprinklers throughout allow open-plan apartment layouts

Ample circulation and back-of-house spaces to allow for effective

management

Efficient design for ease of construction, operation and maintenance

Quality landscaping to provide attractive environment for residents and

the wider community

Provision of appropriate community facilities and mixed uses to create

daytime activity

Promotes sustainable placemaking (as diagram)

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GREENFORD

GREEN

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CASE STUDY: GREENFORD GREEN

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Block 3

For sale & shared

ownership

Block 6

DMR (Broadway

Living)

Block 4

BTR / multifamily

New bridge

(pedestrian)

New ‘2 form entry’

primary school

Block 1

Grade II Listed refurb.

officeCentral Square

Café / retail / hair

Local grocery

Block 5

BTR / multifamily

Pub / deli / gym

Block 7

BTR / multifamily

Workspace / office

Block 8

BTR / multifamily

Café / retail / cinema

Block 2

For sale & shared

ownership

New Health Centre

Berkeley Avenue

Existing buildings:

• Ferrero UK

• GSM

Café / yoga / cycles

Long-term, sustainable community

1,965 homes in total

Mixed tenure, fully mixed use &

managed development

DMR affordable housing – new

tenure & mechanism

Amenities assist work / life balance

Faster construction than ‘for sale’

Quicker absorption and high levels

of occupancy

Post-construction jobs on site

Canalside living, connecting to

surrounding community & adjacent

parkland

Create new landmark buildings

Public & stakeholder consultation

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GREATER LONDON SITE LOCATION

15 MINS

10 MILES

26 MINS

WEST EALING

(CROSSRAIL)13 MINS

6 MINS

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KEY METRICS

Previous planning consent

(Nov-14)*Current scheme Variance Variance (%)

Residential units 593 1,965 +1,372 +230%

Retail/Commercial/non-resi. (sq ft) 70,633 230,810 +160,178 +225%

Maximum height (resi. storeys) 3 to 9 7 to 19 up to +10 up to 110%

Site area (acres) 13.8 21.3 +7.5 +54%

Density (dwellings/acre) 43 92 +49 +115%

Land basis £/unit 136,594 41,221 -95,372 -70%

(*) The site area for the previous permission was 13.8 acres compared with 21.3 acres for the current scheme

GREYSTAR OPERATIONAL DIFFERENTIATION

Greystar

Property Operations

In-house management, leasing and maintenance, with

dedicated teams on-site

Coordinate and execute repairs onsite swiftly, with clear

and timely communication of progress

Implementation of industry leading reporting and

accountability systems

Tenant Experience

Continuous monitoring both of operational management

and resident experience

Comfort and security of tenure with a dedicated rental

operator and owner

Staff

Highly trained staff specifically dedicated to one asset,

improving responsiveness and visibility

On-site staff incentivized by metrics measuring service and

operational performance

Market

Property Operations

Disparate estate agent leasing process, with no dedicated

management team in place

No repairs offered; tenants responsible for coordinating with

multiple parties to remedy repairs

Integrated data systems usually not in place, with reporting

conducted ad-hoc by hand

Tenant Experience

Generally poor with residents left to fend for themselves

Little to no community orientation or interaction

No security of tenure

Staff

Centrally managed or third party vendors

No accountability of staff for the quality of their service

provision

Greystar Current Market

Greystar’s operational experience is unparalleled in the UK market and will deliver the superior resident experience required to drive

rental premium

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Michela Hancock, Senior Development Director, Greystar mhancock@greystar.com