It takes a village to raise a fund – more specifically, East Village. For much of the past 18 months, securing capital has been a struggle for many in BTR. But not for operator Get Living, which last year secured £660m, doubling its capital commitments and giving it £1.2bn for expansion, including at its east London site.
“If we have a compelling resident offer, that means we have an investor proposition,” says chief executive Rick de Blaby. The fund raise was through Get Living investors for the Delancey and Oxford Properties (DOOR) vehicle, he acknowledges, but it is Get Living’s proposals that those investors are selling.
“It’s the same proposition that says to a bank ‘lend us the capital’. It’s the same proposition that says ‘come and work for us’, says to a landowner ‘we are a reliable party to deal with’ or says to a local authority ‘give us a planning permission’,” de Blaby adds. “What I have been so passionate about is making sure that proposition is really compelling to all of those audiences and is authentic, durable and purposeful.”
Investors have bought into the story. In March 2020, Delancey and Oxford Properties brought on £250m from Swedish pension fund Alecta, with a further £410m from Allianz Real Estate and Local Pensions Partnerships that August. The latter gave Get Living firepower for significant expansion, with forward funding, standing stock and corporate acquisitions all on the table.
But despite throwing its hat in the ring to acquire north London rival Quintain in 2018 and again last year, Get Living and its investors have been largely silent about their plans – until now. On a Friday afternoon at East Village, E20, as the after-work crowd congregates outside the new Victory Plaza building, de Blaby shows off Get Living’s proof of concept. And it’s just the start, as the developer lines up a slew of acquisitions and a new expanded strategy.
Losing London
The most recent fund raise came with a strict set of criteria. Schemes will be a minimum of 400 homes, “preferably 700-800, maybe more” says de Blaby. He rattles off more tick-boxes from the checklist: “Urban locations, fantastic public transport, high employment.”
“We want a place where we’ve got a decent footprint, so that we can create the realm, we want it in a place where we can put our own team on site, in areas where there is a political will locally,” he adds.
Last week, Get Living exchanged on a £155m forward-funding deal with developers Hub and Smedvig, acquiring 429 homes on a 3.1-acre site next to Maidenhead station. “It’s unusual that it’s not London, and it’s not one of the big regional cities that we have been pursuing,” says de Blaby. “But if we can build on that one, and a necklace of half a dozen others that we are just working through now, that’s entirely consistent with the model we’re trying to build up.”
Crossail Elizabeth Line will open in 2022 in Maidenhead, connecting to stations in Reading, Slough, Ilford and Romford, which could all be targets for Get Living in the coming months. “You won’t be surprised that we have gone all along the stations of Crossrail to find opportunities,” de Blaby says.
Get Living started out as Get Living London. In 2016, Dutch pension fund APG, Delancey and Qatari Diar formed a £1.4bn residential investment partnership with an initial portfolio of 4,000 homes in development at East Village and another scheme in Elephant & Castle, SE1. DOOR has a 39% stake, APG 39% and Qatar Diar 22%. Part of the goal was to create a brand that would be associated with professionalised PRS.
The company dropped the “London” as it sought to export that model to the regions, snapping up sites in Manchester, Leeds and Glasgow. Under the leadership of former chief executive Neil Young, the strategy stretched from the capital to major cities, with an eye to the commuter belt. De Blaby joined in 2017 after two decades leading residential developers including MEPC and Countryside’s commercial business. He took over as chief executive in 2019.
“I think we’ll always be London-biased,” says de Blaby, despite the name change and expanded city focus. “That’s what we know well. Whatever people might say, London is still a great world city, and we’ve got a momentum and presence here.”
Last year, the developer committed £252m to Lewisham to build 649 homes, including its first co-living rooms. And following Delancey and APG’s £425m purchase of Earls Court, it would seem natural that Get Living might want to jump on that opportunity.
“We have no divine right to have a piece of Earls Court,” says de Blaby. “Would I like a piece of Earls Court? Of course I would, it’s Delancey at its best.” De Blaby’s pitch for Earls Court will come back to that unique offering on show at East Village. “I want to give Earls Court, [Earls Court Development Company chief executive] Rob Heasman, [and] Delancey a proposition that says we can bring our model, our look and feel, long-term custodianship and operationally efficient management to Earls Court in a way that is accretive to all of the other things they are trying to do.”
Earning the right
Explaining the offering, de Blaby reflects on the original demands of DOOR, which Delancey and Oxford Properties launched in 2018.
“It was always about building the platform and the portfolio,” he says. Get Living set a target of 12,500 homes and now has 8,500 homes and a new target of 15,000 over five years. “The big challenge in our sector is real operational efficiency and I think a lot of people haven’t fully recognised the challenge of that, because everyone is building that pipeline.
“We have had to do that first before we earn the right to get more shareholder capital, to do more of it in a way that you then use scale as another lever for accretive returns.” Ultimately, efficiency means reducing cost per unit, through a gradual process with “scores of marginal gains”.
There is an art to reducing fit-out costs, for example for tables, sofas and washing machines – not so much that wear-and-tear means items need replacing, not so little that they last too long and the style becomes dated. Get Living refreshes every home between tenants. “It’s got to be sparkly,” says de Blaby. “There’s a delicate balance between doing it at an economic cost and a cost that just comes back and hits you again in two years’ time.”
Another area of focus is operational cost and the right amount of amenities and services to attract and retain tenants, a slick customer hub, and a speedy room turnaround, which all means Get Living can welcome a new resident in less than a day.
“That’s one level,” de Blaby says. “But, obviously, when you add another neighbourhood and another neighbourhood, you really ought to be getting some economy of scale, so that you can increase your returns to shareholders because you’ve built the scale of something that is operationally efficient to start with… It’s endlessly fascinating, this game.”
Those efficiencies add up to create a portfolio value of £2bn. Get Living’s accounts for the nine months ended December 2020 show £1.6bn in built investment assets and £377m under development, rising by 11% since the end of March 2020, when the first lockdown hit. Some 4,500 residents generated net rental income of £38.7m, with estimated rent values ranging from £22 per sq ft in Manchester to £41 per sq ft at Elephant & Castle.
Winners and losers
With a “wall of money” targeting the sector and 22,000 operational units in London alone, Get Living stands out as one of the larger operators. “What differentiates us is that we go for big scale and the biggest neighbourhoods, rather than a building of 150 homes on a postage stamp site,” says de Blaby.
As a result, its audience has broadened, from the younger millennials who first move into a new building to the students who stay for a year, to short-lets, corp-lets and families, with people coming together to make their own community. De Blaby notes the sea of prams that emerge around 11am on a Monday. “We’ve got a baby boom going on here, it’s extraordinary.”
Those different audiences provide a “suite of income strips”. Get Living’s investors have also created T3 Residential, which they have applied to register as a provider of social housing. “Whether that comes into Get Living or not in due course is not determined,” says de Blaby. Though backed by DOOR, Qatari Diar and APG, it would be an obvious move. Another avenue for growth is a separate strand targeting “active seniors”. This demographic requires a different product with more storage. “They come with a lifetime,” de Blaby reasons. Tech and staffing needs also vary.
Ultimately, Get Living will seek to offer specialist services for any individual, within that larger community. “We are moving to a place, like a car configurator, where you can choose what you want in your subscription,” de Blaby says.
As Get Living gets bigger, over the next two or three years the wider sector will see a divide of “winners and losers”. Some riskier bets from those looking to “buy their way in” will inevitably fail and de Blaby wants to get the company to a state where a robust income stream gives the business “headroom and scope” to be a consolidator.
“I haven’t got a clue who that might be or what it might look like,” he adds of the businesses that he might look to pick up. “We can take buildings and turn them into Get Living buildings. You’ve got the hardware of the buildings and you’ve got the software of the experience. We can deploy the software pretty quickly, the hardware might need a bit of surgery here and there.” By this point, Get Living’s finely tuned proposition will be a template not just for future development, but to also transform existing product.
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