ADIA, Greystar form £2.2bn UK rental housing joint venture

This is the second large-scale partnership between the Middle Eastern sovereign wealth fund and South Carolina-based real estate firm in Europe.

ADIA Greystar
Fizzy Living: the London rental housing platform was acquired in conjunction with the new partnership

The Abu Dhabi Investment Authority has formed a strategic partnership of up to £2.2 billion ($2.92 billion; €2.58 billion) with Greystar Real Estate Partners to develop build-to-rent housing in the London metropolitan area.

The partners will jointly commit up to £750 million to the venture, which has a development target of approximately £1.8 billion in assets. One of the seed investments for the partnership is a 0.84-acre site that Greystar purchased on Lombard Road in Battersea, south London for £31 million in June. The firm is seeking planning approval to develop a new property with nearly 500 residential units and additional commercial space on the site, which currently is home to a two-story retail building.

In conjunction with the new partnership, Greystar has acquired Fizzy Living, a London rental housing business, from the UK housing organization Metropolitan Thames Valley Housing at an implied portfolio valuation of approximately £400 million. The Charleston, South Carolina-based real estate firm will also transfer the management of the Fizzy Living portfolio, which comprises nearly 1,000 homes, from MTVH. As part of the transaction, Greystar will also take on the Fizzy Living brand and the platform’s more than 30 employees. ADIA will continue to own a majority stake in Fizzy Living’s portfolio, while Greystar will assume MTVH’s minority interest.

The Fizzy Living assets are located in the London areas of: Canning Town, Lewisham, Epsom, Stepney Green, Poplar, Walthamstow, Hayes and Silvertown. Greystar plans to execute a value-add strategy, including capital improvements and other operational enhancements, across the Fizzy Living portfolio.

The joint venture represents the second large-scale partnership between ADIA and Greystar in Europe. Since 2015, the two parties have amassed a portfolio of more than 6,000 homes for students and young professionals in the Netherlands under their OurDomain urban living platform.

“Demographic trends and a severe structural undersupply of housing is driving demand for high-quality rental homes in the UK, so this remains a high conviction investment strategy for Greystar,” explained Mark Allnutt, senior managing director of Europe at Greystar. “We have a highly successful relationship with ADIA in the Netherlands and now have a unique opportunity to create a rental housing portfolio of substantial scale in London and its surrounding commuter towns.”

Salem Al Darmaki, deputy director of the real estate and infrastructure department at ADIA, added that there was long-term demand for purpose-built rental housing in the London area. “With the creation of this platform, our objective is to address this specific, growing market opportunity while expanding our relationship with a proven, world class partner in Greystar,” he said. “This is consistent with our approach of investing in high conviction opportunities at scale to capture future growth trends.”

The Greystar partnership marks the latest indirect real estate investment for ADIA, whose other alliances include a US student housing joint venture encompassing up to $3.5 billion of assets with Athens, Georgia-based sector specialist Landmark Properties. The investor was close to finalizing an additional equity commitment of $500 million to the partnership as of October.