EXCLUSIVE: Rockspring makes first PRS play

The London-based fund manager will acquire a residential development in Southampton, UK as part of a joint venture with US residential specialist Atlas Residential.

Rockspring Property Investment Managers, the London-based fund manager, has made its first foray into the private rented sector (PRS) with the purchase of a development site in Southampton, UK alongside Atlas Residential.

Rockspring has teamed-up with the US-based residential specialist, Atlas, to make the acquisition on behalf of a separate account mandate.

The joint venture has total development costs of an estimated £36 million (€49 million; $57 million) and the development will be delivered in several phases over the next two years, with the first phase completing in the fourth quarter of 2017.

The 145,544-square-foot development site is within walking distance of the leisure and retail areas of the Southampton marina, and is set to deliver 211 one- and two-bedroom high spec apartments.

“As institutional demand for the UK’s private rented sector continues to gain momentum, this acquisition, which we believe has excellent macro and micro market fundamentals, provides a strong opportunity to provide long-term rental income and stable yields for our investors and clients,” said Eric Linden, European director at Rockspring.

UK PRS development has attracted significant interest among a number of real estate investment management houses which have been investing heavily into the sector as they try to take advantage of a lack of housing supply.

To name but a few: Delancey with APG Asset Management; Realstar Group; Legal & General Capital, the principal investment division of UK insurer Legal & General; Patrizia Immobilien, the German-based real estate investment company; LaSalle Investment Management; and Apache Capital Partners, the London and Gulf-based private real estate investment management firm, are all trying to create their own PRS stock.

“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,” added Richard Bains, partner and head of UK at Rockspring. “We are looking forward to working with Atlas on this project and are actively looking for further developments in this sector to take on together.”

Atlas Residential is one of the largest owners and operators of multifamily apartment properties in the US. Atlas is privately-owned and headquartered in Chicago, with offices in Dallas and London. It has owned and managed over 75,000 apartments with a transaction value of over $7 billion.