GCM Grosvenor’s emerging manager program has acquired a stake in a single-family rental portfolio company run by London-based manager Matter Real Estate as part of a £140 million (€162.8 million; $170.6 million) recapitalization of the platform.
GCM Grosvenor has purchased an ownership interest in Placefirst, a UK-wide SFR developer and operator. Placefirst was acquired six years ago by London-based private equity firm ESO Capital’s ESO Fund VI. ESO then launched ESO Real Assets Fund I in 2019 and split the Placefirst assets between both funds.
David Christie, formerly ESO’s head of real estate and now chief executive of Matter, then left to form Matter and took RAF I with him, including that fund’s ownership in the Placefirst assets. GCM Grosvenor’s recapitalization will allow the Placefirst assets from Fund VI to also come under Matter’s management via a vehicle that includes both GCM Grosvenor and former RAF 1 investors. No Fund VI investors will come over to Matter as part of the recapitalization.
Part of the reason for the investment was to continue the growth of the platform now under Matter’s purview. Placefirst has built 1,500 single-family homes and plans to grow that to 6,500 in the coming years. The firm is targeting 3,500 homes by 2023, Christie told PERE in 2020.
Christie described the single-family rental market as “nascent” in the UK. GCM Grosvenor’s managing director Peter Braffman said the emerging status of the sector helps create the opportunity. By contrast, the majority of capital is chasing larger deals in traditional property types, meaning it is difficult to achieve good returns or drive alpha in those sectors.
“It presents a really interesting buying and building opportunity in a way to aggregate and build volume,” Braffman said. “You have to get closer to the asset level. You have to get closer to the specific geography.”
Other growth opportunities could come through geographic expansion, Christie said. Matter also manages other UK and Irish residential platforms such as Dwellings, a family housing developer in Ireland, and St. Arthur Homes, a shared-ownership developer in the southeast of England. The firm also develops healthcare facilities in Ireland via its Zest Healthcare platform.
GCM intends to continue to invest in other Matter enterprises, both existing and new. Christie said that other residential sectors such as senior living could also make sense as areas of expansion.
“There is value that we can create by linking some of the opportunities that arise between complementary asset classes,” Christie said.