Goodstone Living, the London-based residential developer and investment manager established by Sydney-based Macquarie Asset Management in 2021, has reached a final close for its first institutional fund, PERE can reveal.

The firm attracted £250 million ($303 million; €287 million) in capital commitments for the UK-focused multifamily build-to-rent fund, according to market sources close to the firm. The majority of this came from Northern LGPS – a collective asset pool for the local government pension schemes of Greater Manchester, West Yorkshire and Merseyside – which has combined assets under management of £58 billion, per PERE data. The remainder of the fund’s capital was committed by a large global asset manager.

The fund’s investments are approximately 50 percent levered, market sources told PERE. This provides Goodstone with around £550 million to develop private rented and affordable housing units in London and regional cities throughout the UK, which it will hold for the long term. The firm targets a value-add return for the fund, but declined to provide a figure.

According to James Bechely-Crundall, senior vice-president at Macquarie, the firm spent around 12 months raising capital for Goodstone Living Partners I, and did not set a target size for the fund.

Becheley-Crundall: Goodstone Living plans to raise subsequent funds with different strategies

“Given it has been a challenging macro environment, we kept a pretty open approach to engaging with prospective capital partners around designing the type of investment vehicle they wanted,” he told PERE.

Asked why now was the right time to close the fund in the absence of a pre-determined target size, Bechely-Crundall explained Goodstone’s aim is to raise multiple vehicles over time with different strategies and potentially in adjacent living sectors. The firm therefore felt it was important to catalyze its development pipeline now and start to build a track record for the platform. “We are also seeing some attractive opportunities arise around forward fundings and forward commits with housebuilders. We can do these in vehicle one, but as we look to vehicles two and three, we might innovate and iterate the product as the market evolves,” he added.

The fund has so far deployed two-thirds of its capital in the development of almost 1,000 housing units across Dockside in Edinburgh and Smith’s Garden in Birmingham. With the remaining £80 million of dry powder in the fund, Bechely-Crundall said this was “more than likely to be deployed in one large project in London.”

Blazic: London is the focus for the fund’s remaining capital

According to Iliya Blazic, Goodstone’s chief executive officer, deals and pipeline discussions are happening all over the UK, but the differential in pricing and the quantum of opportunities in London compared to regional cities are what makes the former particularly attractive. “We have been pleased to see that housebuilders, developers and landowners are all coming to the table to discuss the opportunity to bring forward new homes in a turnkey partnership,” he said.

Amid high construction costs putting pressure on rents, Goodstone’s strategy is to ensure at least 50 percent of the private units developed are attainable for 50 percent of the local community, Blazic explained. Each site also has an affordable housing component, which will remain in Goodstone’s ownership rather than be sold off.

The manager has set a baseline target to reduce embodied carbon in its developments by over 30 percent against the RIBA [Royal Institute of British Architects] benchmark, and to reduce operational carbon by over 50 percent against building regulations.

Macquarie’s other exposure to UK real estate includes sustainable offices, data centers and logistics, the latter through its specialist UK platform PLP. The firm has been actively investing in BTR in Australia via its platform Local, and has a multifamily housing platform in the US.

Prior to establishing Goodstone’s first fund, which represents Macquarie’s maiden investment management activity in the UK BTR sector, the firm provided debt funding to UK property company Fizzy Living in 2013 and acted as financial adviser to the business a year later, sourcing the Abu Dhabi Investment Authority as a long-term equity partner for the company. Macquarie has also advised UK rental housing business Grainger in raising third-party capital.