Matter Real Estate gets UBS backing for core UK housing fund

The commitment from the real estate investment arm of the Swiss banking giant has been invested in portfolio company Placefirst.

London-based manager Matter Real Estate has established a core residential fund with an initial commitment of £105 million ($129 million; €121 million) from anchor investor UBS Asset Management’s real estate arm, PERE can reveal.

Matter UK Residential Income Fund (MUKRIF) is a closed-end vehicle, but Matter has the option to convert the fund into an open-end vehicle at a later date, according to a source familiar with the matter.

PERE understands the entire commitment from UBS Asset Management’s Real Estate & Private Markets Multi-Managers business has already been deployed in Matter portfolio company Placefirst, which develops, owns and operates single-family rental housing across the UK. The transaction, which was completed in October, constituted the transfer of ownership of a stabilized portfolio of 560 homes developed by Placefirst, which will continue to manage the assets, into MUKRIF. The portfolio is 99 percent occupied and has benefitted from average rental growth of more than 5 percent in the past four years.

Through Placefirst, Matter is targeting 5,000 single-family rental housing units by 2027, according to market sources, with a gross asset value of around £1.3 billion. It is understood that approximately 1,460 homes have been completed to date, with around 500 currently under construction. Placefirst predominantly develops assets but also acquires units for refurbishment.

It is understood this is UBS’s first investment with Matter. Accord Europe served as financial adviser in the formation of MUKRIF.

Matter is also backed by Chicago-based manager GCM Grosvenor, which has held an ownership stake in Placefirst since July 2022 when the portfolio company was recapitalized for £140 million, as previously reported by PERE. Placefirst was acquired by London-based private equity firm ESO Capital in 2016, before ESO’s then head of real estate, David Christie, left the firm to found Matter in 2021, bringing ESO Real Assets Fund I and its Placefirst assets with him. The platform’s recapitalization last year brought the remainder of Placefirst’s assets under Matter’s management. Christie serves as Matter’s chief executive officer today.

Matter is also raising capital against a £300 million target for Matter Real Estate Fund II, a value-add vehicle focused on residential and healthcare property investments across Northern Europe, according to PERE data. As previously reported, the firm reached a first close on £120 million a year ago. Matter declined to comment on the fundraise.

Since UBS agreed to purchase ailing Swiss bank Credit Suisse for $3.25 billion in March, the industry has waited to see what the combined $160 billion real estate investment powerhouse would do next. The departure of Credit Suisse Asset Management’s global real estate head Rob Rackind, as reported by PERE in June, was followed by reports last month that UBS had begun selling off assets from the €3.5 billion Credit Suisse Real Estate Fund International, per a report by CoStar.

UBS Asset Management’s real estate and private markets business has been led by Joe Azelby since 2019.