In conversation with …. Ashley Perry, the Investment Director at Apache Capital and vice-chair of the UKAA’s Investor-Lender Forum. With a focus on living real estate and a proven track record of creating value through investing, developing, and operating £4.1bn of assets under management, what could possibly keep him awake at night?
Tell us a bit about yourself and your journey into real estate
All my family is British, and I’ve always been back and forth, but I was born in British Columbia, Canada, and coming out of High School wanted to be an architect.
There weren’t any good architecture programmes in western coast of Canada at that time, so I went into forestry – a strange choice, admittedly – and did a wood science degree.
It wasn’t really my thing – the engineering side of it was OK but biochemistry and chemistry in general are not my strong suits – so I pivoted to the British Columbia Institute of Technology and their architectural building engineering programme which, unlike many undergraduate programmes, actually prepares you to enter the workforce.
Since then, I guess it has been connections which have guided me through my career, starting with a good friend who was dating a woman whose father owed a QS company. That got me dinner and a meeting in Toronto and a list of names to call – despite my bare-bones CV!
I got a one-week internship with the BTY Group in Vancouver which led to a summer placement in Saskatchewan. I finished off at BCIT and then basically asked BTY “what office do you want me in?’ and they said Calgary.
At that time, I pretty much put my hand up for anything and, fortuitously a senior member of the team left. That meant I was given quite a big loan book to look after so, at the ripe old age of 23, I was monitoring construction loans for some of the biggest banks.
That was a good start, but in 2013 my wife was doing a Masters in the UK so, as a dual citizen, it seemed the best option was to come over here where I landed at JLL.
My initial foray into Build to Rent was in 2016 when one of my colleagues at a housing association was exploring BTR and I attended one of the UKAA conferences.
But going back a couple of years, one of the first things I did when I landed in the UK was attend the Urban Land Institute’s launch of the Urban Land Guide, and I remember that event like yesterday. That was about three weeks into my time with JLL.
About the end of my time with JLL, in 2017, I moved to Liv Consult after meeting Ian Murray, the managing director, and was then offered an opportunity with Cortland Consult which I grabbed because I liked the idea of working in that sort of start-up environment. I helped grow that business in the UK, Ireland and Spain.
Apache was one of our clients right from the get-go and I was approached about a role with them in the summer of 2021.
What’s your role at Apache and how does it fit with your position as Vice-Chair of the UKAA’s Investor-Lender forum?
Apache Capital is an investment manager focused exclusively on UK living real estate. While we have been active in senior living, student accommodation and most recently single-family BTR, we are probably best known for our multi-family joint venture with Moda focused on prime city-centre sites.
We have operational multi-family assets in Edinburgh, Liverpool, Leeds, Manchester, Birmingham, Glasgow and shortly in Hove. Those have been funded by Middle Eastern capital and through our joint venture with NFU Mutual and Harrison Street. Our Moda site in Hove is funded by KKR, while our single-family platform Present Made has the backing of a large North American asset manager.
Present Made will soon go on site for its inaugural scheme – Present Made of Eddington, which is being delivered in partnership with the University of Cambridge. Although that scheme will be built from the ground up by Present Made, we’ve recently announced that Present Made’s strategy will be expanding, entering into partnerships with some house builders to accelerate that pipeline. It’s quite a good time to be in the market for doing so.
My day-to-day role involves site identification, filtering, investment community presentations, asset strategy, land holdings and investor relations. I guess I’m the quarterback for new transactions, assessing whether we are comfortable with pursuing, or interrogating why we might not be comfortable.
We had a lot of completions last year – big projects of £70m-£120m. We’ve got momentum now so when we look at the Birmingham deal which we closed back in 2021, we have been able to underwrite rents which have grown with the market and it’s been a highly successful scheme.
The most pivotal thing about how we’ve been able to navigate the situation has been the out-performance of those schemes versus our underwrite. That’s the nature of the post-Covid boom back to the cities where demand is not matched by supply.
Moving forward there will be huge barriers to entry for home purchase but the nature of our customers is that while they may be a bit more fleet of foot, they are not income constrained and we are at the niche end of the market.
There are significant headwinds, but they apply to any leveraged funder of these assets – which leads to the second part of the question and the role of UKAA.
The UKAA’s investor-lender forum wants its membership to be informed and alive to what’s happening in the market. We are becoming a close-knit forum and whether it’s meeting through private dining scenarios or webinars or other practices, we are exchanging ideas and sharing best practice.
We’ve had a nice tailwind – an under supply and a lack of competition but that’s going to change and we still all need to up our game in an atmosphere of policy changes, rent controls and the overall economic situation.
You seem happy to collaborate with people who might be your competitors? Is BTR more collaborative than other areas of real estate?
There’s two bits to this here.
Data sharing is a work in progress but there have been great benefits to collaborating. The research conducted around Who Lives in BTR made it a very impactful document and gave great visibility as to who the customer is.
Then, a lot of collaboration happens privately. I talk to a lot of my peers around land values, rental values and rental uptake, make up of their resident base – I find that if you ask the question, you’ll more than likely be given the answer.
Maybe it’s the difference of corresponding in a private versus public scenario. We saw much more sharing when operating in a sort of ‘house rules’ situation at the forum dinner back in February.
Do we need to have more sharing? I guess the question is: what is the purpose?
Some people are more protective or want some intel in return but most of what we’re doing isn’t going to be that ground-breaking anyway and can be found out with some digging around.
Where’s the future in terms of MFH v SFH?
It’s a matter of listening to the market and looking at the supply side. I don’t see SFH as being all off the shelf, it’s not bulk buying of previously built stock like how it started in the States.
I have a friend who lives in a SFH unit, and she loves it, especially compared to her previous private landlord with the lack of timely maintenance and customer service.
This segment will grow. We haven’t got the headwinds of building to the Building Safety Act, and customers have their own front door, which brings a completely different scenario.
The only headwind I see would be if we attract the attention of politicians who might feel there are optics where we are pushing out first-time buyers, and that investors are taking priority over first-time buyers or family occupiers. That’s certainly something which became clear in the Irish market.
A lot of local authorities don’t really understand what investors would want and while it seems like a good idea to have intermingled private ownership with shared ownership, social rent, and BTR, from an operational perspective it becomes really difficult.
I think there’s a need for some nuance in this area, and I am sure it will come, like maybe what in the US might be a Garden Community or a SFH Co-Op.
As an investor, is adding social value a factor in your investment decisions?
If you look at the nature of our sites, these are predominately old carparks, redundant retail, a police station in Glasgow, big sheds in Hove – we’re adding inherent social value and improving the immediate area of the community, not to mention the job creation, training and other socioeconomic benefits for the local area. Our properties employ seven-20 people and utilise other soft services in the local area.
I think BTR naturally adds social value because it’s delivering for the missing middle. There’s supply at one end for the affluent minority who can afford their own homes, and subsidised housing caters for the other. There’s a massive unaddressed market with huge supply issues which have exacerbated the rental situation especially in the cities. I see that as a social value proposition.
The responsibility of operators and landlords is to responsibly adjust rents and add excellent customer service, which includes creating real communities. Part of this means implementing genuinely community-creating initiatives such as dog-walking clubs, homework clubs and more.
What keeps you up at night?
Thankfully not my kids! I would say some of the economic headwinds that we’re facing. The supply situation will affect everyone in the industry at a very granular level. That’s a huge social challenge because the private rented sector will, I hope, always be counter-cyclical – except we’re not having a cycle, we’re having a stagnant economy with high inflation and a somewhat over-reactive financial sector taking a negative view.
I hope it’s a point in time because we should continue to drive forward with large scale communities. That’s what is important for the vibrancy of all the cities we deliver in.
And a final word?
I’d like to issue a call to action for people to get involved with the UKAA. It’s really taken a step forward.
I don’t think I like the phrase “Keep calm and carry on”, but I do like the principle.
Everyone is doing quite a good job – you can see it in a lot of reviews which show that getting the basics right is critical.
There are some exceptional offerings, you might call them four-or-five-star schemes with fantastic amenity spaces, but, in my view, it’s core to the success of BTR that we get the basics right and the mystery shopping research seems to bear that out.
Continuously learning from that cycle of you build something, get customers in … what do you do with that information, how does that inform what you do moving forward? I think we are quite good at that – we could be better – but there are some out there where it’s a bit disjointed – perhaps developer / investment manager / third-party operator – and a lot falls between the cracks, which I’ve seen from my consultancy days.
Getting the basics right and maintaining true focus during this economic crisis and challenge are probably the things most worth embellishing.