Hestia courts funders for £1bn BTR spree
Federated Hermes’ build-to-rent platform is gearing up for expansion with a plan to deploy up to £1bn in under three years.
Hestia is in talks with funders to build on current commitments with British Telecom Pension Scheme, following acquisitions in London, Leeds and Brighton (pictured).
Will Gibby, director of fund management at the international business of Federated Hermes, told EG: “We are speaking with other prospective investors. These are separate conversations to do separate things as part of Hestia.
Federated Hermes’ build-to-rent platform is gearing up for expansion with a plan to deploy up to £1bn in under three years.
Hestia is in talks with funders to build on current commitments with British Telecom Pension Scheme, following acquisitions in London, Leeds and Brighton (pictured).
Will Gibby, director of fund management at the international business of Federated Hermes, told EG: “We are speaking with other prospective investors. These are separate conversations to do separate things as part of Hestia.
“What that looks like in terms of product, whether it is separate accounts or co-mingled, just depends on the client base.”
Hestia launched in December with the acquisition of London Square’s Axion House and Caddick Developments’ SOYO, backed by BTPS. The mid-market rental portfolio includes operational assets from the old Vista Fund, with Cargo in Liverpool and Pomona Wharf in Manchester.
Gibby said: “In our existing model we have vertical integration, but you can grow horizontally asset by asset.
“The ultimate aim over the next two to three years is to commit £800m-£1bn. That’s including our existing BTPS portfolio, certainly an extra £400m-£500m through the raising of new capital.”
Hestia aims to deploy funds quickly and is already in talks over a number of schemes, with a target list of 30 cities.
“To have 30 markets in the UK gives a sense of the fact that we are pretty flexible as to where we’ll invest,” said Gibby. “We’ve got things in Cardiff, Bristol, London, Glasgow, Edinburgh, Birmingham. There are a number of markets and that’s just the deal flow from the past couple of weeks.”
Ideal schemes will be over 150 flats, around 10-15 minutes outside of the central business district. Although designs differ scheme-by-scheme, Hestia looks for natural amenity, such as parkland or water.
“We were thinking this way before the past year, because it is something we’ve done in the US,” said Gibby. “It’s not new to us, it’s something we’ve thought about for a long period of time.”
The fundraising comes as BTR investment continues to grow post-pandemic, despite headwinds in commercial real estate. Last year investment into BTR rose 30% to some £3.5bn, according to figures from CBRE.
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Photo: First Base
