Apache targets the Arc for £160m BTR scheme

Apache Capital is to develop its first housing scheme under new company Present Made at the University of Cambridge’s Eddington site. Present Made is planning a £160m single-family housing rental scheme of 373 homes as a debut for the £1.6bn platform. Apache launched the strategy earlier this year, working with Jo Cowen Architects, and has an immediate pipeline of more than 3,000 homes across suburban locations in the UK. The investor has been selected by the University of Cambridge as preferred bidder for a 10-acre parcel at the Eddington campus after a 12-month procurement. Present Made will develop 261 flats in four blocks of up to five storeys, and 112 three- and four-bedroom houses, built around a central garden and public realm. The homes will be built using modern methods of construction in a net-zero carbon scheme, and Present Made expects to select builders early next year. The debut comes almost five years after Apache first mooted an expansion into the emerging sector. Richard Jackson, managing director and co-founder of Apache Capital and chief executive of Present Made, told EG: “We thought strategically about where we had wanted to start off: that was the Oxford-Cambridge Arc. “For us to be able to launch a flagship development on university-owned land and to sit alongside them and hopefully form the basis for a longer-term partnership and other developments in the future was very attractive.” Jackson said Present Made was drawn by the site’s proximity to infrastructure investment and the strong employment and education base. “There is a strong demographic,” he added. “We also felt that growth of businesses on the back of that infrastructure would continue, and as there was further inward migration of people there would be more demand for rent, which is structurally growing in the UK anyway.” Globally significant site Eddington is the first step in the North West Cambridge Development, the largest capital project in the history of the university. The development is named after astronomer and physicist Arthur Eddington, and has been in the works for the past two decades. Outline plans, approved in 2013, allow for 3,000 homes, with a further 2,000 student beds, more than 1m sq ft of employment space, senior living, a hotel, and more. The site has been earmarked for at least 1,500 homes for sale, with the first homes built by Hill Residential. Present Made’s development will be the first build-to-rent housing in the neighbourhood. “For the university, Eddington is a site of global significance. It is a way of attracting staff and students to the university, and they have done a phenomenal job,” said Jackson. Apache also has previous experience in the city on the student side. In 2018, it sold Brunswick House to Cambridge County Council, achieving a record net yield for direct-let accommodation of 4.76%. However, this is the first BTR, and with Present Made the strategy will be longer-term. Apache hopes to retain a stake in developments as it brings on institutional capital, although Jackson expects single-family housing’s yields will likely trend similar to its urban counterpart. “There is an argument to say that single-family housing yields should be sharper than multifamily; it’s going to be a less transient rental base.” Open to investors Present Made is Apache’s second BTR strategy after its joint venture with Moda Living. The approach will be similar, as Present Made secures land, planning and brings on investors. The scale will also be comparable – some 373 homes in Present Made’s first scheme is indicative of the size of schemes to come. This makes development viable, although significantly larger than any SFH to date. “There are already institutions active in the sector, but they are largely building off-the-shelf housebuilder product,” said Jackson. “The difference between us is that we’ve spent more than four years building and designing this masterplan-led community, with houses to be precision-engineered and targeting a net-zero carbon model. To bring all of that together you have to have the operational business.” Jackson said the decision to launch a solo venture was an obvious route for Apache, as it seeks to replicate the successes of vertically integrated businesses of investor-developer-operators in the US. “When you are building an investment management business like Apache, you don’t just automatically walk into an institution’s office and get a lower cost of capital,” said Jackson. “As that track record grew, our investors were saying to us, we would like you to create your own business.” Apache now has a wealth of low-cost capital at the door. Jackson is staying open to future investment structures, to continue to cater to this audience. “Everything that we do is really focused on two people – our investors and our residents,” he said. “These strategies are not created overnight; we had to ensure that we created the most credible, well-considered business strategy that would be able to deliver strong and consistent returns over the medium and long term. That is our ultimate aim: to be able to own and operate these assets longer-term.” To send feedback, e-mail emma.rosser@eg.co.uk or tweet @EmmaARosser or @EGPropertyNews Images: Present Made, Design and image courtesy of Jo Cowen Architects