Tag Archives: fizzy living

Fizzy Living picks up £32.4m refinancing

Private rented sector landlord Fizzy Living has agreed a refinancing of its four current projects in its portfolio. Pricoa Mortgage Capital has agreed the £32.4m package that will fund its current live projects, freeing up capital to further grow the business.

The deal shows how strong the demand is from funders, for well let private rented homes. “This portfolio offers a compelling combination of excellent quality assets, good locations and stellar sponsorship,” said Aaron Knight, director of European debt obligations at Pricoa Mortgage Capital. “For the foreseeable future, our appetite for portfolios like this one will exceed the supply and we look forward to seeing more opportunities in this space and to the expansion of our relationship with Fizzy over the coming years.”

Julian Turner, deputy finance director and head of treasury at Fizzy’s parent company Thames Valley Housing, revealed that the deal provides low rate finance over the medium term: “With interest rates at historic lows, this debt funding has been put in place at under 3% over ten years. This is made possible as Fizzy has already established a solid track record and is generating performance that not only satisfies but attracts the senior debt market. Its portfolio is operating at optimum level in a market that is poised for further substantial growth.”

Geeta Nanda, chief executive of TVH, commented, “This is another great first for Fizzy and Thames Valley Housing. Having first shown that PRS is deliverable in the UK, this demonstrates that the strength of the Fizzy model is extremely attractive to equity and third party debt investors alike. We are delighted to have conducted this debt package with Pricoa Mortgage Capital who are a new player in the market, and hope that it will be the beginning of a long term partnership.

It was in March 2014 that Fizzy agreed a £200m funding package from Silver Arrow, part of the Abu Dhabi Investment Authority, to support its expansion. To date, the brand has flats to rent at sites in Poplar, Epsom, Canning Town and Stepney Green.

Mayor signs off two major new rental projects

London mayor Boris Johnson has selected developers for two residential sites in east London, with 40% of the proposed new homes destined for private market rental.

The sites at Silvertown Way and Pontoon Dock will deliver around 1,200 new homes, of which 480 will be for private rental. The land is owned by the Greater London Authority, and is part of a tranche of sites taken on by the GLA in 2012, with the aim of bringing them into use quickly.

“These schemes will be built faster than conventional methods, by providing a US-style private rented model alongside traditional tenures,” said mayor Johnson. “It’s important for London’s economy to support the growing rental market, providing top quality homes and management, together with the reassurance of longer term tenancy agreements. I also want to entice more institutional investors to come forward and invest in quality homes for Londoners.”

The developments will include a restriction to ensure that the private rented homes cannot be sold off for a minimum period of ten years.

The larger of the two sites, at Silvertown Way in Canning Town, will accommodate 1,000 homes. It has been awarded to Galliford Try, working with Opal Land, itself a joint venture between Thames Valley Housing Association and Linden Homes. The project split will include 347 private rented homes, 232 for affordable rent, and 154 for affordable home ownership, along with 86,000 sq ft of commercial space. Thames Valley’s PRS specialist Fizzy Living is to manage the private rented homes within the development.

AA Pontoon Dock 1

Homes for rental at Pontoon Dock have been designed by Assael Architecture

At Pontoon Dock the development will include 137 private rented homes, 42 affordable rented and 31 shared ownership homes on a site next to Thames Barrier park. Here, the project will be delivered by Bouygues Development, Grainger and funding partner the London Pensions Fund Authority.

The Pontoon Dock project will be majority funded by the LPFA. Said the authority’s CEO Susan Martin: “Investing directly in the redevelopment of the Pontoon Dock site will not only deliver essential housing for London, but will also provide LPFA with the attractive, liability matching, long-term returns we need to provide for our pensioners.”

Government action demanded to support private rented sector

Two separate calls have come from those in the property industry, calling on the government to involve itself actively in the promotion of the private rented sector. Only with this level of support, they argue, can the sector gain traction, and help solve the UK’s housing crisis.

Agent GVA suggests three initiatives, to help the housing market. In its Development Outlook for summer 2014, the firm suggests there needs to be:

* a substantial expansion of the new town/garden city initiative

* further stimulation of the private rented sector “on sites less suitable for owner occupier housing”

* more public sector affordable homes

However, the researchers at GVA are under no illusions: “All these initiatives would require increases in government expenditure, which seems unlikely to occur in an era of public sector cut backs.”

That said, the government has previously committed itself to substantial support for the housing market including Help to Buy, Funding for Lending, Build to Rent and Get Britain Building. It’s just that, together, these initiatives may have helped in some way, but do not appear to have solved the key issue.

Meanwhile, PRS developer Fizzy Living believes it is only a change in planning law that will help move things up a gear. The company’s managing director Harry Downes says rental housing needs its own planning classification. “We need to get tot he point where the government, local authorities and planners understand the PRS,” he told Property Week, “where it has its own planning classification and where it forms part of a section 106 agreement.”

Downes has suggested his firm would bind itself to work with local authorities, introducing such restrictions as a cap on incomes for those eligible to rent. “If the government is serious about solving the housing crisis, then it just has to give local authorities the policy to make it happen.”

Downes calls on planners to back private rented sector

Local planners need to embrace the professional private rented sector, and recognise it in development agreements. Only by including a private rented provision in section 106 agreements, will the sector gain the traction it needs.

That’s the argument put forward by Harry Downes, managing director of Fizzy Living. PRS developments need a leg-up from the planners, he says, in order to give them a chance in the current overheated development market. Currently, most sites to go a developer who builds for sale, as their business model – a quick turnaround with a full financial exit – allows them to bid more for building land.

“While true long-term PRS operators have to directly compete for sites with the deliverers of open-market sale property, the growth will be slow,” he warns in Property Week. “All sites are fiercely contested…the winner is usually the one whose residential valuation exercise knocks out the highest land value.”

The problem is, he adds, that someone holding the properties they build for a decade or more, with the liabilities of managing those properties built into the cost structure, will not be able to come up with such a frothy return as a house builder.

Downes says there are plenty of investors waiting to participate in the market, similar in scale to the Abu Dhabi Investment Authority, which put £200 million behind Fizzy Living earlier this year. Ready to invest long term, they have the potential to significantly change the rental market for the better, giving tenants well-designed, professionally managed properties they will want to live in.

Downes says one solution would be for section 106 agreements on major sites to include a PRS factor. These are legal documents, regularly entered into by developers and local authorities, and can cover a wide range of commitments from the parties. Often they deliver local infrastructure benefits, from new roads right down to park benches.
The terms of the deal could include a minimum size of, say, 50 units – to help deliver scale; it would cover a long term commitment for the rental units to remain so for a minimum period of, say, 10 years; and “where appropriate…an income cap on tenants, to ensure the flats are actually tenanted by the generation rent target market”.

As Downes reiterates, the problem of affordability is not going away anytime soon – in London, anyone looking to buy will currently need a deposit of around £80,000 to purchase their first home. The professional private rented sector is ready to deliver – but it needs a few simple elements of support to get the momentum going.

Fizzy Living adds fifth project in Lewisham

Private rented sector developer and manager Fizzy Living has committed to buy 136 apartments in the Lewisham Gateway scheme in south London. The flats will be within a 193 unit first phase being built by Muse Developments, part of an overall scheme that is destined to include up to 800 homes in total, under various forms of tenure.

For Fizzy, the deal is the fifth site the company has taken on. It is the first transaction to make use of a recent injection of £200 million from the Abu Dhabi Investment Authority, which has provided a long term funding commitment to Fizzy’s growth. Fizzy is a stand alone private rented sector brand owned by Thames Valley Housing.

For Muse, the opportunity to forward sell the majority of the first phase of its development will give the company the capital to continue developing the second phase at a faster pace. Increasingly residential developers are looking to private rented sector landlords to buy early phase developments, helping them to fund a faster completion of major redevelopment projects.

Housing associations shy away from rental, as sales boom

A booming housing market – helped by government incentives – is forcing housing associations to cut back on their plans to enter the private rented sector.

In London and the south east, the impact of the Help to Buy scheme means house prices are rising, and there is greater demand from buyers who can now get on the housing ladder with a minimal deposit.

As a result, several housing associations are cutting back on their private rented aspirations. Affinity Sutton has abandoned plans to build hundreds of homes a year for private rent, reports Inside Housing. Notting Hill Housing Trust and the Guinness Partnership are also reportedly scaling back plans in a marketplace where building to sell can give them a better short term return, than building to rent.

The news is a setback, as last year nine housing associations bid successfully for funds under another government initiative to boost the housing market, Build to Rent. But house prices are rising, and busy builders are hiking construction costs, while land values are strengthening – all making the quick buck of a sale look more attractive.

Keith Exford, the chief executive of Affinity Sutton told Inside Housing: “We took the decision at the beginning of the year that returns on PRS are just not big enough given the risks involved.”

However, not everyone is focused on the short term, it seems. In the last week, Fizzy Living, the private rented company of the Thames Valley Housing Association, agreed a £200 million cash injection from the Abu Dhabi Investment Authority, specifically to invest long term in growing a portfolio of private rented homes in the UK.

Fizzy Living receives £200 million investment to build rental homes

Private rented sector developer Fizzy Living has received a £200 million cash investment to help speed the growth of its rental homes portfolio. The funds have come from the Abu Dhabi Investment Authority, via its investment vehicle Silver Arrow.

The injection will enable Fizzy Living, which is owned by Thames Valley Housing Association, to significantly expand its activities in the private rented sector, where it has set out firmly to provide rental homes primarily for young professionals, and initially in the greater London area.

Said John Garrity, group chair of TVHA: “As the PRS market is growing quickly with new players emerging all the time, it was a specific objective of ours for Fizzy to have access to a larger capital source within the first two years of operation. We now look forward to Fizzy proceeding rapidly towards its goal of building a large portfolio of quality private rental accommodation.”

The involvement of ADIA, which is well known for its significant investment in other areas of property, including major commercial projects, shows that the UK rented housing sector is now attracting institutional funds. The deal also suggests that ADIA has seen past the historic opinion of many institutional investors, who believed that offices, retail and warehouse properties presented better returns than housing.

Fizzy is likely to split the money between purchasing complete blocks of apartments or whole schemes from developers, and undertaking its own residential developments. Already the company has Poplar, Stepney Green, Canning Town and Epsom which it is renting out.

Fizzy Living launched in early 2012 with £30 million of funding from TVHA. It has subsequently drawn in a further £40 million from Macquarie Capital, but the involvement of ADIA will now considerably accelerate its activities.

TVHA is probably the leader among housing associations getting into the private rented sector. It has managed to finesse the relationship between a not for profit parent and its commercial arms-length subsidiary in Fizzy Living successfully, while other housing associations are still struggling to get comfortable with the concept. Garrity made the point that “profits generated from this venture are invested back into the association to meet our social purpose”.

One key to Fizzy Living’s success is the fact that it has its own, stand-alone branding, complete with an edgy design and website designed to appeal to the target market; and a strong customer service ethos to support its renters.

Geeta Nanda, CEO of TVHA, noted that ADIA’s investment reflected that differentiation in the market: This, we believe, is largely to do with the clarity of Fizzy’s focus, which delivers a great solution to the housing needs of a defined demographic.”

Downes calls on planners to relax affordable housing rules

A few simple changes of outdated planning rules could boost the provision of professionally managed private rented sector (PRS) housing in London and other British cities. Planners need to simply be more open minded in determining what is “affordable housing”, and use existing legal frameworks to ensure PRS homes are delivered and ring fenced for the medium term.

That’s the plea from Harry Downes, director of Fizzy Living. Writing in a recent edition of Property Week, Downes says PRS landlords and their tenants have much to offer localities, and local councils should be actively encouraging them.

Fizzy is the private rented sector business owned by Thames Valley Housing Group, a major housing association with a portfolio of 15,000 properties across London and the south east. Fizzy Living is already offering private rented sector flats for rent at three developments in east London, and one in Epsom, Surrey, and is promising a new deal for renters including prompt attention to any issues, free wifi, and flexible lease terms.

Fizzy Living's new Epsom development

Fizzy Living’s new Epsom development

The private rented sector is really the only practical accommodation option for a rapidly growing group of people. These are young professionals who have a good job, ambitions and a social network, but lack the massive deposit currently required to get a property with a mortgage. Downes labels them “rentysomethings”.

There is an easy way for councils to solve the problem “to achieve their commitment to provide affordable housing – as in, housing that is affordable – in their boroughs,” says Downes. “They can do this by using the section 106 framework to allow buildings of more than 50 flats to be developed as 10 year PRS opportunities.”

Downes says the professional PRS landlord presents four key advantages that benefit both the tenant, and the local community. By building substantial size projects with an average of around 100 flats, professional landlords deliver scale, and with that comes a positive impact on communities. Unlike a private landlord, who can sell out at any time, there is long term commitment, which means tenants are more likely to stay long term, too. Great, proactive management means buildings that stay working well. And finally, there is community, something professional landlords today know is part of making their tenants feel wanted – whether that’s a centrally managed fitness facility, or an online forum that helps individuals find flatmates.

Downes says there are lots of people now wanting to rent; around 2.2 million 20 to 24 year olds were recorded in the 2011 census in the UK. They are, he insists, “valuable assets” as they “spend their time and money in the local bars, shops and amenities, pay taxes and contribute to their community”. Fizzy, and companies like his, would very much wish to accommodate these renters, and are looking for the opportunities to do so. They just need the planners to be a little more helpful, when allocating sites for development.