Atlas Residential, a Chicago-based multifamily specialist that’s been expanding rapidly in the UK, is touting the positive impact that technology has had on its ability to expand and manage its portfolio of apartment properties. “Technology is what’s enabled groups like ours to become more efficient. We use software that’s very prevalent in the US to manage properties and maximize revenue and rental income. It’s dynamic pricing, similar to airline ticket pricing, but also allows us to control costs and maximize efficiency,” said Jonathan Ivory, managing director.
The company has been expanding its UK portfolio since 2012, tapping into a severe supply-demand imbalance in the country’s for-rent housing market that’s become more pronounced since the global financial crisis. While the UK has historically been a nation of homeowners over the past two to three decades, the rental market was less developed. “The UK build-to-rent sector is much more nascent so we’re copying what our US cousins did 30 years ago to professionalize the apartment industry,” Ivory said.
Despite a trend toward homeownership, rising prices have meant that more people are opting to rent. Other issues, including dwindling tax incentives have contributed to the problems. “Many tenants in the private rental sector are renters of necessity rather than renters by choice,” Ivory said. “There’s a scarcity of developable land, sclerotic planning, and a supply-demand imbalance from not building the number of homes to keep pace with that demand.”
Atlas, a developer and operator, looks at deals through the prism of operational efficiency and the potential for development returns. It seeks properties of 200 to 400 units and is working to expand its UK portfolio to as much 10,000 in the coming years. The company’s capital sources are mainly private equity funds, pension funds, endowments, and other institutional investors. “We haven’t struggled to raise capital for this asset class or our deals,” Ivory said. “There’s demand at the consumer level for professional, well-managed product that produces the kind of returns that are commensurate with the level of risk being taken.”