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Former TPG Partner’s Real Estate Startup Bets Big on UK Housing

New homes on a residential development of the Northstowe new town outside Cambridge, UK, on Monday, Oct. 21, 2024. The famed university town is seen across the political spectrum as a model for how to revive the moribund UK economy, but not everyone is sharing in its success. Photographer: Vivian Wan/Bloomberg

(Bloomberg) -- Greykite, the real estate investor founded by former TPG Inc. partner Michael Abel, has formed a venture to invest £750 million ($973 million) in UK rental houses. 

A fund managed by Greykite has teamed up with Gatehouse Investment Management to bet on so-called single family rental homes and has secured its first acquisition from homebuilder Persimmon Plc, according to a statement Tuesday.  The deal includes 11 sites in the Midlands, Yorkshire and the North East, which will be managed by minority partner Gatehouse, it said. 

A succession of institutional investors have piled into letting homes in the UK as soaring mortgage costs and a lack of new development have created the conditions for rising rents. Canada Pension Plan Investment Board, Kennedy Wilson and Hines have all announced plans to invest in the sector within the past month. 

Disposing of completed homes to rental investors has also become a key sales avenue for the UK’s major home builders as private sales have been hit by higher mortgage costs. About £800 million of such sales were completed in the third quarter, taking the total past £2.4 billion for the year through September, according to research published by broker Savills Plc. 

“The UK single family rental sector benefits from a number of compelling demand fundamentals, and continues to be characterized by a chronic under supply of purpose-built stock,” said Abel, who formally launched Greykite’s first fund in March this year. 

Investing in single family rental homes means acquiring individual houses, differing from the typical build-to-rent strategy of snapping up blocks of apartments. 

©2024 Bloomberg L.P.