Oxford Properties to make £1bn-plus BTR push

Oxford Properties is poised to make its first foray into build-to-rent (BTR) in a move that could see it commit “in excess of £1bn” to the burgeoning sector, Property Week can reveal.

The Canadian developer has turned its attention to the residential sector as part of its “next phase of evolution” following a string of recent high-profile office sales.

Oxford, which is currently in the throes of completing a £575m sale of its 50% stake in the City of London skyscraper the Leadenhall Building, will look to partner with BTR specialists and develop new-build, large-scale schemes.

It is close to concluding its debut deal in the sector, where it will target sites in London and Greater London in locations close to transport hubs.

“The residential sector is the largest investable asset class in the world and is something we had not spent any time trying to do in the UK,” Paul Brundage, Oxford’s executive vice-president and senior managing director for Europe, told Property Week.

“The macro thesis for residential is very strong. At the moment, we’ve got government policy lining up with market demand lining up with investors that want to do it. There is a significant need for housing in the UK and there is a lack of existing stock. We are going to build it and become long-term owners of the asset class.”

Residential currently accounts for less than 5% of Oxford’s global portfolio but Brundage said he hoped that with the push into London BTR it would grow to more than 10% in three to-five years.

“Residential represents the smallest asset class globally for Oxford, and that doesn’t feel right,” Brundage added. “I’d like to see that increase globally to a meaningful amount, greater than 10%. It will represent a significant part of our London business for the next phase of evolution.”

Next cycle

As with its London office schemes, Oxford, the global real estate arm of OMERS (Ontario Municipal Employees Retirement System), would take on the development risk in order to achieve higher returns of greater than 10%, he added.

In the past 12 months, the company has made significant sales in its office portfolio including Green Park in Reading in a £560m deal to Mapletree and its stake in Paternoster Square to Madison for £200m, as well as the mega Cheesegrater deal.

Brundage stressed that Oxford was not abandoning London offices, where it has live developments at London Wall Place, the Post Building and St James’s Market, but instead would hold its performing assets through the current cycle. “We are underweight and where do you put that capital to work? Piling a lot more money into London offices for the current cycle is not for us - maybe the next cycle.”

Brundage also set out plans to enter the Berlin office market, making it the third major European city - after London and Paris - in Oxford’s European and UK portfolio.

“The fundamentals of Germany are pretty strong,” he said. “Berlin is the most global city in Germany. Young talent wants to live there, which has fuelled a really strong innovation and tech-driven demand for space.”

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