Target Information

Round Hill Capital, a prominent global specialist in real estate investment, development, and management, has received a £115 million development loan from Carlyle (NASDAQ: CG) to finance the construction of 'Fairfax,' a luxury build-to-rent (BTR) project in Manchester, UK. This transaction marks the inaugural collaboration between Round Hill Capital and Carlyle.

The Fairfax development, acquired through a forward funding agreement in August 2022, will feature two towers comprising 488 high-quality one-bedroom and two-bedroom apartments. Residents will have access to an array of exceptional amenities, including a gym, a 24-hour concierge service, co-working spaces, and a rooftop terrace offering panoramic views of Manchester's skyline.

Industry Overview in the UK

Manchester has witnessed notable demographic growth, with its population increasing by 10% and employment rising by 28% over the last decade. This surge in population has led to escalating demand for housing, with new housing supply falling short of this demand. As of June 2023, rental prices in Manchester rose by 13% year-over-year, representing the highest increase among the UK's Big Six regional cities. According to a recent report by CBRE, Manchester has been identified as the top growth city for BTR in the UK, driven by significant demographic shifts and challenges in housing affordability.

Additionally, Manchester's appeal as a vibrant urban center continues to attract a wide demographic, including young professionals and students. The city's strategic location, being less than a kilometer from the city center and just a five-minute walk from Manchester Piccadilly station, enhances its attractiveness for potential tenants seeking quality accommodations.

The development is situated within the Portugal Street East masterplan regeneration area, further establishing its prime relevance within the local residential market. The local government has made substantial investments to improve infrastructure, making Manchester an increasingly attractive proposition for both residents and developers alike.

Rationale Behind the Deal

The loan from Carlyle provides not only necessary funding but also symbolizes a strong endorsement of Round Hill Capital's vision for Fairfax. Taj Sidhu, Head of Carlyle European and Asian Private Credit, emphasized the opportunity to support a landmark residential project in the heart of Manchester, which is on track to deliver high-quality living solutions in a prime urban location.

This partnership showcases the confidence both firms have in the potential of BTR initiatives in markets like Manchester, where demand for rental properties continues to outstrip supply amid population growth and urban expansion.

Investor Information

Carlyle Global Credit, with assets under management totaling $150 billion as of September 30, 2023, is a key player in providing private credit solutions across various segments, including senior secured loans and unitranche loans. Their involvement in the Fairfax development illustrates their commitment to financing substantial residential projects that align with current market demands.

This deal illustrates Carlyle's strategic approach to leveraging its resources and expertise to capitalize on growing investment opportunities within the thriving UK housing market.

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The investment in the Fairfax development represents a prudent decision, given the current dynamics in Manchester's real estate market. With strong rental growth and a burgeoning population, the region is experiencing an uptrend in demand for high-quality rental properties, particularly in strategic locations that appeal to young professionals and students.

Furthermore, Round Hill Capital's experience in developing and managing BTR properties ensures a professional handling of project execution. Coupled with Carlyle's substantial backing and expertise in private credit solutions, this investment is poised to deliver attractive returns. The high-quality design, sought-after location, and luxury amenities position Fairfax as a leading contender in the Manchester BTR market.

In conclusion, the Fairfax project not only aligns with current market trends but is further validated by the significant endorsement from a reputable investor like Carlyle. The collaboration between these two established firms is likely to foster a successful development, making it a strategic investment in a rapidly evolving urban environment.

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