Brookfield commits £430m to the UK serviced apartment sector
Saxbury is very pleased to hear that Brookfield Asset Management has exchanged contracts with Oaktree Capital Management’s serviced apartment business, SACO.
Over the years, Saxbury has watched SACO's evolution with keen interest. We have seen SACO grow from a small respected corporate housing company to a leading player in the global extended stay housing sector. We are delighted to have played a small part in their growth by completing two serviced apartment transactions with SACO in the past 12 months alone. Undoubtedly, Brookfield’s purchase of SACO will increase the value of our client’s buildings.
There are good reasons for the sector to welcome this transaction. In March 2016, Starwood Capital Group put its “Think” portfolio on the market. It consisted mainly of London based serviced apartments, and although it was on the market for more than eight months, it did not attract any buyers. Observers were left wondering whether this was a strong indication that the serviced apartment industry was not able to exist as a stand-alone asset class, and was a long way from becoming an investor-friendly market.
Saxbury is convinced that the serviced apartment asset class is maturing and that it is a mistake to view it as a niche add-on to a more general class of property assets. Over the past few years, we have witnessed the growth and strengthening of this sector, and believe there are now many opportunities for increased investment and consolidation.
The sale of SACO is a great example of our view coming to fruition. Brookfield not only have a strong presence in the UK, but they also have a relocation firm, Brookfield Global Relocation Services, who are a global booker of temporary accommodation. This acquisition will create a strong, valuable portfolio for Brookfield while ensuring that they own one of their largest accommodation suppliers.
This is not just the perfect deal for Brookfield, but it is also the first time we have seen this kind of transaction. To date, there has been little comparable data to demonstrate the worth of the industry, which has restricted the flow of investment. The sale of SACO demonstrates an investor-friendly asset class, and its “private equity to private equity” nature shows it can create valuable portfolios and a good return on investment. In our view, the serviced apartment sector should now be viewed as “investor friendly”, and has an exciting future ahead.
This landmark acquisition has prompted Saxbury to be frequently contacted by numerous investors, looking for similar opportunities. Undoubtedly this sale has created some excitement in the UK serviced apartment sector and we expect similar transactions to follow as the asset class matures.