Susan Freeman
Hi, I’m Susan Freeman. Welcome back to our PropertyShe podcast series brought to you by Mishcon de Reya in association with the London Real Estate Forum, where I get to interview some of the key influencers in the world of real estate and the built environment. Today, I am delighted to welcome Rick de Blaby. Rick is CEO of Get Living PLC, the UK’s leading investor, developer and operating platform for Build to Rent residential homes, with 4,000 in operation and over 6,000 in pipeline. Get Living’s flagship assets neighbourhoods include East Village at the Olympic Park, Elephant and Castle town centre, Middlewood Locks in Salford and Lewisham, plus others in Leeds, Glasgow, Birmingham, Leatherhead and Maidenhead. Rick has forty years of real estate experience, with a particular passion for large scale urban regeneration and neighbourhood creation. His past roles have included CEO of MEPC and United House and non-exec Chairman of Miller Developments. So now, on the tenth anniversary of the Montague Report that marked the start of the UK Build to Rent sector, we’re going to hear from Rick de Blaby on what drew him to the sector and what plans he has for Get Living. Rick, good morning and welcome to the studio.
Rick de Blaby
Thank you very much for having me.
Susan Freeman
So, we’ve known each other a few years and in one of your previous incarnations so, let’s just start off talking about your real estate background and you’ve worked at Trafalgar House, Countryside, you were CEO at MEPC and I think only really moved into Build to Rent when you joined Get Living about five years ago, is that right?
Rick de Blaby
Yeah, close. I mean I certainly spent ten years at Trafalgar House learning to be a developer. I did ten years at Countryside Properties learning how to be the managing director of a division that was a developer, although by the time we got to about the year 2000, the division at Countryside that I was running morphed into much more of an urban regeneration company that did mixed use so, I guess by then I was seeing and getting involved in more residential development that sat atop of commercial development. As you say, I then was Chief Executive of MEPC for ten years - fantastic fun - really learnt how to be, well that’s the privilege of running big institutional capital on large business parks and science parks and industrial estates across the country and actually, there was quite a lot about MEPC in terms of the model that was transferrable into Get Living. I did do three years of private equity, Chief Exec of a company called United House, which again was really interesting and valuable and then I’m actually six years, Susan, at Get Living, which I have to say has been the best fun to date.
Susan Freeman
And did you always want to be in real estate? You know, was that your ambition when you started off?
Rick de Blaby
I’m not sure I had a grand plan but when I look back retrospectively, I did spend quite a lot of my childhood building things and quite often if I wasn’t building things that looked like houses or larger office buildings, I was quite often drawing them. I thought I wanted to be an architect. I don’t think I’d have made a very good architect as it happens, now knowing the talent and the creativity that you need to be a great architect but I suppose I’ve sort of fulfilled that dream in a different way by being able to you know, very collaboratively and development involves the collaboration between dozens, hundreds, if not thousands of people if you include all of the supply chain. I’ve been able to fulfil my ambitions and dreams by being able to set a brief, set a vision around some of the schemes that I’ve been very privileged to be part of and having smart people like architects bring that vision, that realisation to fruition but as I say, it’s an incredibly collaborative process and I feel hugely privileged to have been a part of some of the things that we’ve all done.
Susan Freeman
It’s a really good way of describing it because it certainly is collaborative and you do need all those moving parts to make it work. And this year I think is still the tenth anniversary of the Montague Review which, you know, is seen as marking the start of the UK Build to Rent sector and of course East Village, the former athletes’ village which is one of Get Living’s flagship schemes was effectively the, I suppose the first, I mean it was the pilot scheme for Build to Rent so there must have been a huge learning curve there as it really, I mean it was the first scale rental scheme in the UK and I mean I you know, remember because at Mishcons we were very much involved in creating the scheme and it was, it was really a question of you know saying well, gosh, you know nobody’s done this for decades, you know how do we set it up? How do we set up the service charge? How do we deal with VAT? But there must have been some incredible learnings and in fact you’re probably still learning because you know the whole sector is still evolving.
Rick de Blaby
Well look, the Montague Review certainly had a vision and I think it’s to be applauded about how quickly that vision was realised in terms of I guess firing the starting gun for the Build to Rent sector in the UK. I mean that vision to create the UK’s first big rental community, you know sat with people like Jamie Ritblat and Stafford Lancaster at Delancey and the team around that, obviously with QD money coming in to support it and yeah, certainly East Village has gone through a few eras, there was that first era about how you set it up and all of the things that you mentioned that, as you say Mishcon were very much a part of. You get an era where the first residents move in, you know inevitably there tend to be a cohort of more pioneering, sometimes more transient people. It then sort of settles down and you get people who go right, okay, the location’s established, I understand what it is and you get what was then actually a predominantly millennial audience move in. You get another era after that actually when people really do start to put down roots and you can really feel that community, that neighbourhood really starting to form and I you know, I often say when I’m talking about Get Living, we don’t really create that neighbourhood, we create the stage in which the people who live there have the ability to create their community, their neighbourhood but that was certainly another era where that started to happen and of course the place you know becomes full and you get all of the retail and amenities working in that sort of ground floor, the public realm starts to be populated with people and it really feels like a place. And then you move into another era where the people who’ve put down the roots, they start to form partnerships and what we’re seeing right now, there are a lot of prams whizzing around in East Village and that itself brings another dimension and of course, you know, we’ve got an Ofsted Outstanding school in East Village as well so there’s always been a lot of children up to the age of eighteen present but that thing of when people form those relationships and they start to build their families, I like to think it’s a real endorsement of what East Village always set out to be, which was this incredibly vibrant, safe, rich neighbourhood and it’s you know it’s very fulfilling for everyone at Get Living to see that happen. There’s another stage coming up I suspect where you’ll see some of the seniors move into East Village, you don’t meet with the grandparents of those small children and at the same time you know those small children in five, ten years’ time become teenagers and again, you get a different dynamic, a different vibe into the village and whenever we’re thinking about you know the next phase of development and we’ve still got a couple of phases to go, a student block of about 500 homes for London College of Fashion students because London College Fashion are building a new University on East Bank and then another 850, 900 homes on the final plot. You’ve got to really think about what those lifestyle preferences are in four/five years’ time and beyond going up ten, fifteen years’ time, how that public realm really needs to work and how people’s changing lifestyles, preferences, are going to play out, which you know have been accelerated somewhat over the last three years post-pandemic around wellbeing or work at home preference for more amenities and so on. So, as you say, you never stop learning. It requires you to be I think a great listener and a great spotter of trends, got to be a great researcher, a great analyst, most of all you’ve got to be a great collaborator you know because East Village does exist incredibly interdependently, symbiotically, with all of the things that are now going on in that part of the world.
Susan Freeman
It’s interesting, as you say, that the age demographics are changing because a lot of the Build to Rent schemes initially seem to be aimed at the younger generation, not necessarily the seniors, as you’ve mentioned, and so the idea of everybody sort of mixing in together is a fascinating, well I mean do you think that will work if you start to get seniors coming in, will they co-exist happily with your younger, pram pushing generation?
Rick de Blaby
I do, yes but you know I think it’s easy to say, to sort of group all of the seniors or whatever nomenclature we give them into one group and it’s not that. I think the sort of people that we might target are those ones where you know they’re drawn to city life, they’re drawn to live with a whole wide variety and demographic of population, people who want that richness, that culture, the easy transportation and so on. And that’s not for everyone of a certain age, that’s for a certain group of people, you know people who are quite happy to lock the door and go travelling for a month or whatever but I mean what I’d say in addition Susan, is that there’s a bit of a fallacy that you know these types of Build to Rent schemes, these types of neighbourhoods are just full of you know affluent millennials that work in insurance and banking and law and accountancy and so on, I mean it often surprises people that one of the most referenced employers we have at East Village is the NHS and we have you know plenty of public sector workers, obviously private sector workers, we have a lot of entrepreneurs who have set up their own businesses, work at home or work locally, inevitably yes I think you know a decent number of people work in Canary Wharf or work in The City but it’s certainly not a monoculture but any means and when we think about Elephant and Castle and we look at what we’ve got in Manchester and then the other six neighbourhoods that we’re building up around the country, I’m sure it will be populated by people of an increasingly wide demographic, background, field of work and so on.
Susan Freeman
And would you say that rental is now a lifestyle choice for the people that you have in your communities because that’s something that Government has been sort of quite slow to pick up at and you know every year the Housing Minister comes to the Property Week resi conference and you know there’s a speech, talks about for sale housing, doesn’t mention Build to Rent and then you know there’s a question about Build to Rent and it becomes clear that the Housing Minister actually doesn’t necessarily know what Build to Rent is. Is that going to change do you think?
Rick de Blaby
I do, yeah. I mean look there’s certainly an aspiration for plenty of people to own their own home and you know who would argue against that but for a very large number of people who for now can’t either afford to own their own or positively choose not to own their own home because they want the mobility and they want the flexibility and who don’t qualify for affordable housing for whatever reason, that rental sector plays a huge role in our housing market in the UK. Now, you know, for the most part, that rental housing is provided by your Buy to Let mum and pop investors but they are exiting the market steadily and surely and the Build to Rent market is still a very nascent sector, probably less than 2% of the housing stock at the moment but if you look at the weight of capital that’s trying to come into the sector to try and solve a part of our housing challenges, yes the sector on ever piece of research that you see from any of the big houses, is set to grow very significantly. And you know it was always part of our vision to address the challenges that renters have because if you took a typical vox pop ten years ago when East Village was set up, you would have heard refrains around insecurity of tenure, indiscriminate rent increases, big fees, security deposits, poor repair service, absentee landlord, all of that stuff and we very much set out to disrupt that and say well you can have security of tenure, the rent increases will be annual, we won’t take fees, we’ll be very measured in the security deposit and if you pass certain referencing no deposit, we’re there 24/7, you pay one subscription a month and we fix everything else and that certainly resonated with the audience that you know we’re targeting that proposition at. Now, I think our vision, our proposition has moved up on significantly from that because that, that did talk to the transaction of coming in and renting a home. I think where we’re at now is that it’s much more about the experience and the opportunity we give people to live the life they want to build for themselves because when I look at a lot of people that first come into our neighbourhoods, you know the people quite often they’ve come from overseas or they’ve come from other geographies that aren’t in London or Manchester and that thing about, it can be very lonely when you first move into somewhere you’ve never lived in before and I think we’re really beginning to see our proposition being about not just a great home and a great public realm and that sort of exemplary level of service but it’s a really, it’s really a story about togetherness and how you make friends and put down roots and as I say, explore and build the life that you want for yourself and if you know that you may move job, you may move geography, you may form those relationships and want to upsize and indeed build a family, then part of our proposition has to address that desire to stay in one place but to be able to move around and have that flexibility.
Susan Freeman
How long on average do your occupiers stay with you?
Rick de Blaby
It’s lengthening all the time. It’s probably approaching three years now but that’s an average, it’s a bit like a cricket score, there are a lot of not outs in that, if you know what I mean, and I would expect it to continue to grow in that respect.
Susan Freeman
And in terms of community activities, do you provide the activities or do your residents all get together and decide what they want and run their own activities?
Rick de Blaby
Yeah, good question. We used to do set up a lot, well if I take East Village, I think we’ve, we will have done something like 48 events this year, so there’s always stuff going on. If I look back at the early days, we generally did quite big, staged events and I think we learned in the end that that probably wasn’t what people really wanted and it’s become a programme of events that are smaller and more targeted because if you live in East Village, you won’t got to 48 events a year, you might go to 8 or 10 but they’ll be the 8 or 10 that really interest you and I think where we are much more now is that we create the opportunity for these events to happen but a lot of the residents take the ownership of actually making their own clubs, their own groups and staging a lot of their own events in the buildings or the spaces that we can provide and that’s actually much more durable, much more successful.
Susan Freeman
Sounds like a very, very nice way to live actually and you know because you hear about people being you know being lonely, especially when they sort of first come to a city and there you’ve got you know as much social life as you want, which sounds very attractive.
Rick de Blaby
Yeah, I mean, I like to think our people come to work with real sense of purpose, you know the biggest direct debit our residents make in a month, generally comes to us and remember they can break their lease on two months’ notice, so if they don’t think they’re getting a great experience, a great home, a great service, they can vote with their feet and that you know instils in us a real culture of customer care and making sure that we do do our best every day for everybody. Happily, our Google scores reflect that, you know they’re in the high 4s but you have to work very hard to keep your Google scores up there and you know in a world of social media if we get something wrong or people don’t like what we do, of course you know they’re very vocal and you can see it very quickly.
Susan Freeman
Yes, it’s sort of almost instantaneous isn’t it. And have you had sort of what you regard as a sort of you know bad renting experience, something that went wrong that you just hadn’t foreseen and just didn’t work?
Rick de Blaby
Um, look we make mistakes like everybody, you know the trick’s to learn from the mistakes. I like to think you know in the 8,000 people and rising that we currently accommodate, and I say rising because it’s going to pretty quickly get to probably 16 or 20,000, you get the odd thing wrong but I don’t think we make too many mistakes but you know where does it go wrong? Sometimes it’s a miscommunication, sometimes you get the odd technology glitch, sometimes you know buildings themselves fail in some way, whether it’s a power outage or it’s a leak or a whatever, it happens but I think what we’ve learned is that where do make a mistake, if you’re honest about that and you fix it well and you look after your residents and they feel that they’ve been courteously and genuinely and authentically respected and dealt with, actually you can build advocacy.
Susan Freeman
And it really is hospitality isn’t it, and sort of hearing you talk about it, it seems less you know traditional real estate and more you know sort of hospitality sector.
Rick de Blaby
Yeah, we do have those conversations and there are days when it can feel like a real estate business obviously because it’s £3 billion worth of real estate. There are certainly days when it feels like a lifestyle experience, hospitality company and I guess it depends which team you are in within Get Living as to which is the predominant sense on any one particular day. But it’s a combination of all of those and look, I don’t think we’re unusual in that because you can look at a lot of real estate classes and asset classes these days and a lot of them, if they are going to perform well for the investors that put up the capital to make them what they are, have to have that operational platform overlay on top and it’s not just our sector that’s like that, I just think that in a B2C world rather than a B2B world, you probably just have to be even more on your game.
Susan Freeman
Yeah, it’s absolutely right about this sort of operational side and affecting other sectors like offices as well. And in terms of Get Living’s expansion plans, you’ve moved into the commuter belt with Maidenhead, obviously you are in various locations outside of London now, where, how are you looking to expand the business?
Rick de Blaby
Look, it’s really exciting and when we started with East Village, as you said, Elephant and Castle was number two but we’re rebuilding the town centre, everyone will remember the Elephant and Castle town centre so there’s a huge redevelopment going on there and that’s actually a third phase at Elephant. The third neighbourhood that we acquired was New Maker Yards in Salford, just on the other side of the River Irwell to Manchester City Centre and we you know certainly had an ambition to get a footprint in all of the major regional cities, so we bought land in Leeds and Glasgow, we’ve got a big scheme in Birmingham. We then did another one in London in Lewisham and to your commuter belt reference, we’ve got an aspiration to build a necklace of similar neighbourhoods around commutable London and it started with Maidenhead, obviously on Crossrail, the Elizabeth Line, we did one a few months a god in Leatherhead and we’ll continue to try and build that necklace around those commuter areas of London, which have you know come into their own because hybrid working has certainly meant that not everyone comes into work five days a week and certainly when you look at those M25 locations of course not everyone works in London, there’s plenty of employment going on, on that orbital motorway so, I think there’s real possibilities for us to build that up.
Susan Freeman
And with the hybrid working, as you mention, is that affecting the way you design your communities? Are you having to put in more workspace for people?
Rick de Blaby
Yeah. I mean that discussion about the right level of amenities, a very live discussion because you’ve got to balance what people want and what they genuinely use and certainly if things like work from home is highly relevant at the moment, now I say work from home, not everyone wants to work in the home but they do want to work in the neighbourhood so, we’re certainly having to you know convert some of our spaces to provide that work from home facility but you know the industry is, got the real challenge of what people colloquially call the leakage, the great sink into the NOI, we express it as cost per unit and you know I’ve certainly seen some of our competitors putting in swimming pools and tennis courts and all the rest of it. It’ll be interesting to see in a year or two how much they’ve been used but the cost of producing that stuff and managing it is enormous of course and I think we, all our peers and us, are sort of trying to discover where the optimum lies between what people want, what they value and what we can affordably provide.
Susan Freeman
Yes, that must be particularly difficult at the moment with rising costs on all fronts, rising you know rising energy at cost, the actually cost of providing those amenities is just forever going up.
Rick de Blaby
Yeah, well look, no one needs telling that the world’s changed a bit in the last three or four months and certainly, when I look at our utility costs next year, I think they’ve gone up by something like five million and that inflationary influence purveys everything from the build costs, to the utility costs, to the insurance cost, to the entire supply chain, to people and all the rest of it so, there is certainly some real challenges around that and of course the debt costs for everybody who’s got a refinancing event or is looking to finance their first development, of also pretty challenging so the viability of our sector has definitely got a lot harder. Yes, there’s been some revenue growth but that’s largely a correction from the Covid era and I think that will start to subdue but it’ll still be pegged as to wage growth because it generally is. You know, the bank of mum and dad doesn’t really apply in our world, people have a salary and they can afford to pay X percent in terms of rent and running costs. So, yeah, there are definitely viability challenges for delivering a lot of the pipeline which may have been consented already or for which planning permissions are in there and we’ll have to see how that shakes out.
Susan Freeman
And ideally, what sort of sites are you looking for at the moment?
Rick de Blaby
Well we, we really like scale and I think we are probably, we differentiate ourselves by that. So if you look at all of the assets we’ve got, they are generally the larger footprints, the larger number of homes with the most variety so, doing a scheme of you know a 150, 200 homes in a single block, on a postage stamp site, is not us. We like to be able to have that realm, that sense of place, that scale that we can put a team on site that’s there 24/7 to handle any resident, customer needs. And I think that enables you to really differentiate your proposition to residents because you have to answer the so what. So we have big neighbourhoods but if I’m talking to you, why would you, Susan, choose to live in a Get Living home in one of our big neighbourhoods compared to an identical one or two-bed home that’s on the other side of our red line? And that’s really a proposition around the fact that we can provide real value, you’re part of that neighbourhood, you’ve got the amenities, you’ve got us on site to deal with it, it’s very safe, we spend a lot of money, millions a year, on security, we’re generally around areas of great public transport and it’s that soft side, that experience side, where the benefits of scale really come to you as a resident.
Susan Freeman
And would you sort of generally be building on your own or would you do it in joint venture or does it vary from scheme to scheme?
Rick de Blaby
Yeah, good question. I mean we’re pretty agnostic about the way we get our opportunities so, some of the schemes we’ve bought land and arranged our own planning and got our own contractor and built the whole thing through, taking all of the risk of the developer, all the way through to the operation. One or two have been on afford commitment, where the building has already started and we’ve said effectively we will buy on completion. A lot have been done through forward funding, where developers have come to us and said we’ve got the land, we’ve got the planning permission, will you forward fund the scheme from inception to completion and we’ve certainly done that. Joint ventures, yes, is another route, you know the sort of scale that we want, in the locations that we want, they’re not growing on trees, you have to be really selective and pretty energised about how you go about finding that pipeline so, as I said at the start, you have to be pretty agnostic about how you’re going to get there. What matters to us is the quality of the architecture, the quality of the homes, the quality of the realm that we can create and the footprints in the neighbourhood and the general vibe that we can get to in the end.
Susan Freeman
And when Build to Rent sort of kicked off initially ten years ago, the UK funds were quite slow to invest back into residential and to invest in Build to Rent. I mean, we’re hearing some quite a lot about you know possibility of sort of rent controls and rent caps and you know this sort of thing, I mean is this something that you’re concerned about and something where you think that the funds are concerned about?
Rick de Blaby
Well, I think there is still seems to be a huge weight of capital trying to get into the sector because everyone can look into the UK and say we’ve got a structural shortage of housing, structural shortage of professionally run rental housing and I don’t think that’s going to change any time soon with the planning regime that we have and the relatively densely populated country that we are with relatively scarce supply of land. So I don’t think that’s going to change. To your question about rent controls, is it a threat to the sector? I think there’s a possibility that rent control of some sort or another might be imposed in the next few years. Of course you can see the political attraction of doing that from the point of view of protecting the resident but it has a whole suite of unintended consequences because it could turn off some investors, if they think their revenue in their financial model that’s going to be capped because they themselves you know are part of a much wider ecosystem where they themselves have their own pensioners and their own liabilities to meet and all the rest of it. It actually reduces the mobility of people to move around because if you are in a rent controlled apartment, you will probably stick with it and therefore it removes that mobility. It actually probably reduces the incentive for the owners to keep the property in a really great state of repair. You know, every time someone moves out of our apartment, we are redecorating it, refreshing it, it’s practically new when the next person comes in. And you can see in other markets, there’s a bit of a black market that emerges because people are effectively selling their position of the discounted rent so, you can see the political attraction of it but I think it does have a suite of intended consequences that in the end will compress the future supply and the best answer to keep the rents affordable and realistic is actually to have a proper demand supply balance and we don’t have that at the moment. But I think there’s always an upside to these things because we’re probably entering a period, for all the reasons around inflation and higher exit yields and higher debt costs and higher cost per unit and stuff where there will be some consolidation in the sector and if the rent controls come in, that’s another influence on that and I think if we can get Get Living into a place where it’s operating just supremely efficiently, when it’s got the product that people really want, when it’s got a proposition that really resonates, I think there’s an opportunity for us to be the consolidator and if the rules of the game involves some rent regulation, well that just goes to price and we’ll have to work with it. But that’s not to say I think it’s a good idea because I think it will have consequences in the wider provision of housing across the UK.
Susan Freeman
Yes, and I think historically it hasn’t worked and you’ve touched on you know the question of supply and demand. How are you finding demand at the moment? I mean, people seem to want the type of accommodation that Get Living are providing and how are occupancy levels? I mean, are…
Rick de Blaby
Well, demand is very high and our occupancy levels are in the 98% plus. Elephant regularly has weeks where it’s 100%. It’s actually very hard to be 100% where you know everybody is, there’s a head on every pillow. So demand is very high, for sure and again, for the reasons I’ve said, I’m not sure that’s going to change particularly.
Susan Freeman
And as a matter of interest, I mean during Covid lockdown did demand hold up and were people able to pay their rent?
Rick de Blaby
So, if you go back to March ’20 and that first period of lockdown sort of what was it, sort of late May wasn’t it? I think what we saw there was that most students, most overseas students just went home so, you certainly lost that, that cohort of occupancy. Most of the younger people that were furloughed went back to the dining room at mum and dad’s. We were still bringing quite a lot of people in, in terms of move ins because you have to remember there were plenty of people that served notice to leave their own rental homes in January and February, counting on us to be able to move them in in March, April and May. So, we certainly had people who were in the office still being able to move people into their homes in a Get Living neighbourhood. But we did lose occupancy in that period like everybody else. What happened after that Covid lockdown period, that first one, we had quite a lot of people defect actually from the 21st floor of a tall building, with no balcony, that were coming to places like East Village and New Maker in Manchester and Elephant because they liked the public realm, they liked the fact that we still had teams on site, they liked the fact that there was a neighbourhood and there was a community feel and actually our occupancy bounced back really quite quickly on the latter part of 2020 and we got to a place in 2021 where we were back in those very high 90s occupancy and it was I think a validation of our big scale neighbourhoods compared to our peers.
Susan Freeman
And what would you say are the sort of greatest business challenges for you sort of at the moment?
Rick de Blaby
You know, when I sort of run up and down the line pretty much on a daily basis, you know building a great team has taken a while but I’m really proud of the team that we’ve got these days, I’m really proud of the commitment that everyone brings to work, I’m really proud of the purpose everyone feels, I’m really proud of the cognitive diversity that we’ve got around the place. Finding your pipeline is definitely a challenge and when you’ve found it, being able to build it on a viable basis is a challenge, getting planning, as everybody knows, has probably never been harder. Keeping your proposition fresh all the time and knowing your target audience and really what they want is something you’ll always have to work at. There’s a whole world behind the veil of processes and controls and good governance and making sure that the machine operates really efficiently and a lot of that goes to the tech stack that you can build in your operation and that’s a continuum as well because as you grow and as technology changes and as you’re in that relentless pursuit for real operational efficiency that manifests itself in a great resident experience, you’ve got to work at that all of the time and you know on the sort of income yields that we operate in, it’s a pretty asymmetric equation because if you get everything right, you can move the total return up by a few bibs, you don’t have to get many things wrong for it to really fall away. So, it’s not sort of episodic in the way that some commercial property businesses are, it’s like an ultra-marathon, you’ve got to be on your game every day so, there’s definitely challenges around that but if you are asking me you know what keeps me awake at night, it’s really how we consistently deliver a great resident experience, how we consistently deliver an outperforming total return for our investors, how we consistently make sure that our team are engaged and collaborating and feeling great and then how we grow our pipeline because you want your pipeline and your growth to be accretive to those returns and actually accretive to the resident proposition that you are giving.
Susan Freeman
So, you mentioned technology, I was just wondering how important great technology is to the operation of the business now?
Rick de Blaby
It’s increasingly important. You know technology has to serve a number of areas so, you know you want technology to provide a great resident experience as I say, so people can go on the app, they can go, I mean they start on the website, apply for a home and they sort of self-qualify, they can view the home online, they can arrange the viewing to see it for real online, they can make payments online, they can find out what events are going online, I mean they just need to be able to get on the app and communicate with us really effectively. Tech has to work for all of your finance functions, your accounts receivable and your accounts payable. It’s really important for FP&A, it’s really important for your data analytics, you know we’re increasingly moving to a position where the data drives the decision making, the pricing and all the rest of it. You know the technology works in terms of your operating model and actually being able to do it in a very formulaic, cookie cutter way, again and again and again and again without, without it falling over. And technology helps us in terms of the way we target our proposition to the audience we’re really trying to connect to. So it’s critical in a number of ways and we’ve got a pretty good tech stack, I was probably telling the investors two years ago that it was absolutely brilliant and class leading but these things need refreshing, touching up, tuning every six months. We happen to be in a moment in time for us where some of our software contracts are coming up for grabs, we are at that point of inflexion where we’re moving from three neighbourhoods to four next year, to up to nine that we’ve secured now, so you’ve got to find a way to be operationally more efficient and technology is a key facilitator of that.
Susan Freeman
And you were talking about consistently delivering for your investors and at the beginning of the conversation you were talking about you know how Get Living started with Qatari Diar. Can you tell us a little bit about who the investors are in the Get Living business?
Rick de Blaby
Yeah, we’ve got three investors; APG, big Dutch pension firm, the Qataris as you say albeit they’re in a process at the moment and we may have a new investor in there shortly and then there is a fund called DOOR, Delancey Oxford Residential, so that is some of Delancey, Oxford Properties, obviously part of the OMERS group and within the DOOR fund itself are three other passive institutional investors. So it’s a club of three, we’re listed on the International Stock Exchange in Jersey as a REIT but I if I look forward and we grow then who knows where that will go, I mean we, I think it’s part of our job as the executive team of Get Living to give investors the optionality around widening the club and IPO, whatever it is but I think that the ambition and the scale that we’re trying to get to, we’re definitely going to need considerably more equity capital and obviously the debt that sits alongside that and it’s for those shareholders to decide whether they want to keep adding more equity into it or whether they wish to bring in other partners to sit alongside them.
Susan Freeman
And in terms of developing the Get Living brand, you know how do you see that, you know do you have thoughts about rolling out the brand outside the UK, sort of extending the ambit of the brand further?
Rick de Blaby
Possibly. I think we’ve got to get a higher level of footprint, a higher level of scale in the UK at the moment, so our focus absolutely has to be on that. We have looked at Dublin in the past, we didn’t succeed at the time, we’ve obviously got the position in Glasgow in Scotland which has a different regime, brought in rent controls interestingly enough pretty recently, but you know we’re busy building another six and a half thousand homes, right now, today, we’re certainly screening new opportunities all the time so I think it’s a UK business for now but at a certain point, who knows.
Susan Freeman
And I mean one of the things that I sort of wonder about, if you look at the multifamily operations in the States, they tend to divide the development function and the operator function, I mean do you see that’s something that could happen in the UK?
Rick de Blaby
Well of course the businesses that operate in the United States make us look like minnows.
Susan Freeman
At the moment.
Rick de Blaby
At the moment. And that tells you something because I think inevitably, you know the UK will see a group of bigger scale businesses like ours really establish themselves. So we’re still very nascent but we will become mainstream quite quickly. To your point about separating the development from the operation, we’ve chosen not to do that because I think when you’re developing your next neighbourhood, you want your development team to be very close to your neighbourhood team because your neighbourhood team who are doing the leasing, who are doing the renewals, have those relationships with residents, your repairs and maintenance teams who know, you know, what taps start to leak, what wardrobes start to creak, you want that constant feedback loop from the people who are at the coalface feeding into your development team so that they’re not just looking at it from a development appraisal point of view where effectively they’ve crystalised their profit on practical completion because ours is a long term business and the decisions we make three years before practical completion, absolutely influence the cost per unit, the attractiveness to the homes, the revenue, the stickiness of the resident and so on, so you need your development team and your operational team to be absolutely hand in glove all the way and you know so we look forward now, that whole ESG, net zero carbon agenda, is a huge part of how we wish to develop in future and when you’re looking at an agenda like that you can be quite disruptive about your new developments, you actually have to be quite adaptive in terms of the portfolio that you’ve already got but that doesn’t mean to say that you can’t take your existing portfolio and move it up that ESG and that net zero carbon agenda so, your development team is a really key part of how they relate to the operation so keeping them apart, not what we’ve chosen to do.
Susan Freeman
And in terms of the sustainability agenda, I mean presumably that requires collaboration with the residents as well, if you know one’s talking about keeping sort of energy consumption down, everybody has to want to do it.
Rick de Blaby
Really good point. I mean there are certain things that we can do on our own and we you know are benchmarked against the GRESB index – got a 5* rating by the way, can brag about that – and there’s the whole TCFD which you’ll know all about which you know we’re required to report against I think from the back end of 2024 but you’re right, in the end if you’re going to be successful in your ESG aspirations, if you’re going to be energy efficient, if you’re going to reduce your carbon footprint, there has to be real alignment, there’s got to be a real shared mission between resident and building owner and we’re very much thinking about that in terms of how we refresh and rearticulate our proposition because at the moment, you know if you’re, if you’re building a city office, if you’re not BREEAM outstanding, you’re not really in the game. At the moment, in our world, residents, it’s not the first question they ask us, you know what’s our ESG, what’s our net zero carbon, what’s our carbon footprint and so on but we really want them to be asking those questions because it’s a differentiator for us and we really want them to stand alongside us shoulder to shoulder to advance that agenda because it’s in our mutual interest to do so.
Susan Freeman
It’s actually quite surprising that they’re not because I would have thought that with your sort of younger demographic that it is the actual sustainability and you know all these things are questions they would be asking when they, when they move in.
Rick de Blaby
You’re right and they are starting to ask that, I mean they certainly ask about recycling and so on. Our employees come to us and say what’s our agenda on that before they start joining us so, it’s definitely got that far but it’s a two-way thing isn’t it, I mean I think if we can articulate our proposition to our prospective residents and says look this is what we’re doing, we’re trying to be a force for good in the world, join our mission and be part of that, then you’re stimulating that interest, that motivation to do that stuff.
Susan Freeman
And in terms of the ‘S’ in the ESG, the sort of social impact side, is that something that Get Living gets involved in, in terms of community events and actually you know building sort of relationships with people outside the actual Get Living community?
Rick de Blaby
Big time. You know, if you are a long term owner of the sort of neighbourhoods that we have, you really have the responsibility to be, to deliver social value, be a force for good in those communities that you live in because as I said earlier, you know we exist very symbiotically with the people that employ the people that are part of the civic group, you really have to be part and earn your right to be part of that civic family in whatever geography that you happen to be in and one of the ways that that is manifested is in the social value that we deliver and that takes all sorts of forms from you know the charities that we sponsor, the local artists that we sponsor, a lot of the sporting endeavours and you know you just go into these new geographies and you invite the community to come forward and say well, what is it that you’re trying to achieve? What is it that we can help participate in? And you know the people who work at Get Living love being part of that.
Susan Freeman
And in five years’ time, Rick, if we were having this conversation, where would you like Get Living to be in terms of you know achievements, size, number of residents?
Rick de Blaby
I really want Get Living to be that exemplar, that, that, provider of homes for people to really thrive and flourish and be together and that leaves you thinking about so how do we do that? And it’s partly about scale because if you can build these big neighbourhoods in lots of places around the UK, that enables you to be smarter, it enables you to deliver a better proposition, it enables you to get better value, it enables you to do it better and better. So there’s certainly a scale point to that. All the time, we are having to compete for capital to do that, so we’ve got to be profitable and operationally efficient so that we’re delivering an acceptable pension fund return. You need a great team to do it so all the time, you’ve got to be sure that you’re giving people that come here a real sense of purpose, a real fulfilling career with opportunities to grow and there is an opportunity for you know the best in the sector to emerge to be that, I just want to be the best of that cohort.
Susan Freeman
Fantastic. Well, I think that’s a great place to end, that’s brilliant Rick. Thank you very much.
Rick de Blaby
Pleasure. Well, again, thank you for having me, Susan, it’s a real pleasure.
Susan Freeman
Thank you so much Rick de Blaby for talking to us about what Get Living and the Build to Rent sector have achieved in ten years and what we may expect from the sector going forward.
So, that’s it for now. I hope you enjoyed today’s conversation. Please join us for the next PropertyShe podcast interview coming very soon.
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