CBRE to Boost UK Multifamily Presence

By taking over Telford Homes, the company will expand Trammell Crow’s real estate development business into the United Kingdom's budding build-to-rent housing market.
CBRE President & CEO Bob Sulentic. Image courtesy of CBRE

CBRE is expanding Trammell Crow Co.’s real estate development business into the U.K. with the acquisition of Telford Homes, a leading developer of multifamily properties in London. The deal, expected to close in the third quarter, values Telford at $336.9 million.

Telford shareholders will receive $4.41 per share in cash. CBRE plans to fund the acquisition through cash and its revolving credit facility. But CBRE has also put a bridge acquisition facility in place as required under U.K. takeover rules to confirm that resources are available to fully satisfy the shareholders. The transaction requires approval by a majority of Telford stockholders.

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Los Angeles-based CBRE acquired Trammell Crow in 2006. The pending deal would allow CBRE to expand Trammell Crow and allow it to expand opportunistically in the U.K. and Europe over time.

Telford has a development pipeline of $1.66 billion. The company focuses on developing middle-market rental properties, a sector that is growing in the U.K. as attitudes about renting versus owning properties are changing.

Telford generated about $446 million of revenue and $50 million of pre-tax profit for the 12 months ending in March. Trammell Crow has also had robust earnings growth over the last five years, while producing very strong returns for its capital partners.

CBRE President & CEO Bob Sulentic noted the U.K. is in the early stages of a shift toward institutionally owned urban rental housing, similar to the well-established system in the U.S. Citing Telford’s 300 professionals in the London area, he said the company is well positioned to lead the trend for Trammell Crow.

Jon Di-Stefano, Telford Homes CEO, will continue to run the Telford business after the deal closes. Telford will operate as part of Trammell Crow and its financial results will be reported within CBRE’s Real Estate Investments business segment.

J.P. Morgan Securities LLC, together with its affiliate J.P. Morgan Securities Plc, which conducts its U.K. investment banking business as J.P. Morgan Cazenove, is CBRE’s financial advisor.  serves as legal advisor to CBRE and Trammell Crow for the deal.

London Investment Growth

Despite concerns over Brexit, London is still the top destination for real estate capital, according to recent research from JLL. The report looked at 30 cities around the world that accounted for half of all global real estate investments for 2018. Much of that volume has been boosted by high levels of foreign investment. One sector that is also getting a lot of attention from investors is student housing. Earlier this week, Legal & General, a London-based financial services firm, said it had formed a partnership with Oxford and will invest $5 billion in housing for staff and students in the university area.