LGIM Real Assets Fund Manager Dan Batterton doesn’t just know build to rent. He has played a crucial part in shaping the sector so far in the UK, challenging institutional investors to get behind him and creating a BTR portfolio for L&G worth £1B and counting.

As his portfolio has grown, Batterton has become one of the people in the UK who knows best the secret to a successful scheme: that the most important person is the one who is paying the rent. Only by keeping this at the forefront of plans can a scheme work.

Why is Batterton raring to share his secret of success with the rest of the real estate sector at Bisnow's Manchester BTR event? Because what he wants now is more competition.

The secret of BTR

Batterton considers himself one of a small group of people who are trying to push the boundaries. Putting the residents first means championing a whole new attitude to institutional investment. It might make some people uncomfortable, such as those focused on short-term gains and a shut-your-eyes-and-ignore-the-residents approach to development. But it really works.

It means first accepting that BTR is a service industry, not a construction industry. It means accepting that you can’t simply delegate away the creation of a relationship with the occupier and still expect a return on investment. Batterton describes BTR as a long-term commitment that can create sustainable communities for many kinds of people.

The sector is still in the early stages in the UK, with huge opportunities to shape what the industry will become and how organisations provide services to occupiers. Schemes can vary in service level, quality, location and provision. This is where Batterton has come into his element, by thinking outside the box.

For example, L&G has brought in a team from British Airways to deliver a bespoke hospitality training course to staff on the ground. Not normal behaviour for an institutional investor. This is the beauty of being able to carve a new sector out of the old tradition of renting; nothing has been done already. It is all there to be created.

The man behind BTR

At university, Batterton spent 75% of his time studying economics and 25% of his time studying sociology. This is exactly what he does on a daily basis today, he says.

As an experienced fund manager with exceptional understanding of portfolio strategy, Batterton became a BTR expert the hard way; he built L&G’s residential strategy from scratch. He was asked the question: Why don’t we invest in the residential sector? And then, how are we going to do it?

So began a year of research, during which time Batterton realised the possibilities. Residential is the biggest asset class in the UK, yet it hadn’t had institutional investment for a decade. Having landed on the purpose-built sector, L&G took the view that bigger is certainly better and settled on blocks of 150 or more apartments.

Next, Batterton did the only sensible thing: He asked someone who already knew what they were doing. L&G partnered with Dutch pension fund PGGM, which had tried and tested all elements of creating a BTR scheme in mainland Europe.

From that point, Batterton has built a crack team of BTR specialists, including planning experts and architects. He realised that when you’re entering a new sector, particularly one where everything is untested, you can’t rely on third-party experts. You need to develop skills in house.

Each time Batterton and his crack team launch a scheme, they learn and improve. L&G’s Deansgate Square BTR scheme, the West Tower, is set to open in June, bringing a range of apartments to Central Manchester aimed at different occupiers. The property will build on L&G’s Slate Yard 225-apartment scheme, which has already won awards. By always improving, a sector is created.

Leading The BTR boom

This year alone, L&G will launch 1,000 BTR homes across four buildings. It has taken three years to curate a BTR portfolio worth £1B, but with a further £1B currently under offer L&G could double this in just one year. Batterton hasn’t just dipped L&G’s toes into residential; he’s dived into the deep end and is getting deeper.

Given his success, it might seem unusual that Batterton is so keen on inviting competitors to join him in this fruitful sector. But he is challenging the rest of the industry to join in, to take advantage of the social and economical evolution that he believes is only just beginning in the UK.

His rationale is that opportunities will only be fully open if investors and developers lobby the government together, walk them around a scheme that works. Adding to this, creating more and more different and outstanding schemes will push each other on, to create better homes that have a wider social impact.

The UK is only a few years into its reborn rental sector and Batterton is confident the biggest impact is yet to be felt. So confident, that he’s welcoming the industry to join him while he marches on.

Meet Dan Batterton and our other All-Stars at Manchester's Build To Rent Event. Sign up today, using the exclusive promo code MBTR20.