Green light for growth as school friends catch the real estate wave

BAM 12.8.20Photo © Sheila Burnett

Two friends who lost touch after leaving school in Gloucester, are now leading a co-living company which controls more than £250 million worth of London real estate – after bumping into each other at traffic lights in St John’s Wood seven years after ditching their old school ties.

Alex Gibbs and Jordi Pasqualin are the brains behind Built Asset Management (BAM), a London-based co-living property company currently turning over around £10 million.

Co-living is shared housing for people. It may simply extend to a common socialising space in a large building or apartment where they have their own bedrooms, and go as far as encouraging residents to participate in activities such as meals or shared workspaces.

BAM Kitchen –And in a world where more people than ever say they are lonely, it can be a perfect answer to the “age of loneliness”. Think university campus, but for professionals rather than students.

BAM aims to solve two real problems in the London real estate market: the ability for renters to find high-end, but affordable house share properties in nice locations, and minimising hassle for landlords in finding tenants, managing properties and avoiding voids in rental income.

The company isn’t alone. While it’s a relatively new real estate asset class, others are doing this too, with the Collective being one of the biggest and most successful ones, with sites in the USA, UK and Germany.

As the business model offers pretty much guaranteed rental income to landlords, it’s very attractive to investors. Property consultancy Cushman & Wakefield forecasts the co-living market potential at $550 billion across Europe and the US over the next decade.

BAM colivingAlex, now 33 and Jordi, 30, attended The King’s School, Gloucester between 1998–2005. When they met up again, Alex was investing in rental properties in the Midlands, using the revenue to fund a travel website selling tours to Sri Lanka, while Jordi, who had played professional rugby for Gloucester between 2008-2011, and latterly for London Scottish, was starting to look beyond his playing career.

The men were both living in London by this time, and had experienced first-hand the woes both of renting, and being landlords.

Alex explains: “When we met up again, both Jordi and I owned property and understood the stresses and the mindset of being a landlord. Probably more importantly, we had a shared vision, work ethic and ambition. I had risen to director level in a large global professional services business by the age of 25 and Jordi had represented two Premiership rugby teams, so we knew about achievement and hard work.”

They both saw the potential that co-living offered, and with the confidence of youth, but no experience in the London property market, Alex borrowed £3,500 from his mother to get the business off the ground.

BAM bedroom“We needed capital to secure a lease, so my mother very kindly loaned us the money to put deposits down on two leases simultaneously and we launched into the West London market.”

Alex and Jordi worked 16-hour days on the virtually uninhabitable properties, scrubbing toilets, painting and making curtains to create the high-end properties they knew London renters wanted.

But money only gets you so far, and while Alex and Jordi could pay for the leases, they also had to convince the freeholders and other stakeholders to let two inexperienced young men take control of their valuable assets, and underwrite their returns when they had no trading history.

The hard graft paid off, and Alex’s mother wasn’t out of pocket for long. “Since that first investment, we are proud that BAM has grown to the size it is now with no external investment,” said Alex.

“There were a few personal guarantees flying around in the early days, but thankfully now the business’s finance and trading history speaks for itself,” he added.

Building relationships was also important early on, and still is as BAM’s requirements for buildings are reasonably specific, leaving a smaller pool of appropriate stock available.

By early 2020, with almost seven years of steady growth under their belts, they were gearing towards a private equity deal to drive aggressive growth – through organic expansion and acquisition.

Then lockdown happened, and now Jordi and Alex themselves are assessing the impact of Covid on the business.

Alex is philosophical. “We are incredibly fortunate that our average annual growth rate for the past five years has been a fraction over 125 per cent. The impact of Covid-19 will be a steadying of this growth rate for this year and an opportunity to shore up our systems and processes ahead of an explosive year of growth in 2021.”

He remains optimistic. “Early data suggests that roughly a third of competing operators may not be around next year, and while it is never good to see businesses and industries suffer, we have underwritten full returns on a quarter of a billion’s worth of London real estate and there is no denying that this represents a huge land grab opportunity for us as we head towards 2021.”