Q&A with Glen Hirsh of Starlight Investments

Starlight’s strategy is to acquire BTR properties in major regional cities and the London Commuter Belt through forward purchases.
• A forward purchase allows Starlight to acquire the building directly from a developer prior to the completion of construction.
• Using this model Starlight can acquire an asset at a discount while also phasing the equity requirement.
• Furthermore, the forward purchase strategy is a risk mitigant. By setting a fixed contract price upon completion, Starlight does not take any construction risk, and is not responsible for cost overruns. Additionally, Starlight has built in financial penalties for late completion of the asset, so if the asset were to not be completed on time, Starlight would be compensated.
• By acquiring the asset during the development stage, Starlight is able to work with the developer to optimize the final rental product. Starlight also controls the leasing process, utilizing our internal expertise.
• Starlight has a deep, historical track record of completing forward purchases in North America and the UK. To date, Starlight has completed +$4.5B in forward purchase transactions, acquiring +8.5K suites. We have seen in our local markets it provides us with a significant competitive advantage for acquisitions and allows us to acquire an asset with just a nominal down payment. Starlight has disposed of +$1.1B of properties, generating a realized gross IRR of 28% since inception.
• The forward purchase strategy allows us to assemble a sizeable portfolio quickly with a smaller upfront equity requirement.

The current UK residential market is unable to properly meet the demand of the people living there.
• As immigration increases, population growth remains steady and people continue living choosing to live in single person households, there will be increased pressure on the already strained housing supply. As stated previously, there will be a +800K unit shortfall of housing in the UK by 2027.
• Furthermore, as home prices rise and interest rates remain elevated over previous lows, renting becomes a much more affordable option than owning.
• Starlight believes that now is an opportune time to enter the UK residential market and provide high-quality, attainable rental housing options in the UK.
• Starlight believes that there is an opportunity to invest in the UK BTR market. Developers are currently under increasing pressure. With PRS sales decreasing by a third in 2023 and first time home buyers down by 50%, the exit opportunities to the owner-occupier market are becoming scarcer. Increased financing costs also present challenges for the developer and Mom & Pop landlord who will require more certainty at lease-up to justify the investment decision.
• In addition, local governments have increased support for redevelopment projects across Starlight’s target markets in the UK. The UK government has assigned £110B to redevelopment opportunities and economic boosts in markets outside of London. This presents a rare opportunity to access prime locations, close to transit, entertainment, business centres and other leisure amenities.
• Finally, these exists a market dislocation which has resulted in developers seeking price certainty upon completion which has become more difficult due to the stress of homeownership affordability. The supply and demand imbalance going forward supports strong rent growth across our markets, and particularly for BTR apartments.

Investors globally have begun to recognize the opportunity in the UK Residential market, investment volumes have increased significantly.
• This is especially true in the UK BTR market as annual investment volumes have continued to grow since 2019, driven by institutional investment. Annual investment volumes in 2023 were 40% higher than in 2019.
• As a result of this increasing investment, the number of BTR units across the UK has increased significantly, growing by 52.5% since 2019.
• Going forward, another ~260K BTR units either under construction or in the development pipeline with a planned completion by 2033, nearly quadrupling the existing inventory of BTR units.
As a result, the future value of the UK BTR Market is expected to grow from £71B in 2023 to £126B over the next five years because of the growing investor interest and new supply coming to market.