Monthly Archives: May 2015

French PRS market sees listing

A landlord that owns more than 7,000 homes in France is to list on the stock market there. The move will raise EUR370 million for Powerhouse Habitat, allowing for further growth of the company’s EUR1.2 billion portfolio.

The move is the first step in a process of creating a tax efficient Reit (or real estate investment trust) and will create France’s first listed residential landlord. Some are suggesting the French market will now follow that of Germany and France, with increasing institutional investment in the residential housing market.

Powerhouse Habitat is owned by parent company TwentyTwo Real Estate, which was established in 2013 to invest in a variety of property sectors. To date, it has focused on France, but is now looking at other European opportunities. The initial Powerhouse Habitat rented property portfolio contains 7,140 homes across France, which are all rented to energy company EDF, for subletting to workers at its power plants.

 

 

Bath Riverside

M&G backs PRS development in Bath

Investor M&G Real Estate has agreed to buy 97 new build homes in Bath from developer Crest Nicholson, to create a core of private rented homes in the city.

The block purchase at the Bath Riverside development will cost M&G £25.2 million, for a mix of one and two bed apartments. It is intended that the deal will be the first of several between M&G and Crest Nicholson, allowing the investor to build a PRS portfolio, which Crest Nicholson will build. The homes are expected to start appearing on the rental market from February 2016.

“We look forward to working with Crest Nicholson on other schemes,” said Alex Greaves, head of residential investment at M&G. “We believe this to be the first transaction of its kind between an institutional investor and a listed house builder, marking a major opportunity for institutional investors seeking access to the UK residential sector. Our residential strategy provides stable, income-driven returns for investors and, in time, thousands of much-needed, well-managed rental properties.

“As we build on this initial agreement to bring scale to our portfolio of rental properties, it’s vital we continue to champion quality. It is our hope that the involvement of institutions like ours will lead to more homes coming on tap and higher standards, just as it has done with the student accommodation market. We want our residents to be proud renters because we and our partners have developed high-quality homes.”

Chris Tinker, executive board member for Crest Nicholson, added: “This is an exciting development in Crest Nicholson’s drive to explore new models of housing delivery across the southern half of the UK. With housing at the forefront of the political agenda, an institutionally funded private rented model has the potential to underpin a meaningful increase in housing output at a time when the need to sustain growth and meet housing need is at an all-time high.

“This type of partnership agreement could mark a step change and acceleration in the PRS model which will ultimately help unlock land, create jobs and bring wider economic benefit as well as bringing forward the delivery of much needed new homes and mixed tenure communities.”

While housebuilders typically argue they can make more money from building homes for sale, private rented sector components can be attractive as part of a larger site development. They enable the housebuilder to gain construction pace more quickly, thus completing a project faster; and can also prove beneficial in negotiating with planners, who sometimes look more favourably on PRS units, and may consider offsetting part of an affordable housing quota against the rental units.

firststreetaerial

Patrizia bags Manchester PRS prize

German investor Patrizia has secured a major private rented sector site in Manchester, with the acquisition of the First Street development in the city.

The deal involves Patrizia buying a 20 acre development site from Ask Developments. First Street includes a mix of sites for development, along with some completed elements. Of most interest to the company will be the project’s residential element, which will see Patrizia build around 500 apartments for long term private sector rental.

The masterplan for the site has already been granted approval for up to 1 million sq ft of commercial space, as well as the residential element. A first phase has recently been completed, containing a hotel, offices, arts centre, student accommodation and retail. Shop and restaurant operators including Sainsburys and Pizza Express have already committed to units in the scheme.

Developer Ask Property Developments has developed the project to date in association with Manchester City Council, and will remain with the project as development manager. Resimarketnews understands Patrizia has been trying to close the deal on the site for around 18 months.

firststreetoffices

The First Street portfolio includes One First Street, a completed 180,000 sq ft office development that has occupiers including Ford, Autotrader and Jacobs Engineering. The occupiers have leases with an average nine years to run, and Patrizia is expected to sell this building to a pension fund or similar institutional occupier.

firststreetmanchester

Also included in the sale is a new hotel. The 208 room property, which is just being completed, will open under the Innside brand, operated by Spanish hotel group Melia. The hotel is scheduled to open in late 2015, and will be the first under the Innside brand in the UK. The brand was launched in Germany, and is set to open in key cities internationally over the next few years.

“With this investment, our property assets under management in the UK now amount to more than a billion pounds,” said James Muir, managing director of Patrizia UK. “Driven by attractive economic and demographic fundamentals in Manchester, and the growing trend for urbanisation, we are anticipating strong demand for this centrally located, high-quality accommodation which will be tailored to the private rental sector. Together with the new commercial buildings we expect to create an attractive investment opportunity for institutional investors. We see this project as an ideal first investment for our planned Patrizia UK PRS Fund.”

Patrizia has residential and commercial holdings in Germany, where it is a major residential landlord with a pipeline of around 4,000 homes. In the UK, it has built a commercial property portfolio and has long declared itself prepared to invest to build a substantial position in the UK’s private rented sector.

Angel Gardens will include a 36 storey tower

Moda finds private rented funding with Apache

Private rented sector developer Moda Living has agreed a joint venture with a Middle Eastern funder that will allow it to start building apartments for rent in Manchester and Leeds.

Funding from Apache Capital Partners has been agreed for a potential £1 billion joint venture, kicking off with Moda’s 458 apartments at its Angel Gardens development in Manchester which has backing of £130 million from Apache.

Moda is a joint venture between Caddick Developments and Generate Land, and the pair are assembling a pipeline of projects around the UK to build further rental apartments. These include:
• Vauxhall Sky Gardens which will create 240 apartments in London, for completion in 2017
• Liverpool Waters with 325 flats in a 40 storey tower, due to complete in late 2017
• Quarry Hill and City One in Leeds, with the potential for more than 1,900 apartments.

The pair are already talking about building scale, before considering an exit possibly via a Reit, or an IPO on the stock market.

More on Moda here.

PRS in figures – the numbers are growing

Major changes are afoot in the UK’s private rented sector, as institutional investors and a wide range of professional landlords start to make their presence felt in the business.

So, how big is the sector at the moment? And what are the other key metrics in the private rented sector right now? Thanks to Housing Matters, who in their March 2015 report, provided the following statistics, gathered from a range of sources including the government, Savills, the CML, the Association of Residential Letting Agents, and BDRC.

4.9 million – the number of UK households today in the private rented sector

84% – percentage of tenants who say they are satisfied with their accommodation

£27.4 billion – gross buy to let lending

56 – average age of a UK landlord; they will have around 8 properties, and have been a landlord for 15 years

close to 2 million – number of private landlords in the UK

19% – number of UK households in the PRS

2.5 years – average length of a private rented sector tenancy

2.8 years – average time a family stays in a private rented sector tenancy

1 million – number of additional private rented sector homes that will be needed by 2018

BPFletter

Better Renting for Britain campaign launched

A group of developers, pension funds and housing associations have started a campaign to promote the private rented housing sector. It says potentially £30 billion of finance is looking to invest in the sector, and has called on the new government to get serious about promoting building for rent.

An open letter, supported by the British Property Federation and signed by scores of senior executives from the development and housing world, calls on the new administration to focus on the potential of supporting the private sector to deliver. It calls on the incoming government to address five key action points:

• implement a national policy so that local authorities identify the need for rental homes, and allocate land accordingly
• support a Build to Rent industry team to work with local authorities, getting schemes delivered more swiftly
• modernise the approach to delivering rented housing
• allow the sector to continue operating as a market – in other words, avoid new restrictive legislation
• work with the private sector to promote best practice and help with improving the perception of the sector
The letter in full can be read here.
Among those supporting the initiative is Martin Bellinger of Essential Living, who commented:
“Now it’s our turn to positively disrupt the housing market. Renting can and should be about making people’s lives easier, offering them value for money and long-term certainty enabling them to create a home.”
While Nick Jopling of landlord Grainger added:
“We want to see a rental market that provides long term options as well as good value for money and customer service. By supporting ‘build to rent’, the future British government can encourage companies like ourselves to help increase housing supply and improve standards of living in the rental market.”
Stanford reflects on positive first year for PRS Taskforce

Stanford joins LaSalle Investment Management

Andrew Stanford, former head of the government’s Private Rented Sector Taskforce, has moved to LaSalle Investment Management to head the group’s UK residential investments.

As lead on the taskforce, his role was always intended to be a temporary one, helping the government push through its Build to Rent funding to encourage private rented sector developments; and generally ensuring key stakeholders engaged with one another to get new homes built for rent. He also spent considerable efforts speaking to local authorities, to encourage them to take a pragmatic approach to planning considerations.

“As UK Residential Fund Manager, I am responsible for the proposed LaSalle UK Private Rented Sector fund and am taking a lead in developing our overall UK residential asset strategy,” said Stanford of his new role. “As a house we are firmly behind UK residential as an asset class and have big ambitions in the sector.”