Tag Archives: acton

M&G reveals details of tenant services at Acton PRS project

Long term investor M&G, part of the Prudential group, has revealed more details about the PRS development in Acton where it is backing a build to rent development of 152 flats. M&G has forward funded a development by HUB, with a £43.5m development, previously reported here.

There will be a full-time concierge on hand, space to store bicycles, and long term contracts giving tenants the reassurance they can stay for as long as they want. And there will be a party or function room, that residents can hire if they are having a party, or the family gathering gets too big to be accommodated in their flat.

Victoria Square, Acton, where 152 private rented apartments are being developed

Victoria Square, Acton, where 152 private rented apartments are being developed

“These will be homes for normal working people, not oligarchs,” Alex Greaves of M&G told the Guardian recently. “In a typical buy-to-let the tenant knows the letting agent, but not the owner of the block, and doesn’t know who to call if things go wrong. Our properties will have a single manager, with on-site service. We will have economies of scale that individual buy-to-let investors don’t have. If we can keep the tenants happy we hope they will stay longer and we get lower voids.”

The Guardian also notes that the growth of purpose-designed, build-to-let blocks should also reduce the quantity of new homes grabbed for purchase by small scale, buy-to-let landlords. This should have a positive knock-on effect, reducing price inflation in the housing sales market, and giving first time buyers a greater chance.

With its upcoming Crossrail train connections, Acton is a development hotspot for private rented sector developers. PRS specialist Essential Living recently purchased the Perfume Factory nearby, which has potential for conversion into around 500 flats. Essential Living is expecting to start work on the project in 2016.

Essential gets £20m from Venn to back conversion project

PRS developer Essential Living has agreed a £20 million debt facility from Venn Partners, to help it develop the Perfume Factory site in Acton. The project, converting the commercial premises into private rental homes, will deliver around 500 new apartments.

New private rental homes looking sweet at the Perfume Factory, Acton

New private rental homes looking sweet at the Perfume Factory, Acton

Alternative lender Venn will advance up to £20 million on a three year debt facility, with an option to extend for two more years.

Essential Living paid £30 million for the site in July, and is currently consulting with the local authority and nearby residents over the redevelopment. Completion is some way off, with the company not expecting to start work until 2016.

Venn has just been appointed to run the government’s Private Rented Sector Guarantee Scheme, which is destined to provide loans to encourage more private sector development of flats for rent. The Essential Living deal is not under this new regime, which is still be established.

This is not the first time that Essential Living has tapped alternative funding sources, specifically those that are inclined to support the private rented sector. Its projects in Maidenhead, Archway and Bethnal Green have recently received a £52 million loan via the government-backed Build to Rent fund. In that instance, RBS and the Homes & Communities Agency are supporting the three year funding.

Essential Living plans private rented development in Acton

Private rented developer Essential Living has bought a former perfume factory in Acton, west London, for conversion to a private rented homes development.

The site, currently home to two office buildings, has the potential to provide up to 500 homes, once redeveloped. Acton is currently the focus of much house builder and private rented sector activity, due to its position as one of the new Crossrail stations; this promises to provide residents with easy public transport access to central London and the City.

Essential Living plans to convert Berkshire House in Maidenhead into flats for private rental

Essential Living plans to convert Berkshire House in Maidenhead into flats for private rental

The site has the potential to take residential towers up to 20 storeys high, with a mix of homes. However, its offices are still occupied, and so any successful planning application could potentially lead to a residential project being completed no sooner than 2018.

Acton’s attractions mean others are taking an interest. Only last month, investor M&G forward funded a project in the area to develop flats specifically for rental.

Charlie Hustler, head of land at Essential Living, told Property Week: “This is our most ambitious project to date, both in terms of scale and scope. The housing offer will boast a range of high-quality apartments and mews homes, forming a truly sustainable community for west London.”

Essential Living's north London redevelopment site in Swiss Cottage

Essential Living’s north London redevelopment site in Swiss Cottage

Essential is backed by US investor M3 Capital Partners, and is already under way on a number of projects. It has bought several sites including an office block in central Maidenhead for conversion to flats, and an office site in Swiss Cottage, where 200 apartments are planned. While Essential’s strategy of buying office blocks and then obtaining planning consent for conversion is risky and slow initially, it does offer the company the potential for greater returns from the portfolio they ultimately develop.

M&G makes £43.5m private rented forward funding commitment

Investor M&G Real Estate has confirmed it has forward funded a £43.5 million development of flats for the private rented market, at a site in west London. It has backed developer HUB which will create 152 private rental homes in Acton.

The project will be held within a strategic fund being developed by M&G which kicked off in 2013 with the purchase of a portfolio of properties from Berkeley Homes. The challenge of finding suitable large scale private rental projects to invest in has led M&G to put funds into what might, in other property sectors, be considered a speculative development. However, such is the demand for private rented homes, there is minimal risk on the project, which is likely to let fully at market rents the moment it is completed.

“With this deal now complete, we are looking for more opportunities to fund mid-market developments via our fully scalable UK residential strategy,” said M&G’s Alex Greaves. “Hopefully deals like this will encourage more institutional investment into the sector and bring forward much needed housing stock.”  It is understood the Acton project took around nine months to complete, so it is more than likely M&G has other investments in its project pipeline.

“For far too long, renting has been seen as a stepping stone to home ownership and, at times, a backward step,” said Greaves. “These 152 built-for-purpose rental homes are a clear statement that renting can be the tenure of choice for an upwardly mobile workforce who require the flexibility of renting, but who also want high quality service and support, to feel abut to lay down roots and settle for longer should they wish.”

The Victoria Square scheme will include a mix of one, two and three bed apartments in a scheme designed by Newground Architects, which is part of a wider regeneration scheme being supported by Ealing council.

 

Pension funds begin move into PRS after a slow start

Dithering insurance companies have already missed out on some of the cream in the London residential rented sector. That’s the accusation from Peter Bill, property columnist in the London Standard, after he pored over the week’s 2013 results from housing developer Berkeley Homes.

Bill notes that Berkeley started the year with 729 rental homes on its books, and has subsequently sold 675 of them, for a profit of £40 million. [For some residential developers, newly completed units were held back for rental where they proved difficult to sell, at a price that would book a profit; the legacy of overpaying for development land in the boom times]

Of the total sold, 534 were apparently sold to M&G Investments, which paid Berkeley £105 million for the portfolio in June 2013. The deal would have booked Berkeley close to £30 million in profit.

“That profit could have been gifted to policyholders, if M&G had acted a few years ago,” says Bill.

However, insurance companies remain inherently risk averse, and with good reason – they’re looking after your pension pot. Anne Kavanagh, global head of asset management at AXA Real Estate, told an audience at last week’s London Real Estate Forum that her company was happy to invest in all sorts of real estate, and will lend to others in order that they can do so. But they absolutely will not lend on development projects – it’s still considered too risky.

However, M&G is now clearly playing catch-up, and has decided the private rented sector is something worth investing in. A report from Property Week suggests the company is about to agree the £45 million forward funding of a 152 rental apartment scheme in North Action. The Victoria Square development is being put together by Hub Residential and features 16 and 10 storey towers. Both this project, and the Berkeley properties, are being held within a UK Residential Fund, into which M&G intends to add further mid-market properties.