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Dev Secs buys Cathedral to create private rented powerhouse

Listed property company Development Securities has agreed a £27.4 million takeover of the Cathedral Group, creating the potential for a major new brand in the private rented housing sector in London. The two have previously worked together on projects, and saw the combination as a natural fit.

The deal adds nine development sites to the Dev Secs portfolio, and brings on board the Cathedral team with its track record of developing mixed use, residential led projects specifically in London and the south east. Dev Secs, being listed on the UK stock market, has stronger access to development funding.

The acquisition means Dev Secs now has seven new sites under its control:
the Telegraph Works in Greenwich
Morden Wharf, Greenwich
The IP Global project in Deptford
St. Mark’s Square in Bromley
The Old Vinyl Factory, Hayes
Circus Street in Brighton
Spirit of Sittingbourne in Kent
There are two further sites currently being acquired, but with deals not yet inked, at The Albany in Deptford, and Preston Barracks in Brighton.

Noted the company in a statement: “Six of the above developments have funding in place to execute the relevant business plans, three have achieved detailed or outline planning consents, and planning applications have been submitted in respect of a further two of these sites.”

Cathedral chief executive Richard Upton commented: “We already have a successful history together through our existing joint venture partnerships at The Old Vinyl Factory and Morden Wharf and our completed development at The Movement, Greenwich. We are confident that the integration with Development Securities will provide a stronger platform as we progress our existing portfolio of developments towards completion, and secure additional projects to further contribute to the growth of the company.”

Dev Secs has been in discussions with housing association London & Quadrant about growing a private rented sector portfolio together, involving potentially six sites around London, and up to 800 homes – details here.

In January, Dev Secs hired agent JLL to look for a development partner – details here. It is unclear whether the combination with Cathedral means it will now no longer look for additional partners to work with.

Among Cathedral’s projects is a private rented sector development in Deptford, south east London. This was recently forward sold to investor IP Global – details here. It would appear that, in this instance, Cathedral had insufficient access to funds to develop the project and retain it, instead relying on an advance sale to IP. Now, with the greater access to funds that Development Securities provides, it is likely that similar projects will be developed and retained within the group’s private rented sector portfolio.