Investor Westrock is planning to grow a portfolio of rental apartments in the UK regions worth up to £500 million. In the last two months, the company has acquired seven sites in Portsmouth, Exeter and Crawley – all office buildings capable of being converted to residential.
Westrock’s plan takes advantage of the recent easing of planning rules, which make it easier to convert redundant offices into residential. The permission only runs automatically until the second quarter of 2016, hence Westrock is looking to secure as many other suitable sites as possible, before then. It is looking in preference in the south west, south east and in London commuter suburbs.
The seven sites already procured have the potential to deliver 1,400 flats, after conversion, which could have a market value of £250 million. Westrock’s acquisition director Archie Cowan told Property Week magazine that the opportunity was better outside London, with prices tightening in the capital. “In the regions, an investor can earn an extra 100 to 200 basis points in yield, yet have superior locations in city centres where demand is completely undersupplied.”
The first fruits of Westrock’s strategy will be 60 flats available in the first phase of a conversion in central Exeter, which are due for completion late in 2014. The company expects to announce a brand for its rented homes, in the summer. Looking ahead, it believes it might be in a position to sell on the rented portfolio to an institutional investor, within a three to five year timeframe.