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.
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.
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.