Investor Aberdeen Asset Management has bought a 26 storey tower block of 166 let apartments in Stratford, east London. The deal indicates the appetite of long term investors in the private rented sector, and specifically in buying completed, well let developments.
The £60 million deal is part of a commitment from Aberdeen to invest around £500 million in the UK residential market over the next five years. The Stratford block will be held within the group’s Aberdeen Property Trust investment vehicle.
“This is the Fund’s largest investment into the private rented sector and it will provide a strong sustainable income stream to the fund,” said fund manager Gerry Ferguson. “It also helps with further risk reduction which has been one of the hallmarks of the Trust over the ten years which we’ve been managing it, and we anticipate adding more high quality private rented properties in the future.”
The block, originally part of a project named Athena, has an unusual history. It was due to be completed for the 2012 Olympics, before financial problems hit its backers. Only recently has it been completed.
Aberdeen already manages around £1.2 billion of residential assets, outside the UK, of which half are still being developed. Ed Crockett, property fund manager, said the investor has a large appetite: “This purchase is part of a wider commitment which Aberdeen has to the private rental sector. The property is in one of the most vibrant and affordable locations in London. The city’s population is growing at a rate most would associate more with an emerging market than a developed one, which is one reason that private residential units are an attractive investment for us.”
“Long term asset managers like Aberdeen are ideal landlords for private residential tenants. They bring the full weight of their experience managing real estates assets to bear on the growing private residential sector, and combine it with the professionalism which our own clients demand.”
Russell Chaplin, Aberdeen’s chief investment officer for property, added: “This is the latest in a line of private residential purchases which Aberdeen has made across Europe on behalf of its clients. The case for the sector to grow, particularly in Europe’s winning cities, is clear with the number of people predicted to rent property set to increase over the coming years. We believe there is plenty of opportunity to grow the amount of assets we own in the years to come.”
The block at 180 Stratford High Street is part of a larger scheme originally named Athena and started by the Irish McFeely group. The developer went bust before the Olympics in 2012, leaving the scheme incomplete. More recently, investor Long Harbour bought the building, completed the development and rebranded it, before letting all the flats over a four month period.
Long Harbour is an asset manager that has around £600 million of money invested across a range of property and infrastructure assets. The company called the deal “part of the natural turnover of Long Harbour’s PRS portfolio” and said it would be investing further in the private rented sector.