Grainger PLC is to acquire, subject to planning, a site for a private rented sector (PRS) build-to-rent development at Gore Street in Salford, near Spinningfields, Manchester.
Grainger has identified Greater Manchester as a key marketplace its PRS investment strategy due to what it sees as its strong economic prospects and growth potential.
The £80m project will be forward funded by Grainger to be known as “UKLP Gore Street Limited” which will be a joint venture between UK Land & Property and Sir Robert McAlpine Enterprises, the latter being the main contractor.
Completion is anticipated for 2020 and will consist of 375 private rented homes with a mix of apartments and townhouses, with a range of amenities on site. Yield projections stand at c7% when fully let.
This acquisition is in line with Grainger’s divestment of its large portfolio of reversionary investments (occupied by regulated private tenants on Rent Act tenancies) and builds on its new strategy of targeting the private rented sector – build-to-let.
Grainger’s existing North West investments total over 1,200 rental homes, including its £100m investment at Clippers Quay in Salford which delivers 614 new rental homes. Construction is underway and first completions are expected in next year.
Helen Gordon, formerly of Nat West Bank and now CEO of Grainger, the UK’s largest listed residential landlord, said:
“We are pleased today to announce this significant £80m investment to deliver 375 new, high quality, purpose built rental homes in Salford, near Spinningfields, building on our existing portfolio in and around Manchester city centre and leveraging our operational platform and Manchester regional office.”
In her March financial statement she stated:
“I am pleased to report that the pursuit of our strategy is delivering strong results. In the first six months of the year we have increased adjusted earnings by 39% and net rental income by 11%.
“We expect this momentum to continue now that we have secured £439m of private rented sector (“PRS”) investment, over half of our £850m target, and have good visibility on additional investment opportunities to meet our overall target. We are making good progress delivering our pipeline, and on average we are completing a new PRS building every two months over the next two years.
“Grainger is a focused, simpler and more efficient business. We have made changes to the way we operate in order to enhance returns, through reducing costs, simplifying processes and improving the scalability of our operating platform.
“The private rented sector growth opportunity is compelling with strong investment fundamentals. Our strategy to grow rents and simplify and focus the business puts Grainger in a strong position to deliver further sustainable income led growth.”