Real estate investment manager Europa Capital and joint venture partner Addington Capital have sold their Lancelot portfolio of 29 residential properties to Mountview Estates Plc for £10.6 million.

The properties comprise 17 houses and 12 flats (see photo) mainly in London and the South East, all leased on regulated, assured and life tenancies, providing a gross rent of £261,243 a year.

Project Merlin

The properties were acquired by the joint venture in October 2018 as part of the Project Merlin acquisition – a portfolio of mostly old housing stock in Greater London made up of 202 units (43 houses and 153 flats) for £55 million.

Since then, Addington Capital has been asset managing the properties with its sister property management and leasing company, AddLiving, providing property management.

Matthew Allen, principal at Addington Capital, says since acquisition it has been looking for opportunities to re-package the properties and add value.

He adds: “As a standalone regulated portfolio, Lancelot presented a relatively rare opportunity to acquire these kind of reversionary interests in bulk. The last of these statutory tenancies were created in 1989 and so there’s a dwindling supply. We ran a competitive process and Mountview, as a specialist buyer, is very familiar with the kind of stock and was a reliable counterparty.” 

Operating Partner

Addington Capital was set up in 2010 as an independent asset management and investment business and operates in the office, retail and residential sectors as an operating partner, working closely with its partners to create value through active asset management.

6 COMMENTS

  1. Knock out the operating costs only income would be capital gain?????? Why invest in an asset that government and so called housing charities constantly bash and attack. The rental shortage will soon be with us getting worse day by day due to political intervention. They will get what they deserve. The only people that will suffer are renters and most adversely affected are those the government and shelter say they are helping. My response would be please don’t help us!!!!!

  2. Better to sell up NOW before CGT increases to 28%! in about a year’s time!!!!!!!!!!!

    LL wishing to sell should sell NOW/

    There is NO way that any profit eaned for another year will be more than the difference between the current CGT rate and the new 28% CGT

    Sell up as a matter of extreme urgency BEFORE the 28% CGT rate kicks in.

    LL should do their public duty and sell up creating millions of homeless tenants.

    This is what the Govt wants.
    LL should oblige them.

  3. Read the small print…

    The properties comprise 17 houses and 12 flats (see photo) mainly in London and the South East, all leased on regulated, assured and life tenancies

    These properties are on fixed term tenancies (Tenancies for life) that go back to the old regulated PRS days… Those properties are grossly under-priced because the rents cannot be increased basically. There will be a huge mark up as the tenants die and the properties return to the open market..

    Example… 8 years ago I sold a 2 bed flat in London for £440,000 safe to say round figures £500,000 today

    The 12 flats = 6 million… sell them off and they still have 17 houses remaining !!!! They could be sold off or converted into flats and make even more money.

    On this sort of venture rents are an insignificant part of the equation.

    • So basically due to regulated tenancies it is worthwhile waiting for actuarial reality to occur.

      Then to sell up with vacant possession at full market price.

      The only issue is how long it will take for those regulated tenancies to become vacant properties!!

      Will the regulated tenants outlive the LL!?

      I also believe there is a complication that regulated tenants can pass on their tenancies to their heirs

      They would definitely outlive the LL!!!

      Investing in regulated tenancy property is a high risk investment predicated on tenants popping their clogs relatively early.

      These tenants aren’t always so obliging!

  4. Agree with all of your comments… This type of investment is more suited to corporations rather than individuals. Its a waiting game in that respect. Not many of these types of tenanted properties come to market these days as there are very few remaining due to death of the sitting tenant.

    If/when they do appear on Rightmove they are typically valued at about 25-30% of market value because of the issues that you have raised. I remember a landlord friend of mine paying the only remaining regulated tenant in a four story bedsitting house £20,000 to vacate. He could then convert the property from bedsits into four flats to be sold on the open market.

    That’s how crazy the PRS had become prior to the wholesale reforms that brought about the system of AST’s etc that we have today.

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