Member Article

Newcastle’s Grainger in £33.25 million London development deal

GRIP Unit Trust , the market-let UK residential property fund owned by APG and Grainger, announces the forward purchase of a new 90,000 sq ft build-to-rent scheme from BY Development Limited (“Bouygues Development”) for £33.25 million.

Bouygues Development, which is also the developer of the scheme, has retained a stake in the ownership of the asset, as part of its commitment to the build-to-rent sector.

The development forms part of the wider Hallsville Quarter masterplan, a major new mixed use regeneration project in Canning Town, London, which is being undertaken by Bouygues Development in partnership with the London Borough of Newham.

In a highly prominent location, directly opposite Canning Town Tube Station, Hallsville Quarter forms part of the £3.7 billion Canning Town and Custom House Regeneration Programme and will become the new town centre for Canning Town.

The 16-story residential tower will provide 134 one and two bedroom apartments together with 25 car parking spaces and 4,173 square feet of resident amenity space. This purpose-built scheme has been specifically designed to provide accommodation aimed at private renters and to optimise property management efficiency.

A PRS covenant has been applied and the permitted use under the lease shall be restricted for the first eight years, post practical completion, to private rented sector (“PRS”) accommodation.

The transaction represents the third collaboration between Grainger and Bouygues Development, following the development of London Road, Barking, a 100-unit PRS scheme which is currently under construction, and in a consortium also with the London Pension Funds Authority which was selected by the Greater London Authority to develop a 211 unit residential development at Pontoon Dock.

As with the London Road scheme, Bouygues Development will manage the development and construction process, while Grainger will assume full management responsibilities following practical completion, including property management, lettings, facility management, and fund and asset management.

Construction is scheduled to begin in January 2015 with practical completion expected in Summer 2017.

GRIP was formed in 2013 by Grainger, the UK’s largest listed residential landlord, and APG, Europe’s largest pension fund asset manager, to invest in predominantly stabilised, market-let residential blocks and portfolios focused on London and the South East of the UK, with additional scope to invest in build-to-rent development opportunities. Grainger provides fund, asset and property management services to GRIP.

Grainger’s GRIP Fund Manager, Tracey Hartley, said: “This transaction builds on an established partnership between Bouygues Development and Grainger and is further evidence of our commitment to the UK private rented sector.

“We now look forward to working alongside Bouygues Development and the London Borough of Newham to deliver this exciting new long-term development.

“The demand for high-quality rented homes far outweighs supply, and PRS represents a long-term rental income and a stable yield for our investors.

“In line with our strategy, and with the financial support of Grainger and APG, GRIP will continue to explore further investment opportunities including build-to-rent, enabling us to offer the growing number of renters top-quality and professionally managed housing that puts the tenant first.”

Managing Director of Bouygues Development, Nicolas Guerin, said: “We are very pleased to close our second build-to-rent transaction in partnership with Grainger, with whom we have worked from concept design stage to create a bespoke PRS product of high quality in the exciting new mixed-use regeneration of Canning Town.

“We are firm believers in the build-to-rent sector and the PRS tower at Hallsville Quarter underlines our ongoing commitment to deliver purpose-built, professionally-managed, and institutional-quality homes for communities in London.

“Our strong partnership with Grainger brings together expertise in development, design, construction, property and asset management to create a formidable team.

“We will not only meet the aspirations of Londoners looking for a better answer to their rental needs, but also continue to work alongside our partners at the London Borough of Newham to drive the economic growth of this important new focal point for the local community of Canning Town.”