Grainger plc joint venture to fund and acquire 132-home PRS development

Listed residential landlord Grainger plc has this morning (May 9) announced that its GRIP REIT joint venture with investment firm APG is funding a large build-to-rent development in Hampshire

GRIP REIT (real estate investment trust) will forward fund and acquire the PRS (private rented sector) scheme in central Southampton for around £27m.

Developer National Regional Property Group will deliver the 132-home project, with Hampshire-based contractor PMC Construction appointed to build the properties.

The new homes are due for completion in late 2020.

Alongside its share of the rental income, Grainger will supplement its overall returns with management fees. The investment is forecast to generate a gross yield above 6.5%.

GRIP REIT focuses on PRS investments across London and the South East. Grainger owns 25% and APG owns 75%, with Grainger acting as the REIT’s property, asset and development manager.

Helen Gordon, CEO at Newcastle-headquartered Grainger, said: “Today’s acquisition is confirmation of our ability to continue to source new and exciting PRS investment opportunities in attractive locations with compelling returns.

“Southampton is a target location for Grainger and this scheme on East Street will deliver 132 new high quality, purpose built rental homes and will allow us to utilise our operational base in Hampshire and provide our customers with great service and a great property to live in.”

Southampton City Council’s director of growth, Mike Harris, commented: “The development at East Street reinforces the importance of Southampton having a City Centre Master Plan.

“It gives developers the confidence to be part of the transformation of this part of the city centre, which is currently undergoing significant redevelopment.”

He continued: “The provision of high quality apartments in the build to rent sector contributes to attracting and retaining talent in the city, which continues to drive the economic growth of Southampton.

“This £27m mixed-use regeneration project is a predominantly residential led scheme, adding to the city’s emerging private rental sector offering.”