18th Feb 2020 08:41
(Alliance News) - Grainger PLC on Tuesday said it will forward fund and acquire a build-to-rent development in Nottingham, England, for GBP55.6 million from Blocwork LLP.
Blocwork LLP, a joint venture between Network Rail and Bloc Group, is the developer for the 348-home scheme. Both Bloc Group and Network Rail have a 50% stake each in the venture, which was created in order to develop rail side sites.
The deal is Grainger's first Nottingham investment, the city being a "key target" in Grainger's build-to-rent strategy. Planning permission was obtained for the scheme in late 2019, with construction likely to start in the first half of 2020.
Grainger said: "Despite the positive market backdrop, Nottingham has a limited amount of similar purpose-built, large scale rental housing schemes offering resident amenities. The build to rent scheme is in an attractive location on the Queens Road, within close proximity to the town centre and adjacent to Nottingham railway station."
The transaction is subject to a number of conditions, including the appointment of a contractor, which are expected to be met "in the next few months" after which it will be made unconditional.
The scheme is forecast to be leased and stabilised early in 2024 and Grainger expects it will generate a more than 7% gross yield on cost once it is stabilised.
Grainger Chief Executive Helen Gordon said: "We are pleased to agree this significant new investment for housing in Nottingham, a city we have been keen to invest in for some time due to its strong market characteristics and growth prospects. Nottingham has a vibrant community, with strong and growing demand for renting, but lacks high quality, professionally managed rental housing with amenities...We look forward to bringing this scheme forward swiftly with Blocwork Group."
Shares in Grainger, which is headqaurtered in Newcastle upon Tyne, were up 0.8% at 307.65 pence in London on Tuesday morning.
By Anna Farley; [email protected]
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