Legal & General Capital (LGC) and Dutch pension fund manager, PGGM, have completed the acquisition of a Build to Rent development site in Bristol, as part of their newly formed joint venture.
The partnership will initially invest GBP600m into building purpose built private rental housing across the UK, providing over 3000 homes.
The partnership, which signals an innovative approach in addressing the UK housing crisis, has acquired a cleared development site in Bristol for GBP4.8m from Square Bay. The site, known as ND7, has planning consent to deliver 168, one, two and three bed homes above c.11, 500 sq ft of flexible commercial space, providing the opportunity to create the first bespoke Build to Rent development in Bristol. The site will be built and managed by LGIM Real Assets, on behalf of LGC, with completion anticipated in autumn 2018.
The asset is well located within 300m of Temple Meads Station and benefits from the wider investment into the Temple Quarter Enterprise Zone, one of the largest urban regeneration projects in the UK. Bristol has very positive rental growth prospects owing to relatively constrained local supply and a healthy demand dynamic and benefits from a growing and educated population, with a large proportion (25 per cent) between the ages of 20 and 34, partly due to the fact there are two universities in the City. Moreover, employment is strong with a number of blue chip companies such as PWC, Osborne Clarke, Burges Salmon and RBS located close by. The scheme will be the largest City centre Build to Rent development of this type, providing a high-quality product for elective renters that will support them for the long term, offering a level of flexibility and choice that currently isn’t available in Bristol.
Sustainability will be at the heart of the development’s design with green infrastructure incorporated into the development. Options to embed energy generation, reduce energy consumption, appropriately resource sensitive materials, optimise water and waste efficiency, and mitigate pollution during construction will all be incorporated.
James Lidgate, Director of Housing at Legal & General Capital, says: “This latest acquisition supports our ambitions to increase our direct investment exposure to housing and create Build to Rent as an institutional asset class – investing Legal & General’s balance sheet capital to achieve high-quality risk adjusted returns.
“This scheme is an excellent example of the partnership’s asset acquisition strategy, by investing in long term sustainable urban schemes centred around key transport hubs that support wider urban regeneration by maximising land density and better utilising the local existing infrastructure.”
Michael Barrie, Director of Fund Management, LGIM Real Assets, says: “This is another example of our commitment to establishing a vibrant Build to Rent sector by creating bespoke, purpose-built, quality rental stock that will provide a positive lifestyle choice for elective renters.
“This asset is situated in a strong micro location within Bristol very close to transport infrastructure. The demographics of the local population are also well suited to the Build to Rent product – being heavily weighted to young, multi-skilled professionals.”