Investor ploughs £125 Million (GBP)
into groundbreaking PRS deal
An institutional investor has become one of the first to buy a major portfolio of private rented housing from a social landlord in a £125 million sale and leaseback deal.M&G Investments has bought 401 market rent homes in the Stratford Halo development on the edge of the Olympic Park from Genesis Housing Association in a 35-year deal.
The deal is the first residential investment made by M&G from its £1.5 billion secured property income fund. It is also believed to be the biggest single investment of its kind in the private rented sector.
Genesis will make inflation-linked payments to M&G while continuing to manage the properties and collect rent from tenants.
Rob Kerse, finance director at Genesis, said the 33,000-home landlord sold the properties in the 43-storey tower as it did not make sense to hold them as a long-term investment.
‘We are getting our money back and making a profit but we want to keep a stake in the management of the properties,’ he said.
The deal follows the publication of last summer’s government-commissioned Montague Report, which called for institutional investors to fund build-to-let projects to ease housing demand and address the issue of poor quality accommodation in the private rented sector.
Ben Jones, fund manager for M&G’s SPIF fund, said: ‘There is significant demand from pension funds for investment into housing and social infrastructure provided it is delivered on a transparent basis and directly assists with their desire for long term inflation linked cash flows to match their liabilities.’
He added that the fund had more capital to invest and would look to buy similar schemes in the future.
Mr Kerse also said that Genesis could enter into other similar deals. ‘We see this as a model that we could roll out more widely,’ he continued.
The Stratford Halo development will be completed later in the year and features more than 700 homes, including around 300 that will be available as affordable rent or shared ownership.
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