Grainger acquires stabilised & immediately income enhancing
PRS asset in Newcastle for c.£57m
Grainger plc, the UK's largest listed residential landlord with 9,109 operational rental homes and a further 8,851 in its £2.1bn pipeline, has acquired The Forge, a stabilised income producing Build-to-Rent (“BTR”) asset comprising 283 rental apartments and a ground floor commercial unit via a corporate acquisition for c.£57m from Moorfield Real Estate Fund III.
This is Grainger's first purpose built, BTR investment in its home city of Newcastle, where the company was established in 1912 and remains headquartered. Newcastle meets with Grainger's investment criteria as a target city in its national BTR and PRS growth strategy.
The Forge, completed in 2019, is the only stabilised BTR asset in Newcastle. In addition to the 283 residential apartments and commercial unit, the scheme offers 3,500 sq.ft of high-quality resident amenity space, including an onsite gym, residents lounge and flexible co-working spaces.
The asset is very well located on Forth Banks in the city centre, with a WalkScore of 91, described as a 'walker's paradise', with a wide range of amenities, local services and public transport links nearby.
The purchase price represents a gross yield of c.6.25%, which Grainger expects to manage in line with its standard rental margin of over 75%.
Today's acquisition is in line with Grainger's stated investment strategy. Stabilised acquisitions, such as today's transaction, are one of three investment routes that Grainger employs, alongside forward funding developments and direct development. Opportunities for stabilised acquisitions, which are attractive because they deliver immediate income and accelerate Grainger's growth strategy, are however limited due to the relative immaturity of the institutional rental market in the UK and often do not meet Grainger's investment criteria, including ESG standards.
Helen Gordon, Chief Executive of Grainger, said:
“We are very pleased to have acquired a stabilised build-to-rent opportunity that meets Grainger's high standards and is located in our home city of Newcastle. The Forge is proven as a great place to live, and, provides us with immediate rental income, further boosting our ambitious growth plans.”