Telford Homes Plc
('Telford Homes' or the 'Group')
Long term strategic build to rent partners selected
'M&G and Invesco chosen as investment partners for future build to rent pipeline'
Telford Homes Plc (AIM: TEF), the London focused residential property developer, is delighted to announce that following an extensive selection process managed by Savills, the Group has chosen Invesco Real Estate ('Invesco') and M&G Real Estate ('M&G') as our long term strategic build to rent partners for forward fund transactions.
The decision to select two partners was based on the high quality of all the potential partners in the final stage of the process and a desire to maximise our ability to enter individual forward fundtransactions via the partnerships. Each investor has different criteria for what makes the optimum build to rent development and with two partners to work alongside we are increasing our ability to bring more build to rent projects forward in line with our strategic priorities and the wider need for increased housing supply.
To have clarity and exclusivity when bidding with partners, M&G will be the Group's priority partner for schemes including up to 200 build to rent homes and Invesco will have priority for more than 200. In capital value terms, 200 homes is likely to represent between £75 million and £100 million. Whilst both M&G and Invesco operate across a wider spectrum, the split at 200 homes fits well with their existing portfolios, ideal investment scale preferences and, in the case of M&G, the schemes we have undertaken with them to date. Both partners can step in to schemes should the other decide not to take an opportunity further.
Telford Homes believes that the partnerships with Invesco and M&G will lead to more efficient ways of buying land and designing bespoke build to rent schemes that match up with each investor's requirements. We also expect to produce a standard set of documents for a forward fund development that will shorten and improve the contractual process for each transaction. It is anticipated that the strategic partnerships will provide excellent opportunities for Invesco and M&G and we expect to develop significant build to rent pipelines for both partners over the next few years. We will continue to work with other investors, on both existing and new projects, especially where they bring opportunities to us or on sites that do not fit the criteria of either Invesco or M&G.
Invesco is a global real estate investment manager, investing in direct property and publicly-traded real estate securities with £49.2 billion in real estate assets under management. Since 2014, Invesco has been actively growing its exposure to build to rent across the UK and has already invested around £1.5 billion in the development of 5,000 build to rent homes on behalf of international institutional investors. Invesco's target is to increase its UK build to rent exposure to at least £5 billion over the next five years with a circa 60% weighting to investing in London and the South East.
Headquartered in London, M&G is one of the world's leading financial solutions providers for real estate investors and is part of M&G Prudential, a savings and investment business with over £341 billion of assets under management. The new partnership builds on M&G's existing strong relationship with Telford Homes, having previously invested in two of the Group's schemes totalling £118 million for 275 build to rent homes.
Both Invesco and M&G have signed partnership agreements with Telford Homes for an initial three year period but with an expectation from all parties that the relationships will continue beyond this. These partnerships are an exciting step forward in our focus on the build to rent sector and we expect them to provide a significant catalyst for our ongoing strategic objective to become one of London's leading build to rent developers in the coming years.
Jon Di-Stefano, Chief Executive Officer of Telford Homes, said: “We have been consistent in highlighting our desire to significantly increase our build to rent pipeline over the next few years. It is therefore a major step forward for us to announce that we have attracted these two extremely well-respected, experienced and ambitious institutional investors as long term partners. Furthermore it underlines our reputation as one of the build to rent developers of choice in London.
“Rental demand is increasing in London but the supply of new homes is still constrained. New generations are demanding better quality amenities, a better level of service and more flexible tenancies, all of which are offered by the growing institutionally owned build to rent sector. These compelling market fundamentals and the opportunity to de-risk our future pipeline with reduced capital investment give us confidence that these partnerships will help accelerate our aim to deliver a significant increase in our output of build to rent homes across London.”
Alex Greaves, Head of Residential Investment at M&G Real Estate, adds: “We are delighted to formally cement what has been an excellent working relationship with Telford over the last three years. Commercialising the production of homes to rent at scale with a likeminded, high quality developer of rental stock, is another step closer to fulfilling M&G's residential investment strategy. Telford Homes has been an early adopter of the sector and this is another example of how it adjusts its model today to focus on tomorrow's customers and occupiers.”
Andrew Brentnall, Head of Savills UK Residential Capital Markets, said: “It is a great pleasure to be able to support Telford's growth ambitions in this sector as their corporate build to rent advisor. Unsurprisingly for a partner of Telford's quality, we received considerable investor appetite from around the world, yet again demonstrating the significant capital capacity for supporting the delivery of much needed homes across London. We will continue to support Telford Homes, M&G and Invesco, to aid the success of the partnerships for the long term.”