Legal & General is under offer on a £100m forward funding deal to acquire Blackswan Properties’ Hockley Mills development in Birmingham.
The purchase would be the pension fund’s second and largest in the city, with a deal expected in the first quarter of this year.
Blackswan’s Hockley Mills scheme comprises 397 apartments designed by Glancy Nicholls Architects, with an end value of £120m.
The four-acre industrial site on Pitsford Street falls within the Jewellery Quarter Conservation Area, surrounded by historical listed warehouses with height restrictions on new development.
Hockley Mills comprises six residential blocks of up to seven storeys in height. It includes 10,000 sq ft of amenity space, including a residents’ gym, lounge and lobby.
Phased construction is due to kick off this year. It will be the largest residential development and the first build-to-rent scheme in the area.
The wider development also boasts a commercial hub with 32,600 sq ft of ground-floor retail and leisure, with space dedicated to jewellery design and manufacture.
This would be L&G’s first major Birmingham BTR deal after its first scheme at Newhall Square. In 2017, L&G agreed to fund a £53m project to deliver 220 flats at the development from Spitfire Bespoke Homes, also in the Jewellery Quarter.
The investor is ploughing around £1bn into the BTR sector, having raised pension fund capital for an open-ended BTR fund as well as a £600m joint venture between Legal & General Capital and PGGM.
L&G has a secured BTR portfolio worth £1.8bn, with 6,000 homes consented, under construction and completed across the UK.
Blackswan Property was founded in 2009 by managing director Marcus Hawley, who previously worked on landmark developments in the city including the Rotunda.
The Birmingham-based developer specialises in BTR development, largely focused on the Jewellery Quarter. It received consent for Hockley Mills and acquired the site last year for its largest scheme to date, backed by a £10m bridging loan from Octopus Property.
Funds are increasingly flocking to Birmingham, attracted by a demand for housing and a growing young professional population. This has been spurred by the relocation of business hubs including HSBC, the Government Property Agency and BT.
To date, institutional finance has been focused on Broad Street Westside, Digbeth and Eastside. The Jewellery Quarter has been a staple for traditional private sales development, with developers now turning to BTR as confidence increases and competition in the city heats up.
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