EXCLUSIVE: Specialist insurer Pension Insurance Corporation is nearing a deal to forward-fund Muse’s 520-flat New Victoria development in Manchester, which would mark its first investment in build-to-rent.
The defined-benefit pension fund insurer has placed the 250-year-long leasehold for the rental scheme under offer, for around £120m.
Market sources estimate that a deal at this pricing would reflect a yield of around 4.25% to 4.5%.
Muse and Network Rail are developing the £250m mixed-use scheme at New Victoria, next to Victoria Station, on 2.5 acres of surplus land surrounding the station on Corporation Street.
The first phase comprises two residential towers of 20 and 25 storeys with 178 one-bedroom, 268 two-bedroom and 56 three-bedroom apartments.
It will also feature more than 3,700 sq ft of amenity space, consisting of a gym, concierge, communal lounge, cycle storage and roof garden. A 150,000 sq ft office will follow in the second phase.
The residential aspect spans 337,426 sq ft, with estimated annual rents of £7.7m, equating to £22.75 per sq ft.
The scheme was designed by Sheppard Robson architects and Arup, and received planning consent in 2016. Construction was intended to begin in 2017, with a target end date of 2021.
However, development has been delayed on the complex site with the River Irwell passing beneath. In 2018, the project received £10m from the government’s Housing Infrastructure Fund to support delivery.
Muse has since lined up Vinci as contractor and instructed Savills to secure finance for the build-to-rent early last year. It is due to complete in 2023.
PIC has been on the hunt for build-to-rent opportunities over the past few years, teaming up with US developer Cortland to bid on Dandara’s £400m portfolio of more than 2,000 built flats. It has a significant track record in social housing and student accommodation.
Last year, the PIC invested £521m of debt into social housing, equating to 4,000 new homes, bringing its total investment to £2bn.
At the end of 2019, social housing was the largest sector in its direct investment portfolio, making up 19%. Student accommodation made up a further 13% of its investments.
To send feedback, e-mail emma.rosser@egi.co.uk or tweet @EmmaARosser or @estatesgazette
