Cordia Blackswan seeks funders for £600m Birmingham resi drive

A year after Hungarian investor Cordia bought Birmingham build-to-rent specialist Blackswan, the new business has amassed a £600m pipeline and is ready to bring the offering to the market.

Cordia Blackswan is seeking investors to back its growing portfolio, with around 1,000 flats secured and in development, and a further 1,000 flats in negotiation, the majority of which will be BTR.

This is a rapid increase from around 200 homes a year ago, following Cordia Blackswan’s expansion from the Jewellery Quarter into Digbeth and Southside, with an eye on the wider West Midlands for future projects.

There is a structural lack of build-to-rent investment product in the UK, we feel really comfortable allocating a significant amount of capital

– Gábor Futó

Gábor Futó, founder of Budapest-based Cordia and parent company Futureal Group, says the business will fund the development and stabilise the product, then bring on investors to recycle capital for new projects, while also retaining a stake in the investment assets for the long term.

Since co-founding Futureal with his father 15 years ago, Futó has grown the business to €900m (£766m) of completed projects, in Hungary, the US, Germany and Poland.

He says: “There is a structural lack of build-to-rent investment product in the UK, we feel really comfortable allocating a significant amount of capital. As a start, pipeline-wise the development value will be well north of half a billion pounds. That’s just what we see now, it will be much more going forward.”

Last year, Cordia raised €105m on the bond markets to support international expansion, following a €135m raise for projects in Poland a year earlier. The investor signed to acquire Marcus Hawley’s Blackswan in September and has spent the last year building out its development capabilities.

“Critical in the next year will be getting our investors on board for the build-to-rent partnership,” adds Futó. “The fact is, we have our pipeline, we have some being built, some in planning and some being planned. We are looking to speak to people now.”

A vertical village and Digbeth digs

Reaching 50 storeys in Birmingham, the developer’s Thorp Street project (pictured) will be its largest to date, following on from smaller schemes like the Lamp Works in the Jewellery Quarter. Cordia Blackswan has teamed up with K4 Architects to design a so-called “vertical village” comprising 453 flats. It will include premium penthouses, serviced apartments and a health and wellbeing suite.

Pre-application documents provided to Birmingham City Council describe a low-carbon building that will also provide a street-level, double-height atrium space called the Drill Yard. Plans include co-working on the first floor with roof terraces, a library and a sky garden at the top. The site currently holds former military barracks in the Southside district of the city around 300m from New Street Station.

The developer is expected to submit a full planning application later this quarter, with a view to starting on site next year. Ahead of this it will pursue development in Digbeth, following the acquisition of a consented site providing 366 homes on Moseley Street.

Futó and Hawley did not name the projects. However, EG understands Cordia Blackswan acquired the site after Rainier Developments secured planning last month. Regarding the broader strategy, Hawley says: “To give us a bit of impetus, we bought a site with planning. Digbeth has loads of potential, we’ve all been talking about it for 20 years, our intention is a really fantastic scheme that builds on this long-termism.”

To support this, Blackswan is developing a BTR brand and looking to grow its management capabilities. “That puts a totally different spin on a development, compared to say a forward funding offer,” says Hawley. “It means we can actually look five, 10, 20 years into the future and think about how the impact of our place influences that investment.

“We’re in a relatively unique position in that we’re a developer and we are looking at the long term. It means that we know the market, we know what we can afford to build and we have a financial model which is based on the long term.”

Mixed tenure living

Hawley established Blackswan in 2009 and has been in residential real estate based in Birmingham for the past 20 years, focusing on for-sale and BTR in Birmingham’s Jewellery Quarter. In 2020, he secured a £100m forward funding deal with Legal & General for Hockley Mills.

Under Hawley, Blackswan has since brought forward development of the 150-home Lamp Works BTR scheme on Great Hampton Street, where construction is set to begin in September.

There is also the for-sale product at The Gothic and the developer has also secured the first shared living consent in Birmingham. The 26-bed Bradford Works project will be a pilot for a product that Hawley hopes to expand across the Midlands.

In this way, Cordia Blackswan will develop a mix of tenures. Futó says: “The majority will be BTR. We will have to do a mix, there are very different characteristics in your cashflow – one brings back the money and the other doesn’t for a long period of time. It will have to be a mix, in the long-term the BTR will dominate.”

In June, Cordia also took a majority stake in affordable housing provider Auxesia Homes, following investment last year into St Arthur Homes, both with its strategic partner Matter Real Estate. Futó would like to see these businesses working together as sister companies to provide a wide range of housing.

“If we are able to integrate this in an investment framework it will offer investors [the opportunity] to take part in different tenures and cashflows,” he adds. “They could invest in affordable housing, in shared ownership, market rentals – that’s a really interesting offering. You have an operator and a wide range of options to access the housing market.”