Singapore’s CDL Hospitality Trusts has agreed its first investment into UK build-to-rent with a £73.3m deal for Fiera Real Estate and Packaged Living’s The Castings in Manchester.
The deal includes a £9.5m payment for the land at Heyrod Street in Piccadilly East, with a forward funding agreement of £63.8m for the development. Some £58.2m will be paid out over the development period with the final £5.6m after completion, anticipated in May 2024. The net income yield on the stabilised property is estimated to be 5.1%.
The price is a 3.7% discount to Savills’ valuation of £76.1m. CDL Hospitality Trusts also expects to pay a further £31.4m on the furnishing and fit-out, bringing the total project cost to £76.4m.
The development is the first for the joint venture between FREOF V and Packaged Living. It comprises 352 flats spanning 219,600 sq ft, with a gym, cinema, resident lounges and ground-floor retail.
The investment from CDLHT is its first foray into BTR, as part of a revised strategy. The group is seeking to broaden geographies, with stable income from new asset classes, beyond its core hospitality business.
Chief executive Vincent Yeo said: “We see a positive growth trajectory for this promising sector in the UK and believe that build-to-rent assets will gain market share from traditional landlords.
“Supported by strong demand and supply dynamics and the asset’s superior location, we expect The Castings to achieve steady rental growth over time. Our attractive entry price will also position the asset for capital appreciation in the future, amid voracious institutional investment demand.”
CBRE advised CDL. Knight Frank acted for Packaged Living FRE UK .
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