Countrywide and Hermes have agreed a deal to forward purchase one of the UK’s largest purpose-built private rented sector developments outside London.
The joint venture partners’ Vista Fund has entered an agreement to buy Baltic Village in Liverpool for more than £50m from Promenade Estates.
The 324-flat scheme represents the fund’s first large investment following its October 2014 launch, with £95m of seed equity. This included three sites in Manchester, Birmingham and Nottingham.
It has since undertaken a further small deal meaning it has now deployed over £75m of its initial seed capital.
Promenade Estates will be retained to develop out Baltic Village, which also includes 6,100 sq ft of shops and 11,000 sq ft of tenant amenity space across the three blocks of one, two and three-bedroom flats.
The scheme is already under construction and due to complete next summer.
It is being targeted at young professionals, with amenities including meeting rooms, a café, social area, building manager, and 358 car park spaces.
Hermes Investment Management chief executive Chris Taylor said the fund was tapping into the government’s plans to transform the North West into a northern powerhouse, predicting Liverpool would soon “move out of the shadow of Manchester”.
The Vista fund, which seeks
to combine the skills of the UK’s largest property services group with those of a major investment manager, is seeking returns of 9-10%, slightly above those typically targeted by other PRS investors such as M&G Real Estate and LaSalle Investment Management which target IRRs of around 8%.
Adrian Bird, national head of acquisitions at Countrywide Residential Investment, said the return targets made regional city centres outside London and the South East more attractive investment destinations for the Vista Fund.
He said data from Countrywide’s network of estate agencies put prime rents for one-bed flats in Liverpool city centre at between £650pcm and £750 pcm.
Baltic village occupies a prime site in the Baltic Triangle area of Liverpool opposite the historic Albert Docks.
