LaSalle IM is in talks to acquire Dandara’s £400m portfolio of build-to-rent flats after rival bidder Cortland stepped out of the ring.
The 2,000 flats across three sites in Manchester, Birmingham and Leeds are all expected to complete in 2019 and be occupied within a year.
If the deal goes through, it would mark a new phase for the nascent build-to-rent sector, which does not have much purpose-built stock to trade.
The acquisition would see LaSalle double its portfolio, which currently comprises 2,084 apartments across seven assets, largely focused in the regions. Its assets under management and under construction sits at £475m.
Cortland had previously proposed a joint venture with Pension Insurance Corporation, with the pension buyout firm providing the bulk of funds through a debt placement. But it is no longer in the running, following a lengthy due diligence process on the half-built assets.
It had planned to acquire the homes to be operated as part of its Cortland management platform.
Last October, EG revealed that Dandara had appointed Rothschild to sell the schemes, with the option to acquire additional sites in Glasgow’s City Wharf and Aberdeen’s The Point at a later date.
The portfolio comprises Dandara’s Manchester site at Chapel Wharf (pictured), which has 995 flats, Birmingham’s Aston Place at Arena Central (which has 324 flats, downsized from original plans to build 706 apartments in 2014) and Leodis Square in Leeds, which comprises 742 flats.
Previously, investors have tended to enter the BTR market through forward-funding deals. This year, there have been no built asset sales, compared to £1.4bn in forward-funding deals and land acquisitions, with the bulk of capital in forward funding, according to CBRE.
Family owned Dandara funded development of the schemes with backing from HSBC and the Homes & Communities Agency’s Home Building Fund. Construction of the schemes began in 2017.
It has previous experience with LaSalle, which acquired its 292-flat scheme at Forbes Place in 2015, operated by the Dandara Living platform. LaSalle acquired the scheme on behalf of a large pension fund.
Dandara has delivered 5,800 apartments over 15 years. It has a further 945 flats across two schemes in Glasgow and two other developments in the pipeline awaiting planning consent, at Bristol’s Bedminster Green and The Chilterns in High Wycombe.
Dandara is advised by Rothschild. LaSalle is advised by Knight Frank. Cortland was advised by Savills.
All parties declined to comment.
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