BMO UK Housing Fund has agreed its first build-to-rent investment, securing 258 homes in Liverpool in a £40m forward funding deal.
The £500m fund aims to provide purpose-built mid-market rental homes for low- to middle-income households, targeting returns of more than 6% and a 4.5% annual distribution yield. It launched in 2020 and is backed by investors including Big Society Capital and Swansea LGPS.
The first acquisition has been made in partnership with housing association Home Group, which sourced the site and will work with developers to oversee construction.
The scheme, Hughes House, is located at the former TJ Hughes site on London Road, in the Fabric District. The discount retailer and developer UK Land & Property secured planning consent for the 10-storey building in 2019. It will be built by Engie’s Equans arm.
Peter Lowe, fund manager at BMO Real Estate Partners, said: “The scheme will enable us to satisfy local demand, particularly from key workers employed in the local authority, city centre hospitals and nearby universities.
“We expect to follow up this acquisition with a further pipeline of near-term opportunities as we continue to support the delivery of affordable housing solutions across the UK.”
Wren Laing, investment director at Big Society Capital, added: “The current failings of the private rented sector are widely documented: unaffordability, poor quality, insecurity of tenure, to name just a few. An essential part of solving the housing crisis is tackling the problems experienced by tenants and improving the quality and range of choice of housing options available to people living in the PRS.”
Allsop and CBRE advised BMO.
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