Investec Structured Property Finance has made its largest PRS development loan to date with a £60.7m facility to fund two schemes; one in Crawley, Sussex and one in Sudbury, west London.
Southdawn, the development arm of PRS operator and developer Rooms & Studios, has secured two senior debt facilities totalling just under £61m from the lender to assist with the acquisition and development of the two schemes which total around 400 units.
Investec has provided £43m for the acquisition and first phase development of a vacant 164,000 sq ft office block and adjoining 7.9 acres of land, known as Kellogg Tower, in Greenford, Sudbury. The development is due to complete in December.
Investec initially provided finance for the acquisition of the site in Q4, 2015, and then construction finance for phase one, comprising 270 units and 100 car parking spaces, which was started speculatively in May 2016. Southdawn successfully forward sold phase one to Network Homes for £68m in November 2016.
In Crawley, Investec has provided an £18m facility for the acquisition and development of a 43,600 sq ft vacant office property, Stoner House, into 129 residential units over four storeys. The development is expected to complete at the end of 2018.
Rooms & Studios is also considering submission of a planning application for additional units.
The developer is part of Interland Group, an umbrella company for a group of property investment companies based in the UK which are funded by off-shore private equity and family trusts. The group owns and operates assets including hotels, commercial, student accommodation, youth hostels and residential properties.
Cyril Ogunmakin, chief executive of Interland Group, said: “These two development sites further complement our existing portfolio of high-quality and well-located private rented sector schemes in and around London.”
Hayley Scott, of Investec Structured Property Finance, said: “As the private rented sector starts to make a significant contribution to solving the housing shortage in London and the South East, we anticipate future opportunities to fund similar schemes, providing a credible and established client like Rooms & Studios, with whom we have a long standing track record, with flexible acquisition and development financing.
“The private rented sector market is continuing to mature, driven by changing home-ownership attitudes and an increasing market acceptance of the advantages of this type of accommodation.
“Record Institutional and private equity investment into this fast growing sub-sector also highlights the potential steady returns on offer, in what remains an uncertain macro-landscape.”
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