Landsec weighs move into operational residential
Landsec is considering a move into operational residential as it secures a pipeline of more than 6,000 homes.
The REIT said that with consent in place for 1,800 homes at its redevelopment of the O2 Centre at Finchley Road, NW3, some 1,700 homes at its Mayfield project in Manchester and plans now submitted for 1,700 homes and more than 1,000 student and co-living beds at its redevelopment of Lewisham shopping centre, it would start thinking about how it would build out and deliver those homes.
Chief executive Mark Allan told EG: “We’ve had to be patient to get to where we are. We’ll make the decision on how we deliver them going forward in the next financial year, but I would like to think that we will have a meaningful operational component and investment in residential in in five years’ time.”
Landsec is considering a move into operational residential as it secures a pipeline of more than 6,000 homes.
The REIT said that with consent in place for 1,800 homes at its redevelopment of the O2 Centre at Finchley Road, NW3, some 1,700 homes at its Mayfield project in Manchester and plans now submitted for 1,700 homes and more than 1,000 student and co-living beds at its redevelopment of Lewisham shopping centre, it would start thinking about how it would build out and deliver those homes.
Chief executive Mark Allan told EG: “We’ve had to be patient to get to where we are. We’ll make the decision on how we deliver them going forward in the next financial year, but I would like to think that we will have a meaningful operational component and investment in residential in in five years’ time.”
Landsec said its current pipeline of homes had a value of more than £1bn but it expects this to grow to more than £3bn within the next decade. Allan expects the REIT’s residential pipeline to deliver around £200m of annualised income over the coming 10 years.
“Our priority over the last one to two years has been on progressing the planning applications,” he said.
“Our focus so far has been getting that pipeline – and it’s a fabulous pipeline – secured. If you look at Lewisham, it is by the station with great connectivity into the City and West End and if you look at Mayfield, it is the only park in the centre of Manchester, and Finchley Road is a five-minute walk to five different stations that give you connectivity all over London. These are all fabulous locations.”
Allan said he believed the REIT’s push into residential was well timed. He said the business was delivering into “an environment where we’ve got a Labour government that is very much pro urban regeneration, pro brownfield development and is accelerating the delivery of homes”.
Allan said Landsec expects to start delivering a first phase of 600 homes at Finchley Road in 2026. The group will invest £350m in the scheme and is expecting a low double-digit IRR.
At Mayfield, its recent signing of a new development agreement has given it greater power over the residential element of the £1bn schemes. It plans to start delivery of the £250m first phase of offices in the next year and will then deliver the residential.
The REIT said Manchester had seen one of the highest levels of residential rental growth in the UK, with a five-year annual growth rate of 7%.
Alongside the commitment to establishing a residential business within Landsec, the REIT reaffirmed its commitment to investing in major retail destinations. It said it expects to be a net buyer over the next six months and is understood to be in negotiations to buy the Liverpool One shopping centre from ADIA and Grosvenor for around £500m.
Mayfield image © Studio Egret West; Lewisham image © WAX
