Patrizia AG’s goal to deliver 2,000 build-to-rent homes in the UK is looking increasingly unachievable, as it puts its second development site up for sale.
The Germany-headquartered fund manager has instructed Avison Young to sell the 198-flat scheme at Barking’s Trocoll House, which is pending consent, seeking offers of more than £13m.
The decision to sell Trocoll House follows the sale of its development at Manchester’s First Street, which had planning permission for 624 units, to Downing Developments for £18m earlier this year, as revealed by EG.
As well as Trocoll House, the firm also owns Birmingham’s Edgbaston Residences, with consent for 375 flats, and a further 612 built units in Birmingham and Southampton inherited through its acquisition of Rockspring in 2017.
Previously, Patrizia expected its 2016 pipeline of 1,200 homes (comprising First Street, Trocoll House and Edgbaston Residences) would grow to between 2,000 and 2,500 by the end of 2020.
A company spokesman said: “Since that was published some of the UK target has been replaced by investments in Ireland, which now totals 400 units and which we expect to grow to circa 700 units by the end of the year.”
Business strategy
Patrizia is disposing of its early-stage BTR developments, held as principal investments on its balance sheet, as it seeks to move to pure fund management.
It currently holds £70m in developments, including Trocoll House, Edgbaston Residences and additional residential assets in Germany.
Patrizia uses its own funds to acquire early-stage developments as a short-term measure, seeking to move them to one of its pan-European institutional funds.
However, the funds have yet to invest in early-stage BTR, avoiding development risk in favour of built assets. It means opportunistic investments have been relegated to the balance sheet.
Following delays to launch construction, Patrizia is putting its riskier UK BTR developments on the market and favouring forward-funding deals and income-producing stock in locations such as Dublin.
Patrizia acquired Trocoll House from Coplan Estates for £10m in 2016. It initially sought to forward-fund development, but opted to acquire the site and deliver it itself.
Stalled development led to the expiry of planning consent, approved by Boris Johnson as mayor of London, and a fresh application now faces new barriers of affordable housing targets under Sadiq Khan and Barking & Dagenham Council.
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