Urban Splash has launched a new residential fund seeded with £20m equity from high-net-worth investors, in its bid to diversify into the private rented sector.
The seed portfolio comprises 123 homes and will target an IRR of 15-20%. Assets include 33 flats at Park Hill in Sheffield, 80 flats at Lister Mill in Bradford, and 10 modular houses at Irwell Riverside in Manchester.
These were acquired at an average cost of £148 per sq ft, with initial gross yield on cost of 8.5%.
The fund marks the first time Urban Splash has brought outside investment into its portfolio. Its investors include Paul Gough from Star Capital.
Former UBS analyst Akeel Malik will lead the business, while John Forbes will be the independent chair. Mariana Investment Partners will be its alternative investment fund manager.
It will target dividends of 3% per annum.
Tom Bloxham MBE, chairman of the company, said: “PRS remains one of the most attractive asset classes but has historically been difficult for institutions to access at scale.
“The new fund is entirely independent of the Urban Splash group but the fund and the group are already enjoying a mutually beneficial, symbiotic partnership.
“The fund will help speed up delivery of much needed new homes and will be able to offer new homes for rent alongside Urban Splash’s traditional sales model.”
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