Aberdeen Standard Investments has acquired AIG’s Clarendon Quarter in Leeds for around £41m.
The scheme has been touted as Leeds’ first stabilised build-to-rent housing, comprising 324 flats under ownership of Luxembourg-registered Habitus Leeds, which is owned by AIG.
It has been bought slightly under the original asking price. Habitus Leeds instructed CBRE to sell the scheme, which formally came to market at the end of February, with a price tag of £45m.
The scheme generates a gross rent of £2.6m, and the acquisition price reflects a net initial yield of 4.25%.
The speedy acquisition is ASI’s third deal in lockdown, following a £50m deal for Abbey Sport Centre in Barking in May and a £36m deal for Aquastrada’s Stratford Office Village at the end of April.
Clarendon Quarter comprises mainly affordable housing at discount market rent let to key workers. There are 262 affordable studio apartments at CQ Court, and a further 62 larger private rented flats at CQ The Garden with one, two or three bedrooms.
Watkin Jones built the scheme for AIG with completion in 2016, and it is managed by Fresh Property Group.
This is a landmark deal for Leeds, marking the first trade of completed, occupied, purpose-built rental housing in an emerging asset class.
Aberdeen Standard has retained appetite for acquisitions throughout the pandemic, with particular interest in affordable housing.
Institutional investors are increasingly turning to affordable housing through long-term debt deals and equity acquisitions, with assets considered to be secure, typical counter-cyclical and supported by stable cash flows.
Ed Crockett, head of UK residential investment at Aberdeen Standard Investments, said: “The potential for rising unemployment is undoubtedly a challenge the sector will have to navigate and as a result our strategy has pivoted more towards the affordable end of the BTR market which shows strong risk adjusted performance as well as helping to meet the needs of the wider community. ”
Mike Gorman, who leads CBRE’s development and residential investment team in the North, said: “This is an incredible result in the most uncertain times and demonstrates the resilience of the residential sector.
“Clarendon Quarter is the first fully stabilised asset of its kind to trade in the UK, marking the start of the next chapter of the multifamily evolution.”
Knight Frank advised Aberdeen Standard on the deal and JLL advised on the operations.
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