Cording Real Estate has agreed its first build-to-rent investment in the UK private rented sector, committing more than £40m to forward fund the 350-home Saffron Court in Nottingham.
Construction of the building, which is being developed by Cassidy Group and Regency Project Management, is due to start this month.
Cording launched its UK PRS business a year ago with the acquisition of PRS specialist CapRes.
The investment is made on behalf of Cording’s UK PRS Club 1 LP, a closed-ended vehicle set-up for institutional real estate investors seeking to capture the benefits of the ongoing shift in the UK residential market from owner-occupation to renting in a market which is believed to be massively undersupplied.
The club is planning to make further forward-funding investments in the PRS in the next few months and is seeking to deliver its investors “double-digit investment returns”.
Tim Holden, director of residential development and asset management at Cording, said: “Nottingham is a compelling location for our first build-to-rent investment in terms of demographics, local economics and affordability.
“Over 300,000 people live in Nottingham, of whom 48% are under the age of 29, including a thriving student population. According to the ONS, the local economy is expected to grow significantly faster than UK averages by 2020, supported by its expanding healthcare and biotech sectors.
“Much of the housing stock in Nottingham is old and the supply of new dwellings has been very limited. As such, we expect strong demand for our completed product which has been designed specifically for the PRS market.”
John Partridge, chairman of Cording and sponsor of the Cording PRS business, said: “Our strategy is to invest in build-to-rent opportunities in the regions and outer London focusing on rents which are affordable in the lower to mid-tier of the market. In our view, this segment provides the best demand-supply characteristics and offers particularly attractive risk-adjusted returns.”
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