Mitsubishi Estate London is to forward fund and acquire Galliard Group’s development on part of the site of the former Royal Mail sorting office in Nine Elms, SW8.
Galliard acquired the 0.9-acre plot at the development site, known as Nine Elms Park, in January for £22.2m, and will develop the scheme on behalf of Mitsubishi Estate London.
The site could provide around 200 apartments within a 12-storey building, which would give it a gross development value of around £150m.
Fund manager Europa Capital, which is majority-owned by Mitsubishi Estate, advised Mitsubishi Estate London on the deal and has been retained as investment manager. It will be responsible for identifying further build-to-rent acquisition opportunities on behalf of Mitsubishi Estate London in the UK.
Mitsubishi Estate London has already been investing in core-plus assets across continental Europe via Europa Capital since 2017.
Yuichiro Shioda, managing director and chief executive of Mitsubishi Estate London, said: “Build-to-rent is an important part of Mitsubishi Estate’s global portfolio, and while this is our first acquisition of such an asset in the UK, it is a sector that has been of interest for some time. This new investment strategy enables us to capitalise on Europa’s considerable expertise, but also paves the way for future build-to-rent strategic investment opportunities.”
Hugo Black, acquisitions partner at Europa Capital London, added: “This acquisition builds on Europa’s residential investment strategy.
“London has a quickly expanding population and a strong demand for new rental homes, whilst Nine Elms, the home of the new US Embassy, is enjoying rapid regeneration with new office and residential development, and improving transport links. Build-to-rent is an emerging asset class in the UK and we look forward to working with Mitsubishi on further build-to-rent opportunities in the UK.”
The former sorting office site spans 14 acres, of which 8.35 acres has been split into seven plots and has had outline planning permission from Wandsworth Council since March 2012.
Royal Mail has been selling the site plot by plot, after attempts to sell the entire scheme to Ballymore in 2015 fell through.
Other buyers of plots at the site include Greystar and Henderson Park, which have teamed up to buy 2.7 acres to develop 894 build-to-rent homes. Telford Homes will build the scheme.
It is part of a flurry of investment activity targeting Nine Elms this year. In April, Damac International secured a £175m development financing package for its 50-storey residential tower, with interiors designed by Versace Home.
Meanwhile, Grainger is to deliver around 400 homes at Nine Elms tube station on behalf of Transport for London. Grainger was selected as TfL’s preferred partner to build and manage 3,000 new rental homes across London.
However, talks with two separate parties to acquire office scheme One Embassy Gardens from Ballymore collapsed this year, with Ballymore subsequently withdrawing the 156,000 sq ft scheme from the market.
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