M&G Real Estate is buying 97 private rental homes in a deal with listed developer Crest Nicholson.
The investment in the UK’s private-rented sector (PRS) is the start of a long-term relationship with Crest Nicholson, the investment manager said.
M&G Real Estate will provide £25.2m (€35m) to fund the development of the apartments.
The company said the units would be ready for tenancy between February and October next year.
Alex Greaves, head of residential investment at M&G Real Estate, said the deal was the first of its kind between an institutional investor and a listed house builder, marking a “major opportunity” for institutional investors seeking access to the UK residential sector.
“It is our hope that the involvement of institutions like ours will lead to more homes coming on tap and higher standards, just as it has done with the student accommodation market,” he said.
M&G’s UK Residential Property Fund is understood to have recently agreed to its third PRS deal, a £50m investment in west London.
The 205 units are part of Inland Homes’ Drayton Garden Village scheme.
The investment manager last year agreed to forward fund a £43.5m, 152-unit scheme in Acton, also in west London, having invested £105m in 2013 in a 534-unit residential portfolio developed by Berkeley.
Chris Tinker, executive board member for Crest Nicholson, said the Bath agreement could mark a “step change and acceleration in the PRS model, which will ultimately help unlock land, create jobs and bring wider economic benefit, as well as bring forward the delivery of much-needed new homes and mixed tenure communities”.
An increasingly competitive commercial real estate sector, low interest rates and an unattractive bond market have brought the UK’s residential sector into the limelight.
For more on PRS and the UK residential sector, read the May/June edition of IP Real Estate
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