Legal & General (L&G) has agreed to fund a Birmingham Build To Rent (BTR) development site known as Newhall Square for a total sum of £53 mln (€59 mln).
The transaction means that L&G has added a sixth city to its new funding strategy for rental homes in the UK and lifts the total total pipeline of BTR units to over 1,700.
L&G is investing around £1 bn into the BTR sector, having raised pension fund capital for an open-ended BTR fund, as well as a £600 mln joint venture between Legal & General Capital and Dutch pension manager PGGM. Legal & General Capital (LGC) focuses on direct investments in key sectors, particularly housing, infrastructure and SME finance.
The forward funding deal in Birmingham has been agreed with residential developer Spitfire Bespoke Homes. The development has planning for 220 residential units and 697 m2 of ground floor commercial space, together with a public square and 61 car parking spaces. The site is located between the established Central Business District and the retail/leisure hub of the Jewellery Quarter.
With a current population of 1.1 million, an increase of 100,000 people since 2004, the population growth of Birmingham is the third fastest in the UK, behind London and Bristol. It also has one of the youngest populations in Europe, with under 30’s representing around 40%. However, available housing stock is at a record low and is exacerbated by weak levels of new house building in recent years.
Through the creation of a BTR asset class, it is looking to use its sources of long term capital to help address the chronic long term lack of housing supply and meet the increasing demand for affordable, quality rental accommodation.
Dan Batterton, BTR fund manager at L&G's investment arm, LGIM Real Assets, said: 'This development, in a highly sort after area of Birmingham, links the industrial heritage of the Jewellery Quarter with the modern business district. The location is ideally suited to high-quality, affordable and professionally-managed rental accommodation that can help to address the supply demand imbalance in the city.'
L&G's other BTR development sites are in Leeds, Bristol, Bath and Walthamstow. Its scheme in Salford has been home to residents since June. In all, L&G backs a fast growing pipeline of over 70,000 new homes over the next five to ten years.
