Patrizia buys plot in Manchester in first UK PRS investment

Listed German property investor Patrizia Immobilien has acquired a 20-acre (8-hectare) site in Manchester for the development of around 500 apartments in the company’s first investment in the UK private rental sector.

The First Street site in Manchester is partially developed with an 180,000 sq ft (17,000 m2) office building. The Grade A property with a Weighted Average Lease Term of nine years is let to occupiers including Ford, Auto Trader and Jacobs Engineering. Patrizia plans to develop up to 1 million sq ft of office space and around 500 new apartments on the site.

The company intends to develop and own the apartments specifically as ‘build-to-let’ properties. The Manchester development will form the basis of a dedicated UK PRS fund, building on Patrizia’s European track record in the sector, which already includes the management of 80,000 apartments worth €7 bn.

Assets recently completed at the site include a 208-bed Melia Innside hotel, nine bar and restaurant units, and 700 parking spaces. Patrizia will develop offices and residential units on the remainder of the site over the next five to seven years.

The seller was a local private property company. Completion of the transaction is expected by the end of the second quarter.

James Muir, managing director of Patrizia UK, commented: ‘We have been carefully implementing our strategy of investing in high-growth locations across the UK. With this investment, our property assets under management in the UK now amount to more than a billion pounds.

‘Driven by attractive economic and demographic fundamentals in Manchester, and the growing trend for urbanisation, we are anticipating strong demand for this centrally located, high-quality accommodation which will be tailored to the private rental sector. Together with the new commercial buildings we expect to create an attractive investment opportunity for institutional investors. We see this project as an ideal first investment for our planned Patrizia UK PRS Fund.’

Patrizia currently manages real estate assets worth around €15.5 bn, primarily as a co-investor and portfolio manager for insurance companies, pension fund institutions, sovereign funds and savings banks.