Prupim to acquire £105m residential property portfolio

By Bridging Loan Directory 4th April 2013

Prupim, the real estate investment management arm of M&G Investments, has exchanged contracts to acquire a GBP105.4m residential portfolio owned by The Berkeley Group and partially funded by the Homes and Communities Agency (HCA).
The portfolio consists of 534 private rental units in 13 locations across Greater London, the south east and southern England.

Prupim will take on the management of the portfolio on completion, currently expected to be in June 2013 and Berkeley will become a minority co-investor. On completion of the transaction, the day to day management of the properties will be undertaken by Savills, the global real estate services provider.

Alex Jeffrey, chief executive of Prupim, said:

“The expanding residential rental property market, particularly in London and southern England, is gaining in appeal for institutional investors. We believe that returns from the sector – which have historically outpaced commercial real estate – will continue to be attractive as demand increases. We expect the supply and demand dynamics of the residential property market in London and the South East to remain favourable for investors, with continued strong demand for quality properties.

“For institutional investors, the challenge of the residential rental sector has been two-fold: can you acquire property in sufficient scale and how will you ensure the units are managed to a high standard? This deal meets both aspects of that challenge. We’re acquiring a diverse portfolio of high quality properties, while Savills contributes its considerable experience of the day-to-day management of rental homes. This is the sort of portfolio that would fit well within a fund dedicated to the rental sector.”

The properties were developed under the 2009 Private Rented Sector Initiative, a scheme designed to attract more institutional investment to the UK housing market. Berkeley, the UK housing developer and HCA, the national housing and regeneration agency, collaborated on the construction in August 2010, using HCA funding to kick start the development.