Invesco makes £98m Birmingham BTR debut

Invesco Real Estate has entered the Birmingham build-to-rent market with a £98m forward funding deal to deliver 483 homes in the city centre.

It is the latest investor to be drawn into the city’s BTR scene, attracted by widespread regeneration and infrastructure improvement.

US investment management firm Invesco has exchanged contracts with the High Street Group to acquire the homes, which are expected to be operated by US BTR giant Greystar.

Holloway Head is located at 49-51 Holloway Head on a parcel of land bound by Blucher Street, Gough Street and Ellis Street.

The site is close to Birmingham’s Mailbox and Arena Central sites and Concord House, which is home to the city’s most expensive apartment, as well as key transport links close to the planned HS2 site at Curzon Street.

Last September, Panther Securities completed the sale of Holloway Head for £11.3m in a deal brokered by Court Collaboration to Holloway Investments, a special purpose vehicle owned by the High Street Group and Birmingham-based developer Taylor Grange.

The High Street Group will lead the development of the scheme, which has an end value of £120m, with construction expected to begin later this year.

Holloway Head currently comprises a car park and the Girl Guides headquarters at Trefoil House. Some 20 planning applications have been lodged for the site since the 1990s.

The rise of Birmingham BTR

Investors are moving into Birmingham as major regeneration projects get under way in the city. Examples include Lendlease’s £1.5bn Smithfield project, expected to deliver 2,000 new homes and more than 3m sq ft of commercial, retail and leisure space, while Hammerson’s Martineau Galleries aims to provide around 2.75m sq ft of mixed-used floorspace, with provision for 1.4m sq ft of offices, 1,300 flats and a 400-bedroom hotel.

Development has been stimulated by the removal of the A38 ring road, the promise of HS2 and citywide infrastructure improvements.

A chronic lack of housing and surging house prices have opened the city to rental options for young professionals seeking city centre living.

In the past year funds have flocked to Birmingham, with commitments coming from Aberdeen Standard Investments, Grainger and Goldman Sachs, but it is still early days for development.

The UK’s second-most populated city launched its first BTR scheme at The Forum at the start of the year, quickly followed by Long Harbour’s Lansdowne on Hagley Road and LaSalle’s Allegro at Exchange Square.

But currently there are just 5,759 units committed to the city, compared to 74,767 in London and 23,320 in Manchester, according to the British Property Federation.

Knight Frank’s 2019 Residential Investment report said investors controlling £32bn in capital pointed to the city as the most attractive for the sector, with a rapidly growing population and a structural undersupply of purpose-built stock.

The report said annual asking rents in Birmingham rose higher than any other region last year, up by 4.8% compared to 3.8% in London.

Numerous other BTR investors and operators lured by rising rents and an unsaturated market are likely to enter the city.

Get Living, Quintain and US operator Cortland have all identified Birmingham as a key location for expansion beyond London.

Invesco has invested almost £1bn in the build-to-rent sector across the UK since its launch into the market through a tie-up with Platform_ just two years ago.

The US investment firm entered into a £116m jv seeded with 580 units across five blocks in the South East to be developed and managed by Westrock-backed Platform_.

Invesco initially focused on London and the South East, slowly spreading into regional hotspots with forward funding deals in Liverpool at Strand Street and Manchester.

The investor linked up with Greystar to manage its Outward Wharf scheme in Manchester’s Salford, building on long-standing relationship with the operator from its 30-year build-to-rent programme in the US.

Following a £400m investment in the capital with EcoWorld London, its portfolio now sits at around 2,900 units. This is expected to grow significantly through a strategic partnership with Telford Homes of schemes more than 200 units, which Greystar is also expected to manage.

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