A housing impact investment fund run out of Lloyds Banking Group has snapped up a new 397 bed purpose-built student accommodation (PBSA) development in Stratford in a deal worth nearly £300m.
The Housing Growth Partnership (HGP), which is a joint venture between Lloyds and Homes England and was set up increase the supply of affordable housing, made the forward purchase from London-listed Watkin Jones, one of the UK’s leading build-to-rent specialists.
The transaction is the first between the two parties and was delivered through an innovative structure, the receipts from which will be spread across the scheme’s three year development.
The two organisations have created a new joint venture, three quarters of which is owned by HGP and 25 per cent by Watkin Jones.
The initial contribution from the transaction is already reflected in Watkins Jones’ guidance for the year, the firm said.
The deal is yet more evidence of a change in fortunes at the build-to-rent specialist, which like much of its sector struggled to adapt to the inflationary pressures and higher rate environment that have characterised the last two years.
Its share price has collapsed over 75 per cent in the two years since August 2022, and it plunged to a £43m loss in 2023 having been struck by costly building safety updates. But in May the company announced a return to profit as the effects of a radical restructuring plan under new boss Alex Pease, who was appointed permanently in November last year. started to bear fruit.
Commenting on the deal, Pease with HGP, Pease said: “We are pleased to collaborate for the first time with Housing Growth Partnership on this exciting development. The innovative nature of the transaction underlines Watkin Jones’ ability to find attractive structuring solutions for our institutional partners.
“While we remain encouraged by signs that confidence is returning to our residential for rent funding markets, this is tempered by continued uncertainty around the trajectory of interest rate cuts. We, nevertheless, have a number of schemes in the market which are generating good levels of interest.”