‘Unique’ developer heads to MIPIM on the hunt for £130m fund

Nottingham-based developer Monk Estates is heading to the international property show MIPIM this week after launching a £130m build-to-rent (BTR) fund as it looks to spread its wings throughout the Midlands and North.

The company is looking to expand its Hylyfe Partnership business to over 1,500 homes over the next five years to

Lace Market Point

encompass a second scheme in Nottingham, Leicester, Birmingham, Coventry and Sheffield, it’s director, Sam Monk, told TheBusinessDesk.com.

Monk Estates has appointed Knight Frank Capital Advisory to hunt for investors.

Talking about the plans, Sam Monk told us: “For years we have always just developed and then sold, either as a forward fund or individual sales on completion.

“What we have seen in recent years is very strong rental growth and at the same time the emergence of the BTR/PRS market. The basics of which are very similar to student accommodation, something which are very experienced in, having delivered 8,000 beds.”

Monk Estates has already completed a 91-apartment scheme, Lace Market Point, in a prime spot in Nottingham on the London Road roundabout, and is currently building out its Leicester development in conjunction with The Housing Growth Partnership (HGP), which will provide 171 luxury 1-,2- & 3-bed apartments in a part-refurbishment of the listed EW Bryan Mill.

Sam Monk added: “For us, this new build to rent market seemed an obvious one, not to mention 30x -40x times bigger than the purpose built student rental sector. We chose to do the fund now because we have proved the concept, and we have proven the build process. Choosing to do both construction, through our Monkfish Construction business, and management in-house was a huge call and means that we can capture all of the development profit, construction savings and benefit from asset growth through Hylyfe, our management business.”

Monk said that the next steps involve looking for areas that are “less well-trodden.”

He said: “We were market leaders in Nottingham and Leicester has a couple of good schemes already but is very undersupplied – which we really like. Next on our radar are sites in Coventry, Birmingham, Sheffield and also a second scheme in Nottingham potentially.

“Our plans are to grow organically but focusing on the Midlands and North where there is stronger rental growth.”

Monk Estates was founded at the beginning of the 1990s by Robert Monk, who remains chairman on the business. The firm has been responsible for landmark schemes in Nottingham such as Trinity Square, Castle Wharf and the Waterside Apartments – along with a host of student accommodation schemes across the city.

Last year, the company expanded outside Nottingham to enter the Leicester market.

Sam Monk told us: “Currently we have partnered with Housing Growth Partnership (HGP) in Leicester. HGP are backed by homes England and Lloyds Bank and the arrangement helps us to roll out the physical construction of the schemes faster, and working with Mike Murphy and his team out of Birmingham has been a delight, they are so helpful and fully support our expansions plans.

“The scheme in Leicester is fantastic, it couldn’t be better located, directly opposite the Highcross Shopping centre it will have 24-hour concierge, spa, gym, beauty rooms, communal kitchen, roof top garden, courtyard, business suite and meeting rooms not to mention our free Hylyfe car as we do with Nottingham. There’s also a Sainsbury’s local in the ground floor. It will really push the envelope on quality internally too. Which we can do as we are able to build so much more affordably than most.”

The new fund/partnership is to facilitate the retention of the completed assets, said Sam Monk. On completion schemes will be transferred to the fund where Monk Estates will continue to manage the build assets through Hylyfe.

He said: “In Nottingham we have seen tremendous rental growth – 25% growth since it’s opening in 2021. Build to rent is a very low-risk investment when you think about it. It’s not like student that has to be re-let every September and there’s no strict deadline for completion of construction. Also, there’s a chronic housing shortage coupled with a shift in people’s sentiments, owning a house is less of an appeal to the younger generations, a growing population prefers service and facilities without the commitments to homeownership.”

The Monk Estates team are heading to MIPIM having instructed Knight Frank Capital Advisory to manage the process and consult with interested parties.

How Hylyfe Leicester will look

Sam Monk said: “There’s a lot of money looking to get into the sector right now, but most people are offering forward fund opportunities for unbuilt stock. With that comes construction risk and lettings risk.

“We are seeking £130m of equity investment for a core plus product that’s extremely low risk, stabilised and offering annualised returns of around 15%.”

“We are different as we have built assets to seed the investment, and unlike nearly all other developers in the sector we are truly vertically integrated, being involved in the process from site purchase, to planning and then on through construction to completion and asset management. This makes us truly unique.”