Property group launches fully subscribed £20m fund
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Manchester-based regeneration company Urban Splash has launched a new residential fund – one of the first branded residential portfolios in the UK.
The fund, which sits independent from the Urban Splash group, has seen the firm invite outside investment into its portfolio for the first time; a soft launch has been over-subscribed for the initial £20m of seed funding secured from HNW professional investors across the UK.
The seed portfolio comprises 123 homes and will target an IRR of 15-20% with modest gearing.
The fund has already acquired 33 apartments at Park Hill (Sheffield), 80 apartments at Lister Mill (Bradford) and 10 modular houses at Irwell Riverside (Manchester).
These award winning homes have been acquired at an average cost of £148 per sqft, initial gross yield on cost of 8.5% and net yield on cost of 6.8%.
Urban Splash Chairman Tom Bloxham said: “I am delighted to unveil this portfolio and to welcome outside investors into an Urban Splash property portfolio for the first time.
“I believe residential property is the ultimate defensive investment for wealth preservation; everyone needs a home and there is lots of potential in inflation-led increases in rents, as well as the access that investors will have to Urban Splash’s pipeline of developments and management platform.”
He added: “PRS remains one of the most attractive assets classes but has historically been difficult for institutions to access at scale. So our vast experience of developing and managing residential apartments over the past 25 years – including managing and growing a brand in excess of 700 units – means that we have created an attractive proposition for investors.
“The new fund is entirely independent of the Urban Splash group but the fund and the group are already enjoying a mutually beneficial symbiotic partnership.
“The fund will help speed up delivery of much-needed new homes and be able to offer new homes for rent along side Urban Splash’s traditional sales model.”
The fund has been established with start-up capital from HNW professional investors, including Paul Gough from STAR Capital, a number of private equity and property professionals, previous FTSE chief executives, leaders from the tech and music industries, as well as Tom Bloxham and the Urban Splash board.
Former UBS analyst Akeel Malik will be leading the business, while John Forbes is the independent chair and Mariana Investment Partners are the FCA-regulated Alternative Investment Fund Manager.
Akeel said: “The commitment of our initial investors shows that USR is an efficient vehicle for individuals seeking to gain exposure to the residential housing sector, away from the diminishing appeal of individual buy-to-let portfolios – which are becoming less attractive as increases in tax and SDLT charges rise.
“We are offering investors exclusive access to access award-winning homes from the Urban Splash pipeline, with the seed portfolio benefiting from a low capital value of £148 per sq ft, and producing a net yield of around 6% in regions ripe for growth across England. All at a low cost as it piggy backs on much of Urban Splash’s existing infrastructure ”
The fund will target dividends of 3% per annum and pursue capital and rental growth; The intention is to fully deploy the initial seed funding acquiring award-winning homes from the Urban Splash pipeline, then using modest debt and further fundraising to substantially grow the fund once a track record has been proven.