Birmingham city centre residential scheme sold in £2.2m deal
A STALLED development scheme in Birmingham’s Southside district has been acquired by a property trust in a deal worth £2.2m.
Alpha Real Trust has acquired the Unity and Armouries site, which is split between Lower Essex Street and Bromsgrove Street, with a view to developing a new residential scheme.
The site comes with permission for 162 apartments with additional consent for 90,000 net developable square feet of residential apartments with ground floor commercial. The site has no outstanding Section 106/Community Infrastructure Levy requirements and has an affordable unit designation for nine flats. Current planning provides for 395sqm of commercial space and 98 car parking spaces.
The site has been derelict for many years, the Unity House building was being maintained by the previous developer and owner in order to retain the external walls of the building, which used to be the Rose and Crown pub before it was converted in the 1950s into a building housing several trade unions – hence its name.
The building although not listed nationally was like many in this part of the city, recognised as having local value.
Alpha said the investment targeted the increasing growth opportunities identified in the Private Rental Sector as a result of rising occupier demand and an undersupply of accommodation.
“The opportunity exists to create a portfolio delivering a high yielding return on equity in a geared portfolio of assets with resilient income,” said ART in its acquisition statement.
The site, which was purchased from the trust’s cash reserves, could deliver a potential gross development value in excess of £25m.
“Post development, the investment can create an opportunity for resilient equity income returns at an attractive yield on cost, with potential for operating leverage to further improve returns. The investment also offers scope to secure capital growth as the site matures or planning is enhanced. The securing of a portfolio of critical mass will afford participation in a maturing market which is attracting greater institutional participation,” said ART.
It added that the investment offered the company the flexibility to add value by either undertaking the development with debt or contractor finance and subsequently holding the completed asset as an investment or forward selling all or part of the developed units.
ART may also potentially benefit from the government support for borrowings securing PRS assets under the private rented sector housing guarantee scheme.
The company cited the massive regeneration taking place in the city centre as one of the reasons why the completed scheme could be popular.
The site is close to the Bullring shopping centre and the new Grand Central development at New Street Station.
The company said inward investment by the likes of HSBC and Deutsche Bank, together with the HS2 head office, was likely to enhance demand for residential accommodation close to the business district.
