Telford Homes selects M&G and Invesco chosen as investment partners for future build to rent pipeline
London-focussed property developer Telford Homes has chosen Invesco Real Estate (Invesco) and M&G Real Estate (M&G) as its long-term strategic build to rent partners for forward fund transactions.
Telford Homes says the decision to select two partners in a process managed by Savills, was based on the high quality of all the potential partners in the final stage of the process and a desire to maximise its ability to enter individual forward fund transactions via the partnerships. Each investor has different criteria for what makes the optimum build to rent development and with two partners to work alongside Telford Homes says it is increasing its ability to bring more build to rent projects forward in line with its strategic priorities and the wider need for increased housing supply.
To have clarity and exclusivity when bidding with partners, M&G will be the Group’s priority partner for schemes including up to 200 build to rent homes and Invesco will have priority for more than 200. In capital value terms, 200 homes is likely to represent between GBP75 million and GBP100 million. Whilst both M&G and Invesco operate across a wider spectrum, the split at 200 homes fits well with their existing portfolios, ideal investment scale preferences and, in the case of M&G, the schemes we have undertaken with them to date. Both partners can step in to schemes should the other decide not to take an opportunity further.
Telford Homes believes that the partnerships with Invesco and M&G will lead to more efficient ways of buying land and designing bespoke build to rent schemes that match up with each investor’s requirements. We also expect to produce a standard set of documents for a forward fund development that will shorten and improve the contractual process for each transaction. It is anticipated that the strategic partnerships will provide excellent opportunities for Invesco and M&G and we expect to develop significant build to rent pipelines for both partners over the next few years.
Both Invesco and M&G have signed partnership agreements with Telford Homes for an initial three year period but with an expectation from all parties that the relationships will continue beyond this.
Jon Di-Stefano, Chief Executive Officer of Telford Homes, says: “We have been consistent in highlighting our desire to significantly increase our build to rent pipeline over the next few years. It is therefore a major step forward for us to announce that we have attracted these two extremely well-respected, experienced and ambitious institutional investors as long term dpartners. Furthermore it underlines our reputation as one of the build to rent developers of choice in London.”
“Rental demand is increasing in London but the supply of new homes is still constrained. New generations are demanding better quality amenities, a better level of service and more flexible tenancies, all of which are offered by the growing institutionally owned build to rent sector. These compelling market fundamentals and the opportunity to de-risk our future pipeline with reduced capital investment give us confidence that these partnerships will help accelerate our aim to deliver a significant increase in our output of build to rent homes across London.”
Alex Greaves, Head of Residential Investment at M&G Real Estate, adds: “We are delighted to formally cement what has been an excellent working relationship with Telford over the last three years. Commercialising the production of homes to rent at scale with a likeminded, high quality developer of rental stock, is another step closer to fulfilling M&G’s residential investment strategy. Telford Homes has been an early adopter of the sector and this is another example of how it adjusts its model today to focus on tomorrow’s customers and occupiers.”
John German, Managing Director of Residential Investments at Invesco Real Estate, says: “We are delighted that Telford Homes has chosen Invesco as a strategic investment partner for their projects in excess of 200 build to rent units across London. The alignment of our respective strategic objectives to both develop the UK build to rent sector and to seek to redress the supply/demand imbalance that exists today, makes for an exciting collaboration and we look forward to working closely with the Telford Homes team to deliver market leading projects. Our global institutional investors continue to believe in the fundamentals of the UK build to rent market and we still see an increasing appetite for the sector both in London and the wider UK market as it provides a key investment opportunity for a diversified investment portfolio.”
Andrew Brentnall, Head of Savills UK Residential Capital Markets, says: “It is a great pleasure to be able to support Telford’s growth ambitions in this sector as their corporate build to rent advisor. Unsurprisingly for a partner of Telford’s quality, we received considerable investor appetite from around the world, yet again demonstrating the significant capital capacity for supporting the delivery of much needed homes across London. We will continue to support Telford Homes, M&G and Invesco, to aid the success of the partnerships for the long term.”