Moorfield partners with Avan Homes in GBP20m sale & leaseback deal for 77 show homes

Moorfield Group, a UK real estate private equity fund manager acting on behalf of Moorfield Real Estate Fund IV (MREF IV), has acquired a 93,000 sq ft, 77 show home portfolio from privately-owned housebuilder Avant Homes for GBP20 million.

Located across the UK, the show homes have been immediately leased back to Avant Homes on an average three-year term. On expiry of the individual leases, Moorfield will either sell the homes on the open market, leveraging Avant Homes’ sales channels, or rent the homes to complement its existing build-to-rent activities.

The investment, one of the largest ever of its type in the UK, is in line with Moorfield’s strategy of identifying real estate which offers a strong income stream that is either immediate or can be generated from their expertise, in those sectors where there is an underlying supply/demand imbalance. The acquisition is a further example of Moorfield’s innovation in the residential sector where it currently invests in senior living (Audley), Build-to-Rent (More. Superenting) and student accommodation (Domain).
Moorfield Group and Avant Homes have previously worked together, with the former acquiring the developer’s Edinburgh city centre GBP750 million mixed-use Quartermile scheme in 2013 for an undisclosed sum. Both parties see this latest deal as paving the way for further strategic partnerships.
Charles Ferguson-Davie, Chief Investment Officer of Moorfield Group, says: “Despite the volatility caused by the COVID-19 pandemic, we remain convinced that the residential sector will continue to be a resilient asset class, providing ongoing opportunities to generate outperformance on behalf of our investors. We have pioneered investment into a range of residential use classes and this innovative transaction provides our investors with further diversification.”
Ross Netherway, Head of Origination at Moorfield Group, adds: “Through this investment we are cementing our relationship with one of the UK’s most dynamic and ambitious housebuilders. It is the first of what we hope will be a number of similar investments, assisting housebuilders that are seeking alternative ways to accelerate the delivery of new housing for sale and for rent across the UK.”
The portfolio’s two, three, four and five-bedroom detached and semi-detached show homes benefit from the developer’s design-led approach and commitment to outstanding levels of specification. This gives the properties distinctive open plan configurations and a variety and quality of specification that sets the homes apart.
Currently operating in Scotland, north east England, Yorkshire and the Midlands, Avant Homes has a turnover of GBP483 million, employs around 780 people and is committed to achieving further continued growth.
Avant Homes Chief Operating Officer, Mark Mitchell, says: “This is an excellent transaction for both businesses. We are very pleased to be working with Moorfield Group, having begun discussions at the start of this year.
“Covid-19 has presented the housebuilding industry with many challenges, which we have responded to dynamically, with the safety and wellbeing of our people as our first priority. Looking ahead, we remain committed to continuing to execute against our growth strategy, underpinned by the resilience and agility of our business, the excellence of our product and the commitment of our people.
“Moorfield Group’s investment is testament to their belief in our ability to continue to succeed. As part of our growth strategy, we are exploring a number of other opportunities with Moorfield Group and hope to be able to reveal more detail about what they are in due course.”
Moorfield Group was advised on the transaction by Cushman & Wakefield and Shoosmiths.