Grainger acquires Southampton build-to-rent development

The UK's largest listed residential landlord Grainger has unconditionally agreed to fund and acquire a 132 property build-to-rent development in Southampton from National Regional Property Group for roughly £27m.

Grainger's investment, made via its GRIP REIT joint venture with APG, a private rented sector investment vehicle focused on PRS investments in London and the South East, is expected to generate a gross yield of over 6.5% once stabilised, with completion of the project expected in late 2020.

The FTSE 250 real estate firm referred to the project in Southampton, becoming a city known for its property investment attractions after Health Secretary Jeremy Hunt's recently bought several apartments, as a "highly attractive investment" given its central location and its strong future prospects, well aligned to GRIP REIT's predominantly London and South East investment focus.

In addition to its share of the rental income, Grainger will receive management fees, supplementing its overall returns.

Grainger is the property, asset and development manager for the real estate investment trust, which it holds 25%, while the remaining 75% is owned by APG.

Helen Gordon, Grainger's chief executive, said, "Today's acquisition is confirmation of our ability to continue to source new and exciting PRS investment opportunities in attractive locations with compelling returns. Southampton is a target location for Grainger and this scheme on East Street will deliver 132 new high quality, purpose-built rental homes and will allow us to utilise our operational base in Hampshire and provide our customers with great service and a great property to live in."

As of 0830 BST, Grainger shares had ticked up 0.13% to 316.80p.