Grainger forward funds Guildford station scheme

Grainger has agreed to forward-fund and acquire a 98-home private rented sector (PRS) development at Guildford Station in Surrey, it announced on Tuesday, for £37m.

The FTSE 250 company said the developer was Solum Regeneration - a joint venture between Network Rail and Kier.

It said the investment would build on its cluster of PRS investments nearby in Hampshire, adding that it is located next to the “extensive” transport links provided by Guildford railway station.

The scheme would form part of the wider £150m station redevelopment scheme, which would comprise £25m of station improvements, around 440 new homes in total, a 412 space multi-story car park, 36,000 square feet of retail space, and about 20,200 square feet of office space.

Grainger said Guildford had “strong” rental market fundamentals, adding that it was home to a number of major corporate employers including Barclays, Philips Electronics and Sony, but currently had no existing professionally-run build-to-rent housing.

With an estimated 44% of the population in rental accommodation, the scheme was expected to be in high demand amongst local renters.

Grainger said the transaction remained subject to several conditions, explaining that once those had been satisfied and the transaction unconditional, expected in mid-2021, construction would commence.

The company said it was expecting the investment to generate a gross yield on cost approaching 5.5% once stabilised, with completion anticipated in early 2023.

That, it explained, was a “highly attractive” investment opportunity which met its disciplined investment criteria.

“Today's acquisition in Guildford is an exciting addition to our growing portfolio of high-quality rental homes across the country,” said chief executive officer Helen Gordon.

“Demand for renting in areas like Guildford continues to grow, and this scheme will add to our cluster of nearby assets in Hampshire which will stand at over 300 rental homes, improving our ability to drive efficiencies while delivering a great service to our customers.”

At 0910 BST, shares in Grainger were down 0.14% at 290.8p.