Elsewhere, the fund is looking at opportunities to explore a new rental model at Port Loop, a waterside community being created by the same developer in Birmingham.
The acquisitions will take the fund’s total portfolio to 240 homes across the country, meaning the business has doubled in size every two years, ‘with a clear investment and fundraising strategy’.
At present, it has committed equity of approximately £40 million, with a portfolio generating a gross yield of 7.8% and net yield of 5.5%. The fund also says it currently has no debt.
“We are delighted to have expanded our portfolio once more, with a high-quality range of homes in growing urban communities,” fund manager Akeel Malik said.
“We are acutely aware of what investors – and ultimately renters – want from modern homes, and we have great confidence in the calibre of House by Urban Splash properties which are cutting-edge, sustainable, and appealing to so many different residents.”
House by Urban Splash demerged from Urban Splash in 2019 in one of the industry’s biggest ever details, which attracted investment of £90 million from the world’s biggest housebuilder, Sekisui House, and Homes England. Since the deal,
The business has continued to grow since the deal, creating its sustainable new homes using MMC – with each being built in the House by Urban Splash factory.
Its forward pipeline now stands at around £800 million worth of properties, something the fund will have first access to thanks to the newly signed MoU.
“We are delighted to complete this deal – part of our long-term strategy to provide houses for sale, as well as homes for affordable and market rent to create great mixed communities,” Simon Gawthorpe, chief executive of House by Urban Splash, commented.
“We are looking forward to working with USR on future sites including the new town of Northstowe in Cambridgeshire, Grappenhall Woods in Warrington, and the ongoing regeneration of New Islington and Port Loop.”
Another of the fund’s main priorities is to invest in homes with green credentials, something it says it has achieved with these homes. Among them is a core of House by Urban Splash Mansion House apartments, a ‘cutting-edge new building’ created using sustainable cross laminated timber (CLT).
“Our portfolio is the perfect proposition for investors, with great green credentials, bar-raising design, and the appeal of the broader neighbourhood - areas which have been transformed into some of the best places in the UK to live, work and play,” Malik added.
“We are delighted to invest in these communities, with assets which will further strengthen our nationwide portfolio.”
USR says it provides investors with the opportunity to invest alongside the award-winning developer to build a branded, institutional-quality portfolio of UK private rented sector (PRS) properties. John Forbes, its chair, concluded: “I have been delighted with the rapid progress that USR has made and I have enjoyed working with the fund’s management team and House by Urban Splash to develop this into a market-leading residential fund.”
He added: “The initial seed portfolio has now grown to £40 million, with annual returns to date consistently exceeding our 10% target. We are in active discussions with institutional investors and our aim is to establish the fund as a permanent capital vehicle, scaling the portfolio to £1 billion-plus and being one of the most successful residential funds in the UK.”
Fortwell provides £30m loan for new 28-storey South Central tower in Birmingham
Fortwell Capital, a leading lender to developers and investors in the UK property sector, has provided a £30 million loan to Essex Street (Properties) Ltd, a UK-based property development company, to support the construction of South Central, a new 28 storey residential tower in central Birmingham.
The development, which stands at 88 metres tall, is set to deliver 154 purpose-built apartments for private sale in a ‘striking’ new building on the corner of Bristol Street and Essex Street.
The building is well located in the heart of Birmingham’s prominent Southside District, on the edge of the city’s Chinese Quarter and a short walk from Birmingham’s Grand Central, Bullring and New Street station.
Fortwell says the latest deal continues its strategy of targeting high-spec residential and commercial schemes in key regional cities, where there has been accelerated demand for contemporary living. Developed to ‘match the growing demand of Birmingham’s younger residential market’, South Central is described as a community living project, incorporating ‘low carbon design features, outstanding communal spaces and a range of leisure and lifestyle amenities for the post-Covid world’.
The experienced team behind the project has previously successfully delivered Bank Towers I and II, two of the tallest residential towers in the city, on Birmingham’s iconic Broad Street. The lender says this latest deal highlights Fortwell’s appetite for working with experienced sponsors to bring forward high-quality new developments.
It recently extended its credit line with Cain International from £400 million to £500 million and says it remains ‘agile’ in its growth strategy, upping its funding activity with a strong pipeline of deals across all asset classes in the UK and Ireland that are set to complete in the coming months.
LEXI Finance, a fast-growing financial consultancy for the property industry, carried out the tendering process on behalf of the developer and ‘fully met their requirements by securing a fully funded construction facility’. This is the latest transaction of note advised upon by LEXI, keeping the company on course to surpass £250 million of structured finance by year end.
The scheme will be delivered by contractor Wates Group, having already successfully delivered both Bank projects.
“The loan represents an opportunity to support the delivery of a first-class residential development in a key commercial area,” Nick White, associate director at Fortwell Capital, said.
“The team behind South Central has a clear vision for the scheme underpinned by their development expertise and understanding of the evolving demands of the local market. It’s an exciting time to be lending into Birmingham on schemes like South Central, which offers a range of exceptional accommodation aligned with the long-term growth prospects of the city.”
He added: “We are grateful to LEXI for the introduction and their role in the negotiation between multiple stakeholders.”
Charlie Armstrong, co-founder at LEXI Finance, added: “This is another statement piece from the team behind the Bank towers, cementing their legacy in the city and their impact on Birmingham’s skyline. This track record, along with the strength of the counterparties and the quality of the design, made the project very appealing to the debt market.”
He went on: “After conducting a competitive tender process, Fortwell offered the most compelling terms and remained pragmatic throughout, particularly given international stakeholder involvement. Our thanks to all involved.”
Mark Holbeche, of Essex Street (Properties) Ltd, said Birmingham’s development landscape is shifting towards ‘true city living’, and the funding from Fortwell will enable its ‘experienced and agile team’ to continue to play a key role in this shift.
“LEXI Finance managed the process from initial finance tender through to completion faultlessly, and we’re very grateful to Charlie specifically for establishing this new partnership,” Holbeche added.
“The Fortwell team has demonstrated professionalism and agility throughout this transaction with an understanding of the regional market and our objectives. Now we turn our focus to bringing another new residential landmark to the heart of Birmingham and welcoming Fortwell’s expertise to support the delivery of our vision. We also look ahead to bringing a pipeline of further exemplary schemes to the Birmingham marketplace.”