£40m forward funding announced for Hughes House BTR scheme

BMO REP invests £40m forward funding for Hughes House Build to Rent scheme in Liverpool for BMO UK Housing Fund.

Hughes House Build to Rent scheme in Liverpool - BMO UK Housing Fund | BTR News
Hughes House Build to Rent scheme in Liverpool.

The BMO UK Housing Fund (the Fund) completes on the acquisition of Hughes House – a Build to Rent scheme in Liverpool city centre, through a £40m forward funding agreement, signalling the first round of deployment for the Fund.

The agreement will provide 258 new Build to Rent homes for the city. Once complete Hughes House will comprise 144 one-bedroom apartments, 99 two-bedroom apartments and 15 studio apartments. The scheme will operate Home Group’s innovative flexible rent leasing mechanism, which provides a flexible mix of market rent and discounted rent units. Home Group Developments sourced the project and is the main developer working with UK Land and Property and Equans (part of ENGIE Group) to build out the scheme. Allsop also supported the transaction and CBRE are the valuers. 

“We’re proud to utilise our responsible investment credentials in partnership with Home Group to promote private capital’s role in delivering and operating long term rental properties for local key workers. It is also important that while this Fund has clear social objectives it aligns to our philosophy of creating sustainable real estate by also prioritising environmental considerations and promoting sustainable living, ultimately creating thriving communities for the long term and supporting income generation for our clients.”

Richard Kirby, Head of UK, BMO Real Estate Partners

Hughes House is located on London Road and sits within the local regeneration and employment initiative known as the Knowledge Quarter & Fabric Quarter, which are offering wider community and built environment improvements with good access to outdoor pursuits and open green spaces.

The location of Hughes House is also ideal for those residents working for some of the largest key worker employers in the city – with the Royal University of Liverpool Hospital as well as both Liverpool John Moores University and The University of Liverpool all within walking distance, in addition to city centre workers. The scheme also has strong access to transport links with Lime Street Station a six-minute walk away.

“This acquisition provides us with an opportunity to support the delivery of affordable private rental housing in Liverpool while also generating sustainable, inflation-linked long term income returns for investors. The scheme will enable us to satisfy local demand, particularly from key workers employed within the local authority, city centre hospitals and nearby universities.

“We expect to follow up this acquisition with a further pipeline of near-term opportunities as we continue to support the delivery of affordable housing solutions across the UK.”

Peter Lowe, Fund Manager, BMO Real Estate Partners – the investment advisor to the Fund

The Fund aims to address a distinct gap in the UK housing market by delivering high quality, sustainable, community based rental property. Hughes House is targeted at low to middle income households whose needs are not currently being met by the existing private rental sector. The Fund’s investment strategy is focused on local housing needs and will invest across house types including city apartments and suburban housing.

“The current failings of the private rented sector are widely documented: unaffordability, poor quality, insecurity of tenure, to name just a few. An essential part of solving the housing crisis is tackling the problems experienced by tenants and improving the quality and range of choice of housing options available to people living in the PRS. The Flexible Rent model has the potential to contribute to this through the delivery of new professionally managed affordable rental homes, expanding the current Build to Rent offering to a wider market.

“Social impact investment seeks to connect capital with social sector organisations achieving impact; this strategy brings together a unique partnership between BMO Real Estate Partners and Home Group, a housing association with a strong social mission and demonstrated track record of delivering affordable homes and tests an innovative and impactful housing rental model.”

Wren Laing, Investment Director, Big Society Capital

BMO UK Housing Fund

The objective of the Fund is to innovate and improve the private rented sector in the UK and become a trusted partner of stakeholders – investors, residents, partners, local authorities and communities. The Fund is targeting a 6% plus return and circa 4.5% annual distribution yield, and is governed by a progressive social agenda, aligning with rigorous ESG and impact investment objectives, which has attracted investors including Big Society Capital and Swansea LGPS. Acknowledging the requirement for a focused long-term solution to the UK housing shortage, the Fund is open ended and has also been seeded by BMO Real Estate Partners and Home Group.