Grainger plc has agreed to forward fund and acquire a 259-home Build to Rent development in Derby for c.£37.4m. Located on Victoria Street within close proximity to the town centre, the scheme is part of St James Securities wider mixed-use regeneration of the Becketwell area in Derby city centre.
This is Grainger’s first investment in the city of Derby, which the operator identified for its strong market fundamentals as a location with deep rental demand and strong economic growth prospects. Derby is a target city within Grainger’s national Build to Rent and PRS investment strategy.
The transaction is subject to the satisfaction of certain conditions which are expected to be met in the next few weeks. The transaction will become unconditional and then considered fully secured. Construction is expected to start shortly thereafter, with completion targeted for H2 2023. GMI Construction Limited has been appointed as the contractor for the Becketwell area scheme.
Grainger expects this investment to generate a gross yield on cost of c.7% once stabilised. This is a highly attractive investment opportunity which meets Grainger’s strict investment criteria and will further boost the company’s investments in the Midlands.
The new Becketwell area investment also generates further economies of scale in conjunction with Grainger’s other Midlands scheme – Queens Road, Nottingham, which the operator acquired early last year (2020). Across both schemes, Grainger will have 607 rental homes in the area.
“This acquisition in Derby is an exciting addition to our growing portfolio of high-quality rental homes in the Midlands, and our first scheme in Derby, a city which meets our strict investment criteria. Demand for high-quality rental homes in the city continues to grow, and this scheme will add greater scale to our Midlands cluster, improving our ability to drive efficiencies while delivering a great service to our customers.”Helen Gordon, Chief Executive, Grainger