Berkeley to launch BTR platform amid profit decline
Berkeley Group has set out plans to launch its own build-to-rent platform, as it posted a decline in pretax profit for the year ending 30 April citing a “challenging and volatile” market.
The housebuilder said it was making the foray into BTR to maximise returns “in today’s market conditions” from its long-term regeneration sites.
It has identified capacity for some 4,000 new homes across 17 of its brownfield urban regeneration developments. Berkeley said it would develop the portfolio over the next decade.
Berkeley Group has set out plans to launch its own build-to-rent platform, as it posted a decline in pretax profit for the year ending 30 April citing a “challenging and volatile” market.
The housebuilder said it was making the foray into BTR to maximise returns “in today’s market conditions” from its long-term regeneration sites.
It has identified capacity for some 4,000 new homes across 17 of its brownfield urban regeneration developments. Berkeley said it would develop the portfolio over the next decade.
Berkeley estimated that the platform would represent a 10% increase in housing delivery.
Establishment of the portfolio will be financed by a combination of internally generated funds, debt secured against rental properties once income-generating, and the introduction of third-party capital “at the appropriate time”.
“There is strong, unsatisfied demand for quality residential rental property built at scale in and around London – the country’s most under-supplied market – from institutional capital, which is attracted to its inflation-correlated attributes,” said the housebuilder.
“Having sold over 1,000 homes across five sites in the last three years to institutional investors on a forward commitment basis, we now believe that adopting a more strategic route to this market will drive best value for these assets by creating a portfolio of scale, professionally managed, with proven income levels stabilised prior to disposal.
“With strong demand and a systemic under-supply of high-quality homes to rent in and around London, upward pressure on rents is forecast to remain. We will be locking in build costs early in the investment cycle and with yields linked to long-term interest rates, there is strong potential to drive value accretion over the next 10 years, as well as incremental income while the properties in the portfolio remain owned by Berkeley.”
The news comes after pretax profit at the housebuilder fell by 7.7% to £557.3m in the year ending 30 April, amid the market slowdown. Net asset value per share grew by 2.6% to £33.63.
Some 87% of the 3,521 homes delivered by Berkeley during the year were on brownfield land.
