The High Street Group raises £100m in BTR push
The High Street Group has raised £100m from institutional and professional investors to fund its pipeline of build-to-rent and rooftop extension developments.
The lion’s share of finance came from family offices in Dubai and the UK, and a corporate bank in South Korea.
Gary Forrest, founder and chair at the High Street Group, said “We had a large chunk of institutional money and other offers that we haven’t taken up because we filled the target.”
The High Street Group has raised £100m from institutional and professional investors to fund its pipeline of build-to-rent and rooftop extension developments.
The lion’s share of finance came from family offices in Dubai and the UK, and a corporate bank in South Korea.
Gary Forrest, founder and chair at the High Street Group, said “We had a large chunk of institutional money and other offers that we haven’t taken up because we filled the target.”
The Newcastle-based developer launched a seven-year loan note promising returns of 12% in the first year, with annual increases up to 22% in the seventh year last September. It means who leave their investment in and compound the interest more than treble their money over the full period.
It will invest the £100m in a pipeline of developments in the regions, with a focus on the North East, as well as rooftop developments in London, under the newly acquired First Penthouse.
The acquisition and development process will be managed by its rental arm, High Street Residential. The HSG is also in advanced talks to acquire a management company to operate the BTR flats on behalf of institutional funds.
Forrest said: “We have a big pipeline of sites to work through and the acquisition of a management company to support it.
“This year will be a year of stabilisation and consolidation. We want to demonstrate that we deliver on these on time and on budget.”
High Street Residential buys land, revises planning permissions and sells the bulk of schemes under forward-funding agreements into the institutional market.
Its first BTR deal was the acquisition and subsequent forward-funding sale of Silbury Boulevard in Milton Keynes, Buckinghamshire, to Grainger in 2017. The site will complete this summer.
The HSG’s second scheme Hadrian’s Tower (pictured) in Newcastle will be the first development it will operate on behalf of investors, offering an evolved product complete with concierge service, a rooftop champagne lounge and an app that lets residents order meals to their rooms.
HSR currently has £460m worth of schemes under construction around Newcastle, Birmingham, Edinburgh and Manchester, and a pipeline in excess of £1.4bn.
The developer targets schemes of 100-300 homes, with an investment value of £10-50m, anticipating gross yields of 6.5-7.5%.
Forrest said: “We are looking at any major town or city where there’s a regeneration story.
“There is a premium for well-located land in areas of regeneration in towns and cities on the outskirts. We’re working hard on opportunities where you are close to the town centres, have all the services, transport and schools. You might not be able to sell houses very quickly, but you can rent them all day long.”
HSG has also identified 25 rooftop schemes for investment, with an end value of £88m.
Forrest said: “London is a fantastic area to do because you are building penthouse apartments and increasing the housing without the cost of land.”
He added: “There’s lots of opportunity, it’s about having the capital to take advantage of it.”
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