Lloyds Banking Group’s housing impact investment fund has acquired a new 397-bed purpose-built student accommodation (PBSA) development in Stratford, in a deal valued at nearly £300m. The Housing Growth Partnership (HGP), a joint venture between Lloyds and Homes England, was established to increase the supply of affordable housing.
The forward purchase from Watkin Jones, one of the UK’s leading build-to-rent specialists, marks the first transaction between the two parties. The innovative structure of the deal will see receipts spread across the scheme’s three-year development.
A new joint venture has been created, with HGP owning 75 percent and Watkin Jones owning 25 percent. The initial contribution from the transaction is already reflected in Watkins Jones’ guidance for the year.
This deal signifies a change in fortunes for the build-to-rent specialist, which, like many in its sector, has struggled with inflationary pressures and a higher rate environment over the past two years.
The share price of Watkin Jones has plummeted by over 75 percent in the two years since August 2022, and it reported a loss of £43m in 2023 due to expensive building safety updates. However, in May, the company announced a return to profit, thanks to the effects of a radical restructuring plan under new boss Alex Pease, who took up his role permanently in November last year, as reported by City AM.
On the collaboration with HGP, Pease commented: “We are pleased to collaborate for the first time with Housing Growth Partnership on this exciting development. The innovative nature of the transaction underlines Watkin Jones’ ability to find attractive structuring solutions for our institutional partners.”
“While we remain encouraged by signs that confidence is returning to our residential for rent funding markets, this is tempered by continued uncertainty around the trajectory of interest rate cuts. We, nevertheless, have a number of schemes in the market which are generating good levels of interest.”
