Prupim, the real estate investment management arm of M&G Investments, has acquired a £105.4m residential rental portfolio owned by the Berkeley Group and partially funded by the Homes and Communities Agency.
The portfolio consists of 534 private rental units in 13 locations across London, the South-east and southern England.
Prupim will manage the portfolio on completion in June 2013, with Berkeley becoming a minority co-investor. The day-to-day management of the homes will be carried out by Savills.
The properties were developed under the 2009 Private Rented Sector initiative, designed to bring in institutional investment. HCA funding was used to kick-start the project.
PRUPIM chief executive Alex Jeffrey said: “The expanding residential rental property market, particularly in London and southern England, is gaining in appeal for institutional investors.
“We believe that returns from the sector – which have historically outpaced commercial real estate – will continue to be attractive as demand increases.
“We expect the supply and demand dynamics of the residential property market in London and the South-east to remain favourable for investors, with continued strong demand for quality properties.
“For institutional investors, the challenge of the residential rental sector has been two-fold: can you acquire property in sufficient scale and how will you ensure the units are managed to a high standard?
“This deal meets both aspects of that challenge. We’re acquiring a diverse portfolio of high-quality properties, while Savills contributes its considerable experience of the day-to-day management of rental homes.
“This is the sort of portfolio that would fit well within a fund dedicated to the rental sector.”
The properties were developed under the 2009 Private Rented Sector Initiative, a scheme designed to attract more institutional investment to the UK housing market.
Housing developer Berkeley and the HCA collaborated on the construction in August 2010, using HCA funding to kick-start the development.
HCA interim CEO Richard Hill said: “This exciting deal, with a company as highly regarded as PRUPIM, demonstrates the long-term benefits that can be realised by investing in the private rented sector.”
Berkeley Group managing director Rob Perrins said: “The Private Rented Initiative was a pioneering way to provide high-quality, professionally managed and affordable rented homes across London and the South-east.
“This announcement is an excellent example of a public and private partnership working together to deliver against an ambition to attract long-term institutional funding into the private rented sector.”