Newcastle’s Grainger buys £141m London scheme

Grainger CEO Helen Gordon

Newcastle-headquartered Grainger plc, the UK’s largest listed residential landlord, said on Thursday it has exchanged conditional contracts to forward fund and acquire Merrick Place, a 401-home build-to-rent development scheme in Southall, West London, for £141 million.

Proceeds from Grainger’s recent successful £206 million equity placing will help enable this acquisition.

Grainger also published a trading update in respect of its financial year ended September 30, 2021, reporting an “exceptional lettings performance in late H2 2021″ and “95% occupancy expected imminently.”

Grainger has 9,109 operational rental homes and a further 8,851 in its £2.1 billion pipeline.

On the acquisition, Grainger said: “In addition to the 401 PRS homes at Merrick Place, 18,116 sq ft of office space, 3,541 sq ft of flexible commercial floorspace, 5,253 sq ft of internal residents’ amenity and over 17,000 sq ft of external space is to be delivered.

Located adjacent to Southall Station, including the new Crossrail station, the scheme forms part of a wider development to be delivered by Network Homes with Henry Construction as the appointed contractor.

After the satisfaction of outstanding conditions which is expected shortly, including the Section 106 Agreement with the local authority, today’s transaction will become unconditional.

Construction of Merrick Place is expected to commence in December 2021, with practical completion targeted in mid-2025.

“It is anticipated that the scheme, including the commercial element, will generate a gross yield on cost of c.5.75% once fully let and stabilised.

“This is a highly attractive investment opportunity which meets Grainger’s disciplined investment criteria.

In line with Grainger’s cluster strategy, Merrick Place builds on Grainger’s existing West London portfolio, which includes Kew Bridge Court comprising c.100 homes.

“In addition, Grainger is pursuing Southall Sidings, a build-to-rent scheme of 460 homes which is located nearby to Merrick Place and recently received planning consent, and which forms part of Grainger’s partnership with TfL, via its Connected Living London JV.”

Grainger CEO Helen Gordon said: “We are pleased to work with Network Homes to bring forward Merrick Place to deliver 401 new, high quality, purpose built rental homes in Southall.

“Merrick Place is an excellent addition to our existing portfolio in and around West London and will benefit from both operational efficiencies and opening of Crossrail.

“This acquisition marks a further exciting investment for Grainger as we continue to deliver on our strategy in the fast-growing UK build-to-rent sector.”