CDL Hospitality Trusts announced it is acquiring a piece of land from a developer, Packaged Living LLP, for £9.5 million ($17.6 million) in Manchester, to develop into a 236,900 sq ft build-to-rent (BTR) property, The Castings, with 352 apartments. The transaction will be done via a forward-funding scheme. After paying the initial £9.5 million, CDLHT wll pay a sum of £58.2 million, periodically to the vendor, based on progressive construction costs incurred under the Development Funding Agreement Balancing Payment. Approximately £5.6 million to be paid to Vendor shortly after practical completion which takes place in May 2024.
The cost of the property including construction is likely to be no more than £73.3 million ($136 million). Based on this, the net property income yield on a stabilised basis is likely to be 5.1%, and accretion to distribution per security is likely to be 2.2%.
“We chose a forward funding deal because of a dearth of completed projects out there. We like the location and demographics and Manchester is one of the fastest growth cities in Europe,” says Vincent Yeo, CEO of CDLHT’s manager. According to him, young professionals are likely to say in BTR, in the 25 to 34 age group. Average length of stay is about a year.
At any rate, the rental housing market has been quite strong in the UK, even through Covid, beause the house price to income ratio has risen sharply since the global financial crisis.
“The location is very good. It’s a nine minute walk to Manchester Picadilly Station, where all the trains come and go from other parts of the UK. In 2035 when the High Speed Rail is ready, you have a connection to London in 1 hour 7 minutes. The master plan for the area is also very exciting,” Yeo says. The property will be CDLHT’s second property in Manchester after The Lowry Hotel.
Photo credit: CDL Hospitality Trusts
