Prime resi market receives £200m injection

Prime resi market receives £200m injection


A property investment company has announced that it has agreed a £200 million Joint Venture to target the Central London residential market.

London & Stamford Property PLC’s confidence in the Central London residential market has led it to agree a new Joint Venture with Green Park Investments, and another unidentified partner to buy homes in the capital, according to a report published yesterday.

London & Stamford, co-owner of one of the UK’s largest malls, will own 40 per cent of the venture and the other two partners will own 30 per cent respectively.

The group said it has seen weakening yields in non-prime property over the last year, but have seen prime yields sustained by significant availability and low cost of capital for investment in prime property.

The Joint Venture will be primed with £200 million of equity, funded by £80 million from London & Stamford and £120 million from the Joint Venture partners. London & Stamford said they are working, through solicitors, to acquire over £150 million of residential assets for the Joint Venture and are in advanced discussions with a number of undisclosed banks about loans with which to make the purchases.

The firm said in the report: "We continue to explore the possibility that ultimately our Central London Residential Joint Venture can become a residential REIT. Notwithstanding the changes in the draft Finance Bill 2012, which we consider to be helpful, discussions continue with HMRC on changes which we believe are still required to the legislation to allow us to invest efficiently, without adverse tax implications, as one REIT investing in another REIT.”

In July last year, the company completed the £25 million financing of the residential portfolio at The Stadium in Highbury Square.

The company’s Central London residential portfolio currently comprises of 266 units at Highbury, Bridges Wharf, Battersea and Clapham Road, Oval. 96 per cent of which are let.

London & Stamford’s underlying profit for the year up to March 31st rose by 60 per cent to £25.4 million from £15.9 million the year before.

In its outlook, London & Stamford said it is currently engaged in due diligence on a number of 'exciting opportunities', which, if successful, could involve around £300 million of new investment.

Raymond Mould, The Executive Chairman of London & Stamford Property Plc, said: "Our total firepower currently is c.£900 million and this puts London & Stamford in a very strong position in a market which we believe is offering increasingly exciting opportunities for investment in good quality assets with good covenants at reasonable prices.”

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