Bouygues Development Ltd. (‘Bouygues’), part of Bouygues Group, one of the world’s leading construction and services group, and Grainger plc (‘Grainger’), the UK’s largest listed residential landlord, today announce the creation of and their co-investment in a new Build-To-Let Fund (‘the Bouygues & Grainger Fund’ or ‘the Fund’). The Fund will provide institutional investors with the opportunity to invest in scale into the Private Rented Sector (‘PRS’) which to date has been relatively inaccessible.
The Fund is unique in that it has a dedicated portfolio of purpose built PRS development sites in London and South East of England.
The development sites are expected to provide over 1,000 residential assets on completion. The assets will be developed and built out by Bouygues in phases over circa three and a half years, with construction expected to begin in Q1 2012 and the first units expected to complete in Q4 2013. Bouygues will manage the investment and construction process, while Grainger will undertake the operation of the portfolio after completion, including property management, lettings, facility management, and fund and asset management.
The Fund benefits from an exclusive pipeline of projects developed by Bouygues Development, and offers investors the opportunity to acquire the sites at cost, which will enable the Fund to deliver superior returns. The Fund aims to provide an attractive coupon based return over the development and investment stages, and a return based on capital appreciation.
The Fund has been created with an eight year life, with an option to extend it by up to three years. Bouygues and Grainger will co-invest into the Fund upfront, and seek additional equity investment from institutional investors, totalling up to £150m.
The Bouygues & Grainger Fund is primarily designed to capitalise on the appetite of UK and overseas investors to put long term money directly into residential property in London and the South East. The Fund is also strongly aligned with the UK Government’s plans to increase the number of new homes being built, and the Housing Minister's public land initiative.
Nick Jopling, Executive Property Director, Grainger plc, and long-time advocate of purpose built residential building in the UK, said:
““The new partnership with Bouygues to set up the Bouygues & Grainger Fund and deliver new private rental buildings by 2013 represents a very exciting opportunity for Grainger. Although the Fund is at a very early stage this represents a significant milestone in the evolution of the UK residential property sector and today’s announcement is a major step toward creating a large scale, attractive and accessible private rented sector in the UK, for both investors and tenants alike.”
Madani Sow, Chairman, Bouygues Development, said:
“The alliance between Bouygues and Grainger is a great achievement and demonstrates to the UK residential market our willingness to establish the private rented sector as a new asset class that will address the huge housing demand in the country. Together we cover the full spectrum of expertise required by the financial institutions and we are glad to announce that some projects are already available for the Bouygues & Grainger Fund.”
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For further information, please contact:
Bouygues Development
Justine Williams
Tel: +4402074010035
Grainger plc
FTI Consulting
Nick Jopling / Kurt Mueller Dido Laurimore/Stephanie Highett/Will Henderson
Tel: +4402077954700
Tel: +4401912611819 Tel: +4402078313113
Notes to Editors
Bouygues Development Ltd
- Bouygues is a diversified French industrial group listed on the Paris Stock Exchange. Its businesses focus on two sectors, Construction (Bouygues Construction, one of the largest construction companies in the world) and Telecoms/Media.
- Bouygues employs 133,000 people operating in 80 different countries and has annual sales in excess of £28bn. In the UK, Bouygues employs 6,500 people with a £1.3bn turnover and is growing year on year.
- Bouygues Development, the UK property development division of Bouygues, through its construction sister companies, Bouygues UK, Warings and Leadbitter is able to offer a fully integrated develop, design and build, service. Their highly skilled project management teams enable them to deliver projects to agreed time, cost and quality guarantees.
- Bouygues Development developed a large range of schemes from residential to commercial and have been very successful in regeneration or mixed use projects in England. Their current pipeline of housing projects is approaching 2,000 units.
Grainger plc
- Established in Newcastle in 1912, Grainger is the largest listed specialist residential landlord in the UK
- Grainger directly owns £2.4bn of property assets, with over £3bn under management, this translates into 40,800 properties being owned or managed in the UK and Germany
- Grainger is listed on the London Stock exchange and is a constituent of the FTSE 250 index
- Turnover for 2010 was £244.5m
- Grainger is currently the advisor and a co investor to the G:res fund which has a total of £199m of equity under management
Grainger has an expert knowledge of the UK residential market having been investors and managers for nearly a century. Their experience in the British letting market and with the G:res fund in particular, will be utilised to the benefit of the fund.