Chicago's LaSalle Buys 270 Rental Units in U.K.
13 January 2016 - 2:28AM
Dow Jones News
By Art Patnaude
U.S. real-estate investor LaSalle Investment Management has
struck two U.K. rental apartment deals in its latest step toward
becoming one of the country's biggest owners of multifamily
properties.
Chicago-based LaSalle said Tuesday it bought a total of 270
multifamily units in London and Leeds for a combined GBP55 million
($79 million). The firm has now invested GBP115 million in 562 U.K.
apartments specifically built to rent since making its first
acquisition last summer.
The multifamily sector in Britain is still in a nascent stage.
Small landlords with a handful of homes dominate the rental market.
But a decadeslong effort to institutionalize the fragmented sector
is gaining traction.
A decade ago, there were practically no purpose-built rental
homes here. These typically have amenities like concierge services
or gyms. Now there are over 23,080 either completed, under
construction or in the planning process, according to the British
Property Federation, an industry group.
"In the U.S. it's a fully-established sector. We see no reason
why that can't happen in the U.K.," said Andrew Stanford, U.K.
residential fund manager at LaSalle. "It's certainly been a long
time coming."
One major driver: More British people are renting. In the past
few years, buying homes has been increasingly unaffordable as house
prices moved higher, outstripping wage growth.
Investor demand for less-developed parts of the real-estate
market, from industrial warehouses to student housing, is also
playing a role. Demand for property has pushed up prices around the
world, as returns on property investment appear attractive because
interest rates remain low.
Lasalle bought 87 apartments in the Rathbone Market
redevelopment in East London for GBP30 million from the English
Cities Fund, created by the U.K. government to spur private-rented
sector investment. The gross-initial yield was 5.2%.
In Leeds, the firm bought Waterside Apartments from U.S.
private-equity firm CarVal Investors LLC for GBP25 million at a
gross-initial yield of 6.7%. The 2008-built blocks have 183 one and
two-bedroom apartments.
LaSalle has around $5 billion of residential assets under
management globally. It plans to invest GBP500 million in the U.K.
multifamily sector "within the next few years" on behalf of its
institutional clients, Mr. Standford said.
Write to Art Patnaude at art.patnaude@wsj.com
(END) Dow Jones Newswires
January 12, 2016 10:13 ET (15:13 GMT)
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