Patrizia Immobilien, the German-based real estate investment company, has made its first foray into the UK private rental sector (PRS) with the acquisition of the First Street site in Manchester which will spark the launch of a dedicated PRS fund.
Patrizia acquired the partially-developed site, which includes an 180,000 square foot office building, capacity for the development of up to 1 million square feet of office space and approximately 500 new apartments. A source close to the transaction said the development is expected to be valued at approximately £500 million ($779 million; €699 million) once it is completed.
The German firm intends to develop and own the apartments specifically as a build-to-let property, marking its maiden investment in UK PRS. This development will form the foundation of Patrizia’s plans for a dedicated PRS fund, building on the company’s significant European holdings in the sector, which already includes the management of 80,000 apartments valued at more than €7 billion.
Other assets recently completed at the site include a 208-bed Melia Innside hotel, nine bar and restaurant units, and 700 carpark spaces. Patrizia will develop offices and residential on the remainder of the site over the next five years to seven years.
“With this investment, our property assets under management in the UK now amount to more than £1 billion. Driven by attractive economic and demographic fundamentals in Manchester, and the growing trend for urbanisation, we are anticipating strong demand for this centrally located, high-quality accommodation which will be tailored to the private rental sector,” commented James Muir, managing director of Patrizia UK.
“Together with the new commercial buildings we expect to create an attractive investment opportunity for institutional investors. We see this project as an ideal first investment for our planned Patrizia UK PRS Fund.”
Patrizia currently employs 800 people with 90 percent of its €15 billion portfolio managed on behalf of third-parties such as insurance companies, pension fund institutions, sovereign wealth funds and savings banks.