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Rockspring, Atlas JV bags second UK PRS site

The pan-European property fund manager has bought the biggest private rental sector site in Birmingham, the UK’s second biggest city, with US residential specialist Atlas Residential.

Rockspring Property Investment Managers has acquired a private rental sector (PRS) development site, with its joint venture partner Atlas Residential, in Birmingham city center for £50 million ($73 million; €66 million)

The London-based firm has purchased The Beacon, a 174,000 square foot site, which is already under construction and due for completion in early 2018. It will comprise 334 apartments, with residential amenities including underground car parking, a gym and landscaped gardens.

The site is located adjacent to Birmingham’s major regeneration project, Smithfield, and a short walk from the Bullring, the city’s largest shopping center, and its busiest rail stations, Birmingham New Street and Grand Central.

Rockspring has bought the development on behalf of its sixth European-focused core plus/value add vehicle, TransEuropean (TEP) VI. The seller was Hallmark BY Development, itself a joint venture between Essex-based asset manager Hallmark Investments and London-based property firm Bouygues Development.

The deal marks Rockspring’s second foray into UK PRS investment following the acquisition of a 145,500 square foot development in Southampton in August 2015, which is also being undertaken in conjunction with Atlas.

Paul Hampton, Rockspring partner and fund director of TEP VI, said: “The acquisition and development of this PRS scheme is in line with TransEuropean’s strategy of participating in urban regeneration activity in certain key cities across both the UK and continental Europe.”

“We are actively looking to replicate this sort of transaction, not just in the UK but elsewhere in Europe where we see evidence of similar themes and trends,” he added.

UK PRS development has attracted significant interest among a number of real estate investment management houses which have been investing heavily into the sector as they try to take advantage of a lack of housing supply and exorbitant property prices.

To name but a few: Delancey with APG Asset Management and Qatari Diar; Realstar Group; Legal & General Capital, the principal investment division of UK insurer Legal & General; Patrizia Immobilien, the German-based real estate investment company; LaSalle Investment Management; and Apache Capital Partners, the London and Gulf-based private real estate investment management firm, are all trying to create their own PRS stock.

“This is an exciting time for Birmingham where we see a lot of potential emanating from socio-economic trends in the UK, with a number of high profile companies across a range of sectors, including the professional and financial services sectors, moving significant parts of their operations there,” said Hugh Elrington, Rockspring partner and head of UK transactions.

Chicago-based Atlas Residential, which has additional offices in Dallas and London, is one of the largest owners and operators of multifamily apartment properties in the United States. Its current US portfolio, which contains more than 18,000 units across 13 states, is worth approximately $1.3 billion.

Earlier this month, Rockspring held a fourth close on TEP VI, with a capital raise of €428.5 million, exceeding its original fundraising target of €400m. The fund, which is expected to close in July, has a €500m hard cap.

As of December 31, 2015, Rockspring had assets under management of €8.2 billion.