Hearthstone Investments, the specialist residential property fund manager, has acquired residential property in a major regeneration development in Wembley for its TM Hearthstone UK Residential Property Fund from Quintain Estates and Development PLC. Approximately £1.5m of the purchase price will be cash consideration with the remainder delivered via redeemable units in the Hearthstone fund.
The agreement will see the fund acquire 34 tenanted residential properties in the Quadrant Court development, located in the regeneration area of Wembley. These properties, which are fully let, will be leased back to Quintain for an initial fixed period, providing certainty of income for the Fund.
The deal with Quintain marks the third deal with a major developer or UK housebuilder since the launch of the TM Hearthstone UK Residential Property Fund in July 2012, following agreements with Barratt Developments and Bovis Homes. A total of £45m of staged seed capital has now been secured from housebuilders and developers, in a diverse spread of new and recently constructed assets, half of which are located in London and the South East.
The deal follows closely on the heels of a £20m investment in the fund from Islington Council’s pension fund, announced in November and completed earlier this month. The fund intends to acquire further assets in London, which constitutes approximately 25% of the fund’s overall allocation to residential property, and the fund’s focus on family housing should ensure a boost in the supply of rented accommodation within the capital.
The TM Hearthstone UK Residential Property Fund is the first FSA authorised residential property fund. It is eligible for tax-efficient wrappers such as ISAs and SIPPs with a minimum investment of £1,000, and is available to both retail and institutional investors.
Commenting on the partnership, Christopher Down, founder and Chief Executive of
Hearthstone, said: “We’re very pleased to announce this deal with Quintain. The properties at Wembley will provide part of our fund’s property weighting for London as well as a strong and stable rental income. The completion of the transaction also highlights the growing industry confidence in the UK’s first FSA authorised residential PAIF, launched by Hearthstone late last year. ”
“The development of this fund is part of our goal to change the way the UK invests in this £4trn asset class. Professionally managed, FSA regulated funds like ours will be crucial in channelling mainstream investment toward housing, whether that be from individuals looking to put residential in their ISA or SIPP or institutional pension funds seeking stable, long-term returns from an asset class with historically low volatility.”
Richard Stearn, Finance Director of Quintain said:
“Quintain is delighted with the confidence this transaction demonstrates in the Wembley scheme, where rental prices are an average of 20% above equivalent properties in the surrounding area. The Company is pleased to support the development of the professional private rental sector while continuing to reduce net debt in line with our stated strategy.