Several major investors bid for L&Q’s BTR scheme.
Morgan Stanley Real Estate Investing has emerged as the preferred party to buy L&Q’s build-to-rent residential portfolio.
The fund management arm of the U.S. banking giant is reported to have agreed to a price in the region of £1.1B, according to Green Street News, having fought off bids from Blackstone, Kennedy Wilson, Pelham Partners and LRC Group. Those parties all submitted offers above £1B around a month ago.
The deal highlights how, while development of BTR schemes has dropped sharply, there is capital looking to invest in existing assets because of strong expected rental growth.
The sale, codenamed Project Greenwich, consists of 3,147 homes across 52 schemes in and around London and is almost fully let. It is managed by L&Q subsidiary L&Q PRS, which trades as Metra Living.
L&Q’s private rented locations across London include Beam Park in Rainham, Rookery Grove in Hendon, Barking Riverside, Hayes Village and Queen’s Quarter in Croydon.
The housing association appointed adviser BNP Paribas to find a buyer for the portfolio in November last year in order to reinvest proceeds into its core affordable business and to improve fire safety standards across its properties.
MSREI is understood to be working with its UK-based partner Ridgeback on the Greenwich deal, which has a portfolio of more than 4,000 operational units, predominantly through its partnership with Canadian investment firm Alberta Investment Management Corp.
Morgan Stanley launched its latest global real estate opportunity fund, North Haven Real Estate Fund XI Global, in January. Its predecessor fund raised $3.1B of equity in 2021, and in February last year, MSREI agreed to an extension of its investment period by 12 months to give it more time to invest amid uncertain market conditions.
“We will seek opportunities to acquire, renovate or develop existing multifamily, single-family rental and student housing product in undersupplied housing markets,” it said of its investment strategy for 2025 at the start of the year.
Separately, London housing association Notting Hill Genesis has appointed Deloitte and Savills to offload £1B in stock owned by its Folio private rental business, having reported a deficit of £129M for 2024-2025 after being hit by losses to the value of private rental properties, new building safety costs, write-downs and cost overruns.