L&G puts Manchester’s North Tower up for sale
The investor is seeking a buyer for the 38-storey build-to-rent skyscraper, one of two it owns within the 1,600-apartment Deansgate Square scheme.
L&G bought the 276-apartment North Tower in 2020, two years after acquiring the 44-storey West Tower.
Three years on, the investor has instructed CBRE to find a buyer for the asset, which boasts “visual prominence, enviable views, and unparalleled amenity”, according to marketing materials.
The sale of North Tower represents an opportunity to acquire a BTR scheme within the cluster of buildings that redefined Manchester’s skyline, not to mention one that generates around £7.4m in rent annually.
Given that Manchester’s BTR market is still in its infancy, there is relatively little to go on in terms of comparable deals that might give some kind of steer as to how much an investor might have to pay for North Tower.
In April 2022, Swiss Life Asset Managers entered the UK residential market, acquiring the 270-apartment Duet at Salford Quays from Moorfield Group for £74m, reflecting a net initial yield of 3.54%.
Barings acquired Trilogy in September 2021 for £55m, a NIY of 4%.
The North Tower deal will give an indication of how the market has fared during the economic upheaval of the last 18 months.
Manchester’s growing population, coupled with a lack of supply, could make North Tower an attractive prospect for would-be investors. If recent trends are to continue, there is also scope for rental growth over the coming years.
In the last 24 months, rents have risen 42% in the city centre and could increase by another 26% between now and 2027, according to CBRE.
Rents within the building currently range from £1,375 to £8,315, according to marketing materials.
The SimpsonHaugh-designed scheme has an EPC B rating and boasts 92,000 sq ft of shared amenity space.
L&G and CBRE were contacted for comment.
A spokesperson from L&G said: “We can confirm we are selling the North Tower at Deansgate Square in Manchester following the successful completion of the joint venture between the UK Property Fund and the Managed Fund.
“To date, LGIM has funded the development of over 600 apartments at Deansgate Square, providing strong and stable cashflows for investors alongside high-quality homes for more than 1,000 residents across two iconic towers.
“LGIM remains committed to the continued growth of build to rent and, since its first investment into the sector in 2016, LGIM has deployed more than £3bn of capital with 24 schemes across the UK.”