UK bank NatWest and Dublin-headquartered Allied Irish Bank have provided £100 million (€116 million) of debt financing to Macquarie to fund what the Australian investment management firm describes as the largest modular build-to-rent residential scheme to-date in the UK market.
The financing will support Macquarie’s residential platform, Goodstone Living, with the transformation of a 182,952-square-feet, 4.2-acre island site in Digbeth, Birmingham.
The BTR scheme, branded Smith’s Garden, will comprise 550 rental homes, plus co-working space, a fitness centre and a creche. Goodstone has partnered with contractor Elements Europe, part of Korean conglomerate GS Group, to build the homes in its factory in Telford in the West Midlands, in a major example of modular construction in the UK residential market.
Martin Bellinger, principal at Goodstone Living, said Smith’s Garden is one of the largest BTR projects in the UK, and receiving bank backing only emphasises the growing evolution of the asset class. “We want to show it is not just possible but desirable to build better now, and this helps improve and future proof assets for all of our stakeholders,” he said.
Goodstone received planning permission from Birmingham City Council in August last year. The site is located near Birmingham New Street and Curzon Street train stations, the latter of which will be part of the UK’s HS2 train network, as well as being near the Bullring shopping centre and retail quarter.
The firm will look to reduce embodied carbon emissions during construction by more than 30 percent compared with the RIBA 2025 benchmark, through its use of cement-replacement with ground granulated blast furnace slag, and locally manufactured, volumetric modular construction.
It said it will also aim to reduce operational carbon emissions by more than 50 percent by implementing the latest heating and enhanced building fabric technologies. This includes fully electrifying the scheme with an air source heat pump in each apartment, on-site energy production and triple glazed windows.
One of the lenders to the scheme indicated the UK’s housing shortage makes BTR schemes desirable. “As a forward-looking lender it is increasingly important for us to be able to finance schemes that provide much needed new housing that has a positive social and environmental impact while being future proofed against changing market conditions,” said Kieran Redford, corporate banking at Allied Irish Bank GB.
“Smith’s Garden is pioneering in terms of its construction and environmental considerations while delivering 550 much needed new homes for rent,” he added.
Michael Goode, director and BTR lead at NatWest, added: “Quality build-to-rent is an increasingly important housing tenure for the UK.”
The debt facility is the second NatWest has provided to Goodstone. In March, the bank underwrote a £67 million facility to the residential specialist for the development of its BTR residential community in Edinburgh – the scheme will provide around 338 homes.