Select sources £109m loan for Manchester development

Select Property Group has sourced a £108.9 million (€123 million) loan from a club of lenders to fund the development of a build-to-rent scheme in Manchester.

The loan, provided by NatWest, Lloyds Bank Commercial Real Estate and Greater Manchester Housing Fund, will finance the development of Select’s £247 million Affinity Living project, which consists of 683 apartments at Circle Square. The value of the scheme implies a debt facility loan-to-value ratio of 44 percent. The project is scheduled for completion in Q1 2021.

The deal marks a step forward for the Affinity scheme, which is expected to play a “pivotal” role in providing the housing infrastructure that Manchester’s economy needs to maintain its growth, said Allan MacKenzie, head of Scotland and the North for Lloyds.

Demography in Manchester is “heavily weighted” towards the professional market, which will look for this type of accommodation in the city centre, Andy Clarke, NatWest’s relationship director for the real estate finance team in Manchester, told Real Estate Capital.

“Over the last 10 years there’s been very little development in Manchester and, therefore, significant demand is expected,” Clarke added.

For Gareth Conroy, associate of GVA, the investment manager for the Greater Manchester Property Venture Fund, the City Square development will soon be a sought-after destination in the city, as other construction projects involving office, hotel, and parking elements at City Square have already started.

Last year, Manchester residential developments attracted debt financing. In January 2017, a joint venture between Gulf-backed investment manager Apache Capital and residential developer Moda Living closed an £85 million financing agreement with pbb Deutsche Pfandbriefbank to fund its Angel Gardens private rented sector residential scheme. In May, UBS provided a £17 million development financing facility to Inspired Asset Management to fund a ‘micro-apartment’ scheme in Cheadle Hulme.