Mill to grind out £300m PRS vehicle

(source: Estates Gazettes)

Mill Group is refining plans for its first private rented sector fund, which it hopes could raise up to £300m of equity.

The residential investor and developer is in talks with an investor base comprised of UK and international institutions, from which it hopes to raise an initial £70m of equity.

The fund would target a return of 8.5% and would invest in housing in London and the South East.

The structure of the vehicle is still under discussion, but is likely to be an English Limited Partnership – a tax transparent structure popular with UK-based property funds.

Mill Group is also looking to take on segregated account mandates from pension schemes and other institutional clients to invest in the private rented sector, according to a source close to the company.

Andrew Smith, former global head of property at Aberdeen Asset Management and one of the most high-profile figures in the UK fund management industry, joined Mill Group in April to spearhead the company’s plans to develop partnerships with institutional investors.

Mill Group launched its first PRS project at the same time as Smith joined the business, buying 190 homes in the South of the UK in a £45m joint venture with Bovis Homes. The jv received an £8.7m cash injection from the government’s £1bn Build to Rent fund.

Mill Group’s plans are a further sign of the private rented sector’s growing traction with institutional investors. Last week Estates Gazette revealed that fund manager Cordea Savills was working on plans to raise £300m to develop residential stock to sell on to institutions looking to gain PRS exposure (30 August, p30).

Mill Group has acquired, developed and managed residential assets valued at around £1bn since it was formed in 1994.
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