The Berkeley Group intends to create its own build-to-rent (BTR) platform to “capitalise on strong occupational and institutional investment demand for high quality, well-managed rental homes in London and the South East”.
The company announced the news in its financial results for the year to 30 April 2024. It posted a 7.7% fall in pre-tax profits to £557.3m and a fall in the number of new homes it delivered from 4,043 plus 594 via joint ventures over the period to 3,521 plus 406 via joint ventures.
Berkeley chief executive Rob Perrins said pre-tax profits were in line with guidance provided at the start of the year and the company had posted a “strong performance in a challenging and volatile operating environment”.
He said the company’s new BTR platform would allow it to “maximise returns in today’s market conditions”.
Perrins added: “Berkeley has identified some 4,000 homes across 17 of its sustainable and well-connected brownfield regeneration sites as an initial portfolio for this platform. Developed over the next 10 years, and broadly representing a 10% increase in delivery, the portfolio will be financed by a combination of internally generated funds (over and above annual scheduled shareholder returns), debt secured against rental properties once income generating, and the introduction of third-party capital at the appropriate time, thereby fully supporting Berkeley’s long-term corporate 15% pre-tax ROE target.”
The company said it had sold more than 1,000 homes across five sites in the last three years to institutional investors on a forward commitment basis and it now believed “adopting a more strategic route to this market will drive best value for these assets by creating a portfolio of scale, professionally managed, with proven income levels stabilised prior to disposal”.
The company added it intended to create its own operating and management platform “to provide tenants with the high levels of customer service experienced by our purchasers” and that the platform being established would be “flexible” to ensure it could “dispose of the properties individually or in stand-alone blocks at any time should this become the more compelling exit route for any reason over the course of the next 10 years”.
