Knight Frank sells residential investment portfolio in Manchester for £39m

Knight Frank’s Residential Investment team has sold a portfolio of four assets in Manchester city centre. The portfolio has been sold on behalf of Manchester Apartments (property and lettings division of Beech Holdings) to Cedar Tree Investments.

All Cedar Tree Investments are managed by AIMS Investments, one of the largest private and public equity investors in Saudi Arabia.

The portfolio comprises four freehold rental properties across the city with 163 units in total. The properties included in the sale are Basil House (105-107 Portland Street), Salisbury House (123 Princess Street), 51 King Street and 341 Great Western Street. Shariah funding for the acquisition was sourced from the UK arm of Abu Dhabi Islamic Bank (ADIB UK), indicating the bank’s desire to expand its footprint in the UK market.

Basil House is a Grade II Listed building in the heart of Manchester – located on one of the city’s premier residential addresses. The property was built in 1870 and comprises red brick elevations, sandstone dressings and an iron frame with many exposed heritage features internally. The property is currently let on Assured Shorthold Tenancies (ASTs) and includes a ground floor commercial unit.

King Street is a heritage block currently let on Assured Shorthold Tenancies (ASTs). The property was built in the early 1900s and comprises locally sourced red brick elevations with sandstone pilasters at ground floor level and ornate window details. There is basement, ground and first floor retail comprising 3,300 sq.ft. let to Patagonia the outdoor clothing specialist.

Salisbury House is a purpose-built block of 98 units, comprising a mixture of studio & one-bedroom apartments. It is located the heart of the city between Manchester Piccadilly and Manchester Oxford Road train stations. 341 Great Western Street is a collection of studio and 2-3 bedroom apartments based in the popular student area of Rusholme.

Hannah Badger, Associate at Knight Frank commented, “As the PRS market has matured, we have seen the capital flowing into UK PRS diversifying and becoming truly global, with this deal being no exception. It’s a good indication of the strength of the residential market in Manchester and also of the city as a global brand”.

Beech Holdings commented, “These apartments have been well received by the rental market and have been massively over-subscribed. We have proven that Manchester’s appetite for high end, luxury apartments is strong and Manchester Apartments has been instrumental in changing the landscape of our city centre and being at the forefront of bringing super-premium products to the city.

“Manchester Apartments is delighted to be retaining the letting and property management of the buildings and looks forward to building a strong long term partnership with the new landlord.”

Mr Abdulaziz Albassam, CEO of AIMS Investments, commented on behalf of the new owners, “The acquisition of this portfolio of high-quality assets, located in prime locations within a major regional market, is an important step towards realising the investment strategy for Cedar Tree Investments in the UK. We remain committed to establishing a sizeable portfolio in the UK over the coming 2-3 years.”

Paul Maisfield, Head of Real Estate at ADIB UK, said: “We continue to see strong demand from Middle Eastern investors for the yield offered by UK real estate. The ability to provide them with attractive Shariah-compliant financing solutions in a short timeframe is core to ADIB UK’s offer and we look forward to continuing to support Cedar Tree Investments as they grow their UK portfolio.”

According to Knight Frank data, annual rental growth in the Manchester residential rental market (including PRS and private buy-to-let) is 1.6%. The firm estimates that the total value of the Residential Investment sector, including capital committed in PRS, will rise by 68% by 2025, taking the total value of the sector to £146 billion. By then, the PRS and Senior Living markets will be more established, underpinned by a broad base of investors keen to tap into an asset class which is closely linked to student, employment and population fundamentals across the UK.