Second Private Rented Sector sale for £63.2 million

31 May 2016

Telford Homes Plc (AIM: TEF), the residential property developer focused on non-prime London, is pleased to announce that it has exchanged contracts for the sale of Carmen Street, E14, to M&G Real Estate, one of the UK's largest property investors and the real estate fund management arm of M&G Investments, a leading international asset manager controlling assets in excess of £246 billion.

This is the Group's second transaction in the Private Rented Sector (PRS) comprising the freehold interest in the land and the construction of 150 open market homes together with commercial space for net consideration of £63.2 million. The site at Carmen Street was conditionally purchased by Telford Homes in November 2015 with completion taking place in April 2016. The sale to M&G is on a forward funded basis and will comprise an initial land payment followed by regular payments throughout the construction period and therefore will not require debt finance with only limited equity to be invested by the Group.

The Carmen Street development has full planning permission to include a 22-storey tower and 206 new homes. The 56 subsidised affordable homes will be sold by Telford Homes in a separate transaction to a housing association. The development is anticipated to be completed in 2019.

Telford continues to explore further PRS opportunities and the two transactions to date are just the start of the potential for PRS to become a permanent and more significant part of the Group's sales mix. The Board is also exploring whether longer term partnerships can be formed with institutional investors to enable further sales within a relatively fixed framework and to work together on future site acquisitions.

Alex Greaves, Head of Residential Investment at M&G Real Estate, commented:

"This partnership with Telford Homes marks a significant point in the evolution of our residential investment strategy. We have now invested in over 1200 units on behalf of UK and international institutional investors, including pension funds, insurance companies and local authorities.

"We are thrilled to be working with Telford Homes and playing our part in increasing the supply of high quality, sustainable rental communities to London's housing market. With excellent access to transport, employment, and local amenities, this location and delivery partner is an excellent strategic fit. This deal adds scale and efficiency to our portfolio, brings additional homes to market and provides our investors with stable long-term income growth. We have really enjoyed working with Jon and the Telford team on this exciting scheme and hope this is the first of many deals."

Jon Di-Stefano, Chief Executive of Telford Homes, commented: "We are delighted to be working with M&G, a leading international asset manager that is enthusiastically increasing its PRS portfolio. Forward funded PRS transactions offer strong returns and we are very pleased to have swiftly secured our second sale in the sector just a few months after the first. We hope to extend our relationship with M&G as new opportunities arise and as Telford Homes continues to broaden its sales mix with further de-risked forward funded PRS transactions.

As previously stated, the Company will be reporting financial results for the year ended 31 March 2016 on Wednesday 1 June 2016." 

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About M&G Real Estate

M&G Real Estate is the real estate fund management arm of M&G and is one of the top 25 real estate fund managers in the world by assets under management, with over £25 billion invested in a broad spread of properties across Europe, North America and the Asia Pacific region (as of 31 December 2015). M&G Real Estate has a sector leading approach to responsible property management, and is committed to assessing and improving the sustainability performance of funds under management.

M&G is the investment arm of Prudential Plc in the UK, Europe and Asia. For more information please visit www.mandg.com/realestate

About M&G

M&G is an international active asset manager, investing on behalf of individuals and institutions for over 80 years. At 31 December 2015 the firm manages over £246.1 billion of assets through a wide range of investment strategies across equities, bonds, property and multi asset.