Giant, Troubled Earls Court Scheme Could Be Heading For BTR Future
A huge residential development site at Earls Court could become one of the largest build-to-rent schemes in London, if the recent history of the parties behind a bid for the scheme are anything to go by.
CapCo, the company that owns the 77-acre site in West London, said Monday that it had granted a short period of exclusivity to Delancey and APG regarding a potential purchase of the scheme.
The announcement came after weekend press reports that Nick Candy was looking to buy CapCo, which owns both the Earls Court site and retail and leisure assets at Covent Garden in the West End.
The Earls Court site had been earmarked for 7,500 luxury flats, with a potential end value of between £8B and £18B, depending on where you take your estimate from. The site itself was last valued at £599M by CapCo in July, a 12% decrease over the course of six months, as London’s high-end residential value has declined. The value of the site has dropped about 40% in the past three years.
A purchase of the site by Delancey and APG could mean a major pivot for the future of the scheme. No info about their plans was forthcoming, but Delancey and APG have been trailblazers in the UK BTR sector. The duo established Get Living, the UK’s first major BTR developer, in 2012, when they purchased the former Athlete’s Village from the 2012 London Olympics in Stratford.
Delancey and APG have since bought further sites in London, Manchester, Leeds and Glasgow, taking the total number of apartments either open or in its development pipeline to more than 6,000.
Last year Get Living added Oxford Properties to its roster of investors, and said it wanted to take its number of apartments in the UK to 12,500.
Bisnow first floated the prospect of some or all of Earls Court being switched to BTR in October last year.
Green Street analyst Rob Virdee estimated that Earls Court could provide a yield on cost of almost 6% if it was built as a private rented sector scheme, using a site value of £700M and at today’s BTR development costs — metrics that have improved as the site value has dropped. That is not an amazing profit, but is the kind of return that long-term investors like APG might find acceptable.
Any deal for Earls Court could still hit a snag, because of the incredible complexity of the scheme.
CapCo has been in a long-standing row with the residents of two housing estates that form part of the estate. Earlier this month the local authority, Hammersmith & Fulham Council, said it had laid the groundwork to undertake a compulsory purchase of the estates. It is not known how this might be affected by a change of ownership, or whether these estates are integral to Delancey and APG’s plans.