Legal & General Investment Management (LGIM) has bought the North Tower in the Deansgate Square scheme.
The build-to-rent (BTR) tower is one of four glass towers in the square, which includes the 200m South Tower - the tallest building outside London.
The 37-storey North Tower provides 276 one, two and three-bedroom apartments and houses a two-storey gym, 20m swimming pool, sauna, steam room, fitness studios and a full-size indoor sports hall.
The asset management arm of financial services firm Legal & General bought the tower from developer Renaker on behalf of its two largest balanced funds - the UK Property Fund and the Managed Fund - which each takes 50 per cent of the ownership.
Michael Barrie, director of real estate fund management at LGIM Real Assets, said: “This acquisition represents the coming together of two of LGIM Real Assets’ largest funds as we continue to diversify our exposure to alternative sectors.
“Alongside hotels, self-storage and student accommodation, BTR will continue to be a preferred subsector, giving us real-time access to occupational markets with a robust growth in rental income.”
The acquisition is Legal & General’s second BTR acquisition in Deansgate Square, after it bought the adjacent West Tower in April 2019.
Legal & General said the West Tower is currently around 72 per cent let, which exceeds the “leasing velocity expected” for the acquisition.
CBRE advised Legal & General on the transaction.
Tom Sinclair, residential investment director at CBRE, said: “CBRE is delighted to have advised Legal & General on the acquisition of the North Tower at Deansgate Square.
“The North Tower marks CBRE’s second transaction with L&G at Deansgate Square and demonstrates continued confidence in Manchester’s residential market following the strong occupier demand experienced at the West Tower.
“On completion, the North Tower will provide exceptional residential accommodation, providing more renters with the opportunity to experience life at this desirable residential address.”
The deal is the first BTR acquisition for The Managed Fund, which has a current value of £3.4bn. It said it is part of a push into “alternative sectors”, with previous investments including hotels, healthcare facilities and student accommodation.
The UK Property Fund, which has grown from £100m in 2006 to around £3bn today, has recently acquired of a 189-flat BTR site in Chelmsford.
