Small-Time Investors Get Burned In UK BTR Corporate Collapse
High Street GRP, the Newcastle-based private rental developer, has been forced into administration.
The slo-mo collapse, not unexpected after the resignation of two auditors — first PwC, then Haines Watts — and in the wake of a revision to its investment arrangements, marks a line in the sand for UK build-to-rent. It sees the end for one of the few BTR companies backed by small-time investors, leaving larger investors to truly dominate the field.
Not that the High Street GRP was small time, although many of its investors were relatively low-rollers. The company website said the High Street Group — which offered high returns to small investors with minimum £25K stakes — was expected to be worth £3B by 2023, and claimed a current value of £1.5B, with 16 projects in the pipeline.
High Street was one of the largest groups following a multi-investor, quasi-syndicated model.
Funding arrangements included investors putting up a minimum of £25K with the expectation of 12% per year interest over seven years, plus potential annual bonuses. The firm was four years into its first seven years, and it had recently sought to extend the period within which payments could be made. Changes to the £100M loan note were approved by investors in May 2021.
A court order has appointed Insolve Plus Director Anthony Hyams and SKSi Director Carrie James as joint administrators of High Street GRP.
High Street Group, founded by Chairman Gary Forrest, had debts that could total £212M according to court paperwork. Earlier this month Forrest said that administration was the only way forward for the group.
Schemes included St George’s Place, a controversial 750-unit scheme on the boundary between Hulme and Castlefield, Manchester; the Westminster Works, Digbeth, Birmingham where Metnor had been chosen a contractor for a 220-unit BTR scheme; and the 600-unit Kent Street Baths, also in Birmingham.
The High Street GRP hit the investment buffers at a time when money is flooding into UK BTR. Although end-of-year figures have yet to be realised it is not impossible the annual total investment into UK BTR in 2021 could top £6B, compared to £3.5B in 2020. It was already running 78% ahead of 2020 figures by the half-year, Knight Frank calculated.
The last few days before the holiday closedown saw the completion of another set of high-value BTR investment deals. German investor Patrizia extended its UK portfolio, funding the 281-unit Olivers Place scheme in Reading in a deal with Berkeley Homes; whilst Europa Capital signed up to support the 203-unit Crown Works in Birmingham. The month’s largest BTR deal saw U.S. investor Cortland back the 559-unit Colliers Yard scheme in Manchester in a deal with developer Renaker.
The administration at High Street GRP follows the renaming of the original High Street Group as Hadrian Real Estate. Founder Gary Forrest has been replaced as the controlling party at Hadrian Real Estate by Gavin Fraser.
