Goldman To Sell £190M SFR Portfolio In Test Of Market Appetite

Goldman Sachs is selling a £190M portfolio of UK single-family rental homes in one of the largest investment transactions seen so far in the nascent sector. 

The investment bank is looking to cash in on a portfolio of 918 homes it bought as recently as November 2020, React News reported. 

Goldman bought the portfolio in a joint venture with Pitmore for £150M from Gatehouse Bank and SFR specialist Sigma, React said. The homes are situated on 15 sites concentrated around greater Manchester and Liverpool. 

A sale at the price Goldman is seeking would represent a profit of more than 25% in less than three years, a sign of how quickly values for rented residential have risen in the UK. 

Data about investment volumes is sparse, but SFR is becoming a much bigger part of the rented residential sector. Investors like Aviva and Apache Capital have committed significant amounts of capital to the asset class in the last year.

Pitmore has been bought by Savills Investment Management, and longtime SFR proponent Sigma has been bought by PineBridge Benson Elliot. 

Rising mortgage costs pushing people toward renting is a major factor in the sector's favour. UK rented residential was the best-performing sector in terms of capital growth in September, MSCI said, although the value still dropped 0.2%. 

Working against the sector are elevated construction costs and a cost-of-living crisis that means there is no guarantee rents can be increased in line with inflation. The sector is also low-yielding, and investors could find it harder to bear such low yields as the cost of debt rises.