16th January 2013 back to news

The Watermark - Edinburgh

On the instructions of RSM Tenon Recovery, Graham + Sibbald has successfully leased and forward sold ‘The Watermark’ on East Cromwell / Coburg Street, Edinburgh. 

The Watermark comprises 30 flats over two blocks.  Two flats were sold privately pre G+S appointment and the remaining 28 flats were 85% complete when brought to the market.  There was strong development and investment interest to acquire the units in their existing condition but having considered all the options, our advice to optimise realisation was to complete the flats subject to agreeing a new 10 year lease to Hillcrest Housing Association Ltd for let at Mid Market Rents.  The resulting investment was sold to a private London based property company.

Ross Wilson, selling agent at Graham + Sibbald says:  “The mid-market rent model is targeted towards young professionals and individuals in full time employment without the required collateral to facilitate a step onto the property ladder.  It is aimed at bridging the gap between social housing and private landlord rental values.  This letting to Hillcrest Housing Association Ltd created an institutional type Investment with secure, inflation proof income spread over a 10 year term to an organisation with a strong covenant.  Residential investment opportunities such as this are proving very popular with a range of investors.  This is primarily due to the discount offered when buying in bulk with the prospect of long term capital growth.  We are witnessing a radical change in investor’s attitudes towards residential property with many institutional investors looking into the creation of bespoke residential funds”

The purchase price achieved of £2.9 million reflects a strong net initial yield of 5.21%.

Emma Garry of Hillcrest Housing Association Commented “Edinburgh city faces a large housing shortfall and the number of those in housing need is continuing to increase.  With reduced government subsidy available, Hillcrest has been looking at alternative ways to provide new affordable housing which is not subsidy reliant.  The Watermark deal brings with it Hillcrest Housing Association’s first Mid Market Rent homes in Edinburgh, something we are really pleased about.  But they are delivered without any government subsidy. This is the really exciting aspect of the model.  We believe that this model can be replicated to provide more affordable housing without subsidy and we hope to continue to provide housing on this basis in the future”.

Graham + Sibbald and Maclay Murray & Spence acted for the RSM Tenon. 
Lambert Smith Hampton and DLA Piper actor for the purchaser.
Thorntons WS acted for Hillcrest Housing Association