Firms aim to attract up to £150m of institutional investment, starting today

Residential landlord Grainger and French construction group Bouygues are to launch a build-to-let residential fund that will finance more than 1,000 homes over the next three years.

As well as jointly investing in the project, dubbed the Bouygues and Grainger Fund, the firms intend to raise up to £150m from institutional investors.

The Times reports that they will begin an investor roadshow today, and are “quietly confident” that the venture will attract healthy levels of interest.   

Investors will receive a coupon-based return during the development and investment stages, and then a return based on capital appreciation.

The fund has already lined up four sites with permission for over 1,000 homes, in Barking and Canning Town, east London, and in Maidstone, Kent.

At least two of them were previously publicly owned, and are included in the Public Land Initiative that housing minister Grant Shapps announced last week.

The initiative will see the government release thousands of acres of disused public land to developers. They will be entitled to build on many of the sites before paying for the land, with payment due only after the homes are sold.   

Bouygues plans to build the proposed houses in phases over the next three and a half years. Construction should begin in the first quarter of next year, with the first completions scheduled for the end of 2013. The flats are being built as rental properties for short-term tenants.

The portfolio will operate through Grainger, which will oversee lettings, facility management, and fund and asset management.    

The fund will have an eight-year lifetime in the first instance, but may be extended for a further three years.