Developer, Tellon Capital, and investor, Legal & General, have announced the completion of funding of the Bargate Quarter, the £139m scheme in Southampton, with regeneration works starting immediately.
The transaction is on a forward funding basis to one of Europe's largest asset managers, Legal & General Investment Management (LGIM) on behalf of its Legal & General Retirement (LGR) business. Legal & General will own and operate the completed scheme.
The development is built around the City Walls and The Bargate, a 12th Century gatehouse to historic Southampton. It will provide 519 much-needed new homes comprising a mix of studio, 1, 2 and 3 bed units, along with 2,515 square metres of ground floor commercial space.
Construction is now underway following a unanimous decision by Southampton City Council's Planning & Rights of Way Panel to grant permission for the revised scheme earlier this year.
Councillor Jeremy Moulton, Deputy Leader and Cabinet Member for Growth commented: "This is fantastic news for the Bargate Quarter, Tellon Capital and for Southampton. The development of the £139m scheme for the five-acre city centre site has been much anticipated and will transform this area, shining a new light on our significant local history and landmarks.
"I look forward to seeing this new vision for the Bargate Quarter come to life over the next three years with hundreds of new city centre homes, new retail space, and a new linear park running alongside our medieval town walls."
Tellon Capital expects the Bargate Quarter scheme to be completed by late 2024 or early 2025.
James Burchell, Partner at Tellon Capital, said: "We are delighted with our new partnership with Legal & General and to start work on the Bargate Quarter regeneration. Once this scheme is completed, we believe this will provide an exciting new chapter for one of the most historic parts of Southampton.
"Our development will seek to improve the setting of The Bargate and City Walls and provide retail units along with much-needed new housing in a highly sustainable location. Crucially, our scheme also responds to the changing world created by the pandemic, to ensure we have a scheme that respects the past but is also fit for the future.
"We would like to thank residents and stakeholders for their continued support and we're looking forward to delivering a high-quality scheme that benefits the whole city."
Adam Russell, Senior Residential Transactions Manager at LGIM Real Assets, said: "We're delighted to enter this partnership with Tellon Capital and to drive forward the Bargate Quarter scheme. There has never been a more important time to invest in our cities and support the 'build back better' agenda.
"Southampton is home to a number of major businesses, life science, education hubs, and financial services companies, yet there is a structural undersupply of housing; demand truly outweighs supply. We're excited to play a part in delivering much-needed new homes, and more widely, support the city's regeneration.
"The Bargate Quarter is in a prime city centre location, within close proximity to the High Street, West Quay and the train station, and will deliver new high-quality, professionally-managed rental accommodation."
Following LGIM's first investment in the sector in 2016, its Build to Rent business has grown rapidly. So far this year, it has welcomed the first residents to its flagship Mustard Wharf schemes in Leeds, Box Makers Yard in Bristol, and completed the final phase of The Slate Yard in Salford, plus committed over £150m in investments to Birmingham and Leeds respectively. With a rapidly growing portfolio of over £2bn, and a pipeline to deliver a further 7,500 homes by 2025, LGIM Real Assets remains a leader within the sector.
Regarding the £139m deal, Tellon Capital was represented by Lewis & Partners, Colliers, and LRAlternatives, while Knight Frank acted for Legal & General.
For more details visit bargatequarter.co.uk.