Property Week article ‘Ritchie and Palos Primed for more’

February 18th, 2011
Residential Land

Residential Land in Property Week

Residential Land CEO, Bruce Ritchie was recently mentioned in a Property Week article titled ‘Ritchie and Palos Primed for more’.

The article discussed the joint venture between Residential Land boss Bruce Ritchie and entrepreneur Brett Palos, and mentions how recent trading is encouraging the landlords to purchase more residential assets to add to their portfolio.

Palos, the stepson of Topshop owner Sir Philip Green, paid Lloyds Banking Group and Ritchie’s Residential Land £400m last May for 21 apartment blocks across central London. Profitable trading over the last year has encouraged the landlords to start buying again.

Prime London Residential, the vehicle used for the purchase, is structured as a 50:50 joint venture between Palos and Ritchie. Residential Land will continue to manage the portfolio.

Nine blocks have been sold within the last eight months for a total of £80m with two more under offer for more than £20m.

In that time gross yields on the sales have fallen from 5.5% to 3.8%. Ritchie commented that this along with an average occupany rate of 94%, underlines the strength of prime residential.

All the sales were to overseas investors, but Ritchie argues there is more to the demand than simply weak sterling. “There’s a strong belief in the solidity of the return,” he says.

Prime London Residential feel the market is strong enough to make a return but this time buying “slightly flawed assets or even empty buildings” to turn into profitable investments.

“There’s no limit to the money we want to put into it,” Ritchie says.

Values have risen but he argues that London compares favourably with luxury residential prices in Hong Kong and Monte Carlo.

“We look cheap compared with the rest of the world,” he says.

The first acquisition since re-entering the market is due to complete soon in Regent’s Park. Ritchie anticipates that a lot of distressed stock from NAMA and UK banks will become available this year and says debt is becoming more freely available too.

“We’re finding favour with the banks because it’s Residential Land and Brett Palos and the fact that there is a yield,” he adds. “All that helps get us better banking terms than most people, but the reality is that it’s out there.”

Read the article in full on the Property Week website here