Listed property giant Grainger has agreed to acquire the build-to-rent (BTR) element of a major mixed-use scheme in Bristol for £128m.

The development, which forms part of the second and final phase of the wider Redcliff Quarter, comprises 374 private rental homes, alongside 94 affordable homes and six commercial units.

Newcastle-headquartered Grainger has agreed to acquire the scheme from Redcliff MCC, backed by ICG Real Estate in partnership with Madison Cairn.

Winvic Construction, which built Grainger’s Brook Place development in Sheffield, has been appointed as contractor for the scheme.

The development includes a total of 5,900 sq ft of internal residential amenity space, about 21,200 sq ft of external amenity space, 8,500 sq ft of commercial space and 31 car parking spaces.

Construction of the homes is expected to commence in Q3 2022, with practical completion of the final element targeted for early 2025.

It is expected that the scheme, including the commercial element, will generate a gross yield cost of about six per cent once fully let and stabilised.

The deal builds on Grainger’s existing Bristol portfolio, which includes Hawkins & George, comprising 194 build-to-rent homes, and Millwrights Place, which will include 231 build-to-rent homes when complete in early 2024.

Helen Gordon, chief executive of Grainger, said: “We are very pleased to acquire our third build-to-rent scheme in Bristol which will further strengthen our city cluster, bringing our total investment in the city to nearly 900 homes when complete and driving operational efficiencies, whilst also enabling us to deliver 94 new affordable homes via Grainger Trust, our in-house affordable housing arm.”

Aneil Handa, managing director of Madison Cairn, added: “There is a serious under-supply of homes in Bristol. By working in partnership with ICG Real Estate and Grainger we have been able to secure planning permission for a revised Redcliff Quarter scheme that saw a substantial increase in the number of homes delivered on the site, compared with the previous consent.

“Importantly, the new scheme now has 94 affordable homes, which will make a real contribution to helping address Bristol’s housing need.”

“Redcliff Quarter will be a really vibrant place in the heart of this fantastic city, and we are very glad to have played our part in making this happen.”

Paul Hawkey, associate in Knight Frank’s residential capital markets team, said: “The sale of Redcliff Quarter is a landmark deal for the city of Bristol – rarely do opportunities such as these become available on the open market.

“The transaction demonstrates the high level of demand for Build to Rent assets and the requirements for stock in a city which will always be challenged supply wise due to its heritage being so heavily safeguarded. Appetite for BTR developments in Bristol doesn’t seem to be cooling.”