Barratt sells rental homes to Lloyds Bank subsidiary for £168m

Barratt Developments has sold a portfolio of 604 new homes to Lloyds Banking Group subsidiary Citra Living in an all-cash deal valued at £168.4million.

The deal will see 500 homes completed and transferred to Citra by an expected date of 30 June next year, with the rest scheduled by the same date in 2025. 

Citra’s model is to retain ownership of the homes and then rent them out, acting as a corporate landlord. 

A 2021 strategic partnership between the pair has seen the housebuilder already transfer 502 homes on individual sites to Citra. 

Barratt Developments investors reacted positively to the transaction

Barratt Developments shares were up 1.1 per cent to 416.8p around midday on Friday, bringing performance back marginally into positive territory for 2023 so far.

Housebuilder shares have come under pressure in recent months as investors fret about the impact of rising interest rates and a slowdown in properties being completed.

Barratt has previously flagged sales volumes significantly below last year’s levels.

Lloyds, which is the UK’s biggest mortgage lender, launched Citra in 2021 with the aim of building 50,000 homes by the end of the decade.

This would make it a larger company than Grainger, the country’s biggest private residential landlord, and give it an estimated balance sheet of £4billion and £300million in pre-tax profit.

Citra and Lloyds’ most recent transaction includes 195 homes across four developments, with a gross asset value of £21.5million, conditional on the satisfactory completion of due diligence by Citra.

Barratt chief executive David Thomas said: ‘The single-family dwelling segment of the private rental sector continues to grow strongly and presents an opportunity for us to both diversify our revenues against the current challenging market backdrop and develop communities which encompass all forms of housing tenure.’

Managing director of Citra Andy Hutchinson added: ‘Our goal at Citra is to bring much needed high quality homes to the UK rental market, to help create balanced communities in the places that people want to live.

‘Our partnership with Barratt helps us achieve that goal and will contribute to delivering much needed housing stock across the UK.’