£510M Social Housing Fundraising Shows This Market Is The Next Big Thing
Projections of a 30% increase in the demand for supported housing for the homeless and vulnerable, and the prospect of strong public sector-backed tenancies, has prompted two REITs to launch new fundraisings totalling more than £510M.
Responsible Housing REIT intends to raise up to £250M via flotation to invest in supported housing.
Home REIT, which funds the acquisition and creation of high quality properties for the homeless, has also launched a fundraising targeting a further £262M.
Responsible Housing provides supported housing for adults and young people with learning disabilities, mental health issues, physical disabilities, addiction, those with support needs and those in need of temporary accommodation.
Projections by the Economics of Health and Social Care Systems Policy Research Unit suggest the number of supported homes may need to increase by 30% by 2030. That means growth from around 650,000 units in 2015 to more than 845,000.
Additional demand is expected thanks to the implementation of the Government’s Transforming Care Agenda. This involves moving toward more community care.
Responsible Housing is targeting a NAV return of a minimum of 7.5% and a minimum defined yield target of 5%. The portfolio will be managed by BMO Real Estate Partners, part of BMO Global Asset Management.
Properties will be let to registered charities, housing associations, community interest companies and other regulated organisations. Inflation-linked income is supported by low volatility and benchmarked rents that are ultimately funded by the Department of Work and Pensions through the Registered Providers, the company said.
The prospectus will be published later this month with the admission of ordinary shares by the end of September.
Home REIT, which funds the acquisition and creation of high quality properties for the homeless, has also launched a fundraising targeting a further £262M.
Home REIT launched with a successful £240M IPO in October 2020. In less than 10 months, it has built a £328M portfolio and works with 21 tenants and 81 local authorities with more than 3,800 beds for homeless people across the UK.
Home REIT provides low-cost rented properties on new, unbroken, long-term, full repairing and insuring leases to specialist registered homeless charities, providing them with sought-after long-term security of tenure. The leases are subject to annual upward-only rent reviews, index-linked to the Consumer Prices Index, with an annual collar and cap of 1% and 4%, respectively.
“We are closely monitoring an active pipeline of acquisition opportunities as we look to grow our capacity and, further to the company’s announcement on 20 July 2021 regarding a potential equity issue, look forward to updating the market shortly,” Alvarium Home REIT Advisors partner Jamie Beale said.
