New Social Housing REIT Targeting 7.5% Annual Return Plans London Float

by Jonathan Adams

Home Reit, an investment vehicle focused on homeless shelters and social housing for homeless individuals including recently released inmates, victims of domestic violence and those with mental problems plans to float on the London Stock Exchange next month. The REIT targets a 7.5% annual return and will seek to raise £250 million from a combination of retail investors and ethical and sustainable funds.

Home Reit is supported by the charity Crisis, the UK national charity for the homeless, and will be, if all goes to plan, the first real estate investment trust to float on the London Stock Exchange since 2018.

The Home Reit’s commercial model will be to invest in residential property designed for different categories of homelessness and let the buildings to local housing associations and charities. According to the latest research from Crisis, Britain currently has around 320,000 people either sleeping rough or in temporary housing or homeless shelters. Local councils have a legal duty to provide homeless people with accommodation but often find it difficult to source enough suitable housing.

The new Reit has been created by Alvarium, a ‘boutique’ wealth manager and investment bank. It counts the wealth of some of the richest family offices in the Middle East, North America and Europe among its clientele and has around $15 billion of assets under management. As well as wealth management and investment banking, Alvarium also offers stockbroking services.

When it has raised the necessary investment capital, Home Reit will both buy accommodation and fund the construction of purpose-built blocks with spaces designed for training and rehabilitation of residents. Buldings will be offered on 20-30 year inflation-linked leases.

The REIT hopes to pay out a minimum annual dividend of 5.5p, with the IPO targeting a share price of 100p. Including capital gains, management believe that an average annual return of 7.5% is a realistic target over the medium term. Alvarium also itself runs a £430 million social impact fund that invests in similar sectors.

A few years ago a handful of social housing-focused Reits including Civitas Social Housing and Triple Point launched. But Home Reit is believed to be the first social-housing Reit that is specifically designed to invest in property to house the homeless.

The trust plans to initially gear investments with debt totalling up to 35% of gross assets. It has also committed to making an unspecified donation to Crisis. Alvarium’s fee will be 0.85% of net assets. It will pitch the IPO to funds with stated social, governance and environmental objectives as core to their investment strategies. An IPO prospectus can be expected later this month.

Home Reit’s chairperson will be 57-year-old Lynee Fennah, the chief financial officer of Empiric Student Property. She commented:

“We believe a significant investment opportunity exists in the UK homeless accommodation asset market.”

This article is for information purposes only.
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