Charity Broadway to use £30m investment to buy homes to let to clients
Property fund to help homeless
A homelessness charity has joined forces with a fund manager to launch a property fund to invest in homes.
Broadway hopes the fund will buy 250 properties, which the charity can lease and let to homeless clients with the aid of up to £30 million of investment from charitable trusts, housing associations and institutional investors, such as pension funds.
The fund will be managed by specialist social enterprise finance intermediary Resonance, which will also act as landlord on the properties. These are then leased to Broadway and sub-let to homeless people.
Broadway said investors could expect a 4 per cent yield over the five or six-year life of the fund.
It is hoped the fund, which launches next month, will attract at least £10 million in the first tranche from charitable trusts. Daniel Brewer, a director at Resonance, said they hoped to close the first £15 million of equity in the summer so that purchases could be completed by August and homes occupied by September.
Mr Brewer added the low-risk profile of the investment, in which Broadway would underwrite the void risk if properties remain empty, could attract pension fund and insurer investors, despite the offer of returns that are up to 2 per cent lower than other residential property funds.
At least one housing association is also understood to be in discussions over investing in the fund.
‘It’s a model we would like to see others take up,’ said Howard Sinclair, chief executive of Broadway. ‘It’s very simple: investors get a bit of return and we do some social good.’
Mr Sinclair added that Broadway was already in talks over potential purchases, all of which would be one or two-bed accommodation in London, but said they had to be in ‘areas that people could afford’.