Private rented sector REIT raises £250m in 'oversubscribed' fundraising
The UK’s first real estate investment trust (REIT) dedicated to the private rented sector (PRS) has raised £250m in an “oversubscribed” fundraising.
The PRS REIT, which is managed by investment advisor Sigma Capital, will receive an initial investment of 9.99% (nearly £25m) into the company from the Homes and Communities Agency and will begin trading on 31 May on the specialist fund segment of the London Stock Exchange.
A REIT is a tax-efficient vehicle that enables investors to gain direct investment exposure to certain sectors. The vehicles came to prominence last year when Civitas REIT was launched, which is the first residential REIT dedicated to social housing.
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The REIT was oversubscribed because it had enough investors to take it over its £250m fundraising cap.
The REIT will take control of a variety of assets already developed by Sigma, expected to be worth £72m. The REIT will focus on the undersupplied market for family homes in the PRS. Assets are being delivered in partnership with Countryside Properties and Keepmoat, as well as local authorities including Knowsley, Liverpool, Sheffield and Crewe.
The open-ended nature of the fund means that after this initial £250m is raised, it could reach a £1bn target in five years.
Steve Smith, chair of the company, said: “The launch of this PRS REIT breaks new ground, since it is the first REIT to focus purely on the private rented sector. We’re delighted to report that our target of £250m gross has been raised, with the fundraising significantly oversubscribed. Investors include some of the UK’s leading institutions as well as a strong base of qualifying private investors.
“Furthermore, the support of the government’s Homes and Communities Agency as a cornerstone investor underlines our confidence in our approach, which is to establish investment grade, professionally managed new family homes for rent at scale across the regions in England.
“We believe that The PRS REIT has the potential to deliver an attractive level of dividend income together with the prospect of capital growth.”
Graham Barnet, chief executive of Sigma Capital Group, said: “We are tremendously excited about prospects for The PRS REIT. There is an acute shortage of new rental homes across England and Sigma’s success in the private rented sector clearly demonstrates the unmet need for a high quality, professionally managed family homes in the English regions.”