Investor launches £400m fund targeting supported housing
A private equity investor has launched a £400m fund targeting supported housing, joining a slew of equity investors seeking to move into the sector.
Henley, a real estate investor with more than £1bn of capital deployed across around 40 funds, announced its first acquisition of supported housing units for £70m today.
It is hoping to raise £400m for its Henley Secure Income Property Unit Trust (Henley SIPUT) over the next six months and will focus on the “under-served but fast-growing supported housing sector”.
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It said the investment strategy will be to acquire properties from housing associations where rents are met by housing benefit.
It said there will be “particular emphasis” on homes which have been upgraded to meet the specific care requirements of each tenant. It is seeking a 5% annual return over the 25-year life of the fund.
Today’s acquisition saw it purchase freehold interests in 49 properties UK-wide, which will be leased on long-term, inflation-linked deals to an undisclosed number of housing associations registered with the Homes and Communities Agency.
Ian Rickwood, chief executive of Henley Investments, said: “With growing demand in the supported living sector, there is a significant need and market opportunity, matched with increasing institutional interest in the space. We offer these institutional investors access to long-term, inflation-linked secure and sustainable returns, as well as providing much-needed homes for vulnerable adults, making a positive difference to people and communities.”
There has been an explosion of activity among investors targeting supported housing over the last year, with Civitas Social Housing launching a real estate investment trust (REIT) earlier this year which recently passed £200m of investment. They are joined by LXi REIT, Resi REIT and fund managers such as Cheyne.
The investment comes despite looming welfare reforms which will shake up the way supported housing is funded, making the income stream far less secure.
In the past, lease-based inflation-linked investment in social housing has been approached with caution by housing associations, wary of taking on the risk of collecting the rental returns demanded by the investor over a period spanning several decades.