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Investors sell shares in housing REIT
A social housing real estate investment trust (REIT) has seen its share price plummet after multiple investors pulled out.
The share price in RESI REIT, which is different to other REITs in the sector because it only targets deals with social landlords that own more than 1,000 homes, has fallen 9% this month to 90p.
Ben Fry, investment manager of RESI Capital Management, which manages the fund, told Inside Housing: “We understand a hedge fund has sold some shares in the market in the past week, which has been combined with some selling from private client brokers.”
Several REITs have seen their share prices fall in 2018, but none as dramatically as RESI.
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Mr Fry added: “For most of the others, it’s to do with the First Priority issue and we’ve been caught up in that. It shouldn’t [affect us], but it has.”
First Priority, a small housing association involved with several REITs, but not RESI, was recently censured by the Regulator of Social Housing for a “fundamental failure of governance”.
The regulator said it did not have the ability to meet its debts when they are due.
RESI, however, is not involved with associations like First Priority. The only deal it has completed to date was a £100m acquisition of a portfolio of retirement housing, to be managed by Places for People, one of the largest associations in the sector.
When that deal was completed in November last year, RESI said it was expecting to complete two further deals, worth a total of £150m, before the end of 2017.
It later amended this target to early 2018, but neither deal has been completed yet.
Mr Fry told Inside Housing: “We are still working on transactions, including those ones, and are hopeful of deploying soon.
“Once we’re fully deployed, it’ll be much easier for us to refute those suggestions [that we’re exposed to risks like First Priority]. We can just point to what we’re invested in instead.”
