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First big association does REIT deal
Places for People has become the first named large housing association to do a deal with one of the recently formed social housing real estate investment trusts (REITs).
The 60,000-home association, one of the UK’s largest, will manage a portfolio of retirement housing for Residential Secure Income (ReSI) REIT, which purchased it for around £100m. ReSI REIT did not confirm the original owner of the properties.
This marks the first deal for the REIT, which was set up in June this year by the bond arranger, Traderisks. It told Inside Housing in August that it intended to target deals worth £50m or more with larger housing associations.
In contrast, all other housing associations named as having done deals with REITs so far have been smaller organisations, owning fewer than 1,000 units, according to data from the Homes and Communities Agency.
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In November, five months after launching, ReSI REIT saw its stock price drop three percentage points. That price has now recovered to its former level.
The portfolio in this deal consists of 1,341 retirement properties across 250 purpose-built retirement housing blocks.
Ben Fry, investment manager of ReSI Capital Management, said: “We are delighted to have completed our first investment with the acquisition of such a strong portfolio of properties serving the retirement sector, an important and growing segment of demand.
“The portfolio is operated by one of the leading social housing providers in the Places for People group, and furthers our ambition to become the leading capital partner to social housing providers. We will now continue to progress the execution of our £250m pipeline and remain excited by the scale of opportunities available across the sector.”
ReSI said it is targeting a dividend yield of 5% each year, with a total return of over 8% annually. This will be delivered through rent paid to the REIT by Places for People.
This is the second move in the retirement housing sector this month by Places for People, which has also begun to manage funds for the UK’s largest retirement house builder, McCarthy & Stone, as part of the two organisations’ “strategic relationship”.
