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Homelessness accommodation REIT makes first acquisition
A real estate investment trust (REIT) focused on accommodation for homeless people has made its first acquisition.
Home REIT has bought five properties spread across the North and the Midlands for £9m including acquisition costs.
They are all recently completed purpose-built homes for homeless people, with four schemes designed for women fleeing domestic abuse and one for prison leavers.
Championed by homelessness charity Crisis, Home REIT launched last month and has since raised £240m on the London Stock Exchange.
Each of its schemes have been leased on 25-year full repairing and insuring leases to specialist registered homelessness charities, let at a “low and sustainable rental level” averaging £75 per person per week, the fund said in a stock market update.
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The charities, regulated by the Charity Commission, will manage the properties and provide specialist support, rehabilitation and training services to residents.
Rents paid to Home REIT by the leasing charities are subject to upward-only annual reviews linked to the Consumer Price Index, capped at 1% and collared at 4%.
Net initial yields are “in line with the company’s target level”, Home REIT said.
It is also “in advanced legals on a significant pipeline of assets” to deploy its cash, “with further acquisition announcements expected to be made in short order”.
The fund is managed by Alvarium Fund Managers, a subsidiary of boutique investment firm Alvarium Investments.
Gareth Jones, partner at Alvarium Home REIT Advisors, said: “We are pleased to announce the first investments for Home REIT PLC and to be investing in high-quality accommodation to house vulnerable, homeless individuals in need of housing.
“The properties are located in areas where there is a critical need for more homeless accommodation.
“Each of the properties is let on low and sustainable rents to a registered charity with a proven operating track record in providing accommodation to the homeless and which receives housing benefit or comparable support from local or central government.”
Home REIT describes its mission as seeking “to contribute to the alleviation of homelessness in the UK, whilst targeting inflation-protected income and capital returns, by funding the acquisition and creation of a diversified portfolio of high-quality accommodation assets across the UK which will be dedicated to providing accommodation to the homeless”.
It said its accommodation is expected to save councils and other homelessness accommodation providers money because of the lower rents compared with other forms of temporary accommodation.
