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Homelessness accommodation REIT mulls equity issue after spending IPO funding
A real estate investment trust (REIT) which buys up accommodation for the homeless is contemplating a further issue of equity after spending all of the funding it has raised since its initial public offering (IPO) nine months ago.
Home REIT, which launched last year, said in an announcement today that its board is assessing a potential future issue of ordinary shares to finance further acquisitions of properties for use as temporary housing.
It has already spent the £240m it raised through an IPO in October last year and invested half of the £120m debt facility it secured from Scottish Widows, with the remaining £60m committed.
The trust continues to see a strong pipeline of investment opportunities and is in advanced negotiations on a number of potential transactions.
Based on these discussions, it believes the money raised through any new equity issue would be invested within roughly three to six months.
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If it proceeds with the issues, Home REIT said stocks would be offered at a discount to the share price at the time of announcement.
The trust, which is managed by Alvarium Investments, said it is on target to meet its previously stated 5.5% minimum annual dividend target to investors.
Home REIT leases its properties to charities, housing associations and other organisations for average weekly rents of £90.
It currently has 19 tenants housing over 3,648 people in 643 properties across 81 local authorities.
Rents are paid through Housing Benefit, with the housing provider paying an average of 40% of the benefit it receives to Home REIT.
Jamie Beale, partner at Alvarium Home REIT Advisors Limited, said: “The company continues to achieve its objectives and perform strongly following its IPO in October 2020, driving attractive returns to our shareholders while meeting a vital social need in partnership with our operators.
“We are providing critically needed accommodation to those at risk of homelessness, let at low, sustainable rents to our tenant partners, who are proven to make a difference to the people they house, care for and support.
“The requirement for this kind of housing continues to be felt across the UK and, having built a strong pipeline of assets that meet our strict criteria, we are well positioned to be able to help meet this growing demand.
“Our track record of prudent deployment into attractive assets provides a strong platform for future growth and we look forward to delivering further value for our shareholders and a positive social impact for some of the most vulnerable members of society.”
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