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REIT becomes registered provider of social housing

A real estate investment trust (REIT) has become the first publicly listed investment fund to become a registered provider of social housing.

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Picture: Getty
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Residential Secure Income (Resi) currently leases homes to a housing association, a local authority and a private property management company.

Its subsidiary, Resi Housing, has become a registered provider (RP), which will own any properties that need to remain within the regulated sector.

Alex Pilato, chair of the risk and audit committee at Resi and chief executive of Traderisks, which owns Resi, told Inside Housing the move was “to make it easier to partner with housing associations”.


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He added: “For example, if they’re entering into a [joint venture], this can then be a partnership and both parties are regulated, so it makes it easier in that sense.

“If, on the other hand, they are selling properties to Resi or to Resi Housing, then it makes it easier for them because in the consultation process with tenants, it would be saying that these properties are going to an RP.”

Will Perry, assistant director for commercial and new entrants at the Regulator of Social Housing, said that as far as he knew, no other publicly listed fund has ever applied to be an RP.

He added: “The model that Resi has presented us with is that they will be a registered provider which owns conventional social housing, primarily shared ownership. In that context, we’d expect it to manage that stock effectively and run a viable business.

“Because it’s a for-profit provider, its owners are entitled to take dividends out of it. That’s one of the main reasons for having a for-profit provider. It’s doing social housing activities on its own balance sheet, and we would expect it not to extract an excessive level of profit out of that.”

Resi has a different business model to most of the other REITs that have entered the sector over the past couple of years, though it still looks for a similar return of 5% to investors.

It told Inside Housing last year that it was aiming for all its housing association deals to be struck with larger organisations, doing deals worth £50m or more.

This is in contrast to other REITs, which have almost exclusively done deals with some of the smallest housing associations in the sector.

It has also stated an aim to focus on shared ownership properties, while the other REITs have largely bought specialist supported housing.

Resi, however, has only struck one deal with a housing association so far – acquiring a £100m retirement portfolio in November last year to be managed by Places for People.

Since then, it has also acquired another retirement portfolio worth £31.2m – which was licensed to private management company First Port – and a £21.3m residential building leased to Luton Borough Council.

Though none of these homes contain shared ownership housing, Mr Pilato told Inside Housing that Resi is still “very interested” in shared ownership portfolios.

Update: at 17.05 on 9.7.18 This story was updated to include a quote from Will Perry.

What is a REIT?

What is a REIT?

A real estate investment trust (REIT) is a company that raises money by issuing shares on the stock market and uses it to buy up property in order to raise income and provide a dividend to its shareholders. REITs generally aim to provide a 5% return to investors.

They are exempt from corporation tax on any profits they derive from their property rental businesses.

REITs have been investing in other areas of real estate for decades but have only become involved in social housing since 2016.

In general, the REITs that have launched in the sector have bought properties, repurposed them to be used as supported housing, and leased them to housing associations that own very few homes themselves at levels of rent linked to inflation.

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