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REITs strike deals with association under investigation by regulator

Two social housing real estate investment trusts (REITs) have struck deals with a housing association under investigation by the Regulator of Social Housing. 

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Picture: Getty
Picture: Getty
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Social housing REITs have continued to strike deals with an association under investigation by the regulator #ukhousing

In an update to the stock market this week, Civitas said it had paid £3.9m for two specialist living properties and one registered care property.

One of the supported living properties is leased to Inclusion Housing, which the regulator is currently investigating over possible governance issues.

Fellow REIT Triple Point has struck five deals with Inclusion since the regulator announced its investigation, buying 11 supported housing properties for £15.2m, two for £6.7m and 27 for £4.1m. An undisclosed number of these properties are leased to Inclusion.


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Inclusion has done similar deals with Civitas and Triple Point before, and with a fund jointly owned by the universities’ pension scheme and the construction company Morgan Sindall.

While statistics from the regulator suggest that Inclusion owned 1,279 homes on 31 March 2017, the association’s own accounts for that period indicate that it owned a relatively small number of freehold properties.

Its business model is more similar to the other small housing associations that have done deals with REITs, managing mainly properties leased from other organisations.

One of these associations, First Priority, came to the brink of insolvency after striking deals with various funds, including Civitas.

After the regulator investigated at that association, it said it had a “fundamental failure of governance” and did not have “sufficient working capital” or the capacity to meet its debts when they fell due.

In May, the regulator wrote to housing associations with this business model, seeking assurances over “conflicts of interest”. Since then, however, it has placed Inclusion on its ‘grading under review’ list.

The other supported living property in the Civitas deal will be leased to Falcon, one of Civitas’ most prolific partners, which now manages all of Civitas’ properties that were previously managed by First Priority.

The registered care property will be leased to Bespoke Supportive Tenancies, a registered provider which has not struck any deals with Civitas before, but has done business with Triple Point.

The other Triple Point properties, meanwhile, will be leased to the similar associations Chrysalis, Encircle, My Space, Care Housing Association and Auckland Home Solutions.

In response to a request for comment, a spokesperson for Triple Point referred Inside Housing to the REIT’s May statement on Inclusion, previously reported by Inside Housing.

Civitas declined to comment.

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