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Second REIT misses fundraising target
A second real estate investment trust (REIT) has missed its fundraising target as it attempted to launch on the stock market.
A month after Fundamentum failed to raise the £150m it was seeking in an initial public offering (IPO) to investors, Horizon Housing REIT has missed its minimum fundraising requirement of £113m.
Like other social housing REITs, it planned to buy homes for supported housing and lease them to housing associations at rents slated to rise in line with inflation.
It published its prospectus on 27 April, seeking £125m. Unlike most of the other REITs in the sector, it planned to invest in what it called ‘affordable market rent housing’, as well as specialist supported housing.
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This, it said, included housing let to tenants at Local Housing Allowance levels and rents “at or near to market rent”.
It has been forced, however, to delay its IPO. In an update to the market, the REIT said it planned to engage with more potential investors, “with a view to proceeding when market conditions are more favourable”.
It follows Triple Point only managing to raise £47.5m of its targeted £200m from the stock market.
Harvey Griffiths, chief executive of Horizon, told Inside Housing that many investors he spoke to were concerned about the problems faced by housing association First Priority.
The association was censured by the Regulator of Social Housing in February for a “fundamental failure of governance”, and the REIT Civitas has transferred all its properties managed by First Priority to another housing association, a move also being pursued by the investment fund GCP Infrastructure.
Mr Griffiths added: “There’s no doubt the market is tough. It remains challenging at a market level and a sector level. While we have really solid interest and we continue to work on it, there needs to be some further work to see if we can get this done.”
Like the other REITs, Horizon was targeting a dividend for shareholders of 5% for the company’s second financial year.
According to the prospectus, it had identified an initial portfolio of 551 properties, mixed between specialist supported housing and ‘affordable market rent’, valued at £75.2m.
