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Social housing REIT shares fall amid market uncertainty
Shares in social housing investment funds have fallen and investor interest waned, as markets react to trouble at a housing association which has deals with several trusts.
A series of real estate investment trusts (REITs) have attempted to enter the sector during the past two years, seeking to buy up social housing portfolios to generate an inflation-linked return for investors.
But several trusts have experienced difficulties this year, after the Regulator of Social Housing warned First Priority – which has deals with several REITs – may not be able to pay its debts when they fall due and “continues to trade on the goodwill of its creditors”.
This has combined with wider uncertainty in the stock market, with many share prices falling recently.
Triple Point, launched in August last year with a £200m initial public offering, raised £47.5m from investors last week, less than a quarter of the £200m it had aimed for.
Chris Phillips, chair of Triple Point as well as large housing association Places for People, said: “Given the current market backdrop, we are pleased with the result of this fund raise.
“We appreciate the support of our existing shareholders and welcome our new investors, and we look forward to reporting on the group’s continued strong progress during the coming months.”
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Civitas, meanwhile, saw its share price fall 8% in less than two weeks.
Paul Bridge, chief executive of Civitas, said that the issues facing First Priority, which is obliged to pay £984,556 in annual rent to the REIT, had “some impact on the sector”.
However, Mr Bridge added: “In recent weeks, stock markets across the world have experienced significant volatility as quantitative easing programmes have been reduced, expectations for interest rates have been revised and discrete issues such as trade tariffs have affected sentiment.”
Phil Jenkins, partner at consultancy Centrus, told Inside Housing: “As inflation and expectations of higher interest rates pick up it is quite possible that we will see a shake-out in the alternative income segment of the market as investors become more discerning and the long-term winners emerge with other players falling by the wayside.”
These broader trends have affected other investors such as the huge trust GCP Infrastructure, which lends money to First Priority’s creditors but does not rent any homes to the housing association.
Rollo Wright, chief executive of GCP Infrastructure, told Inside Housing that First Priority “will have had an impact” on social housing REITs’ share prices, but that similar investment trusts in other sectors had faced difficulties as well.
Inside Housing recently reported that multiple investors have pulled out of RESI REIT after deals with large housing associations failed to materialise.
