The London-based firm said the new vehicle would buy companies with existing portfolios of residential properties and aim to attract investment from “mainstream” investors.
Simon Phillips, chief executive of the new vehicle, told IP Real Estate the Mill Residential REIT would give shareholders the opportunity to invest without the “burdens” of being a residential landlord.
By this time next year, the REIT hopes to have built a portfolio with a gross asset value of around £50m (€62.5m), Phillips said.
“People have questioned why a residential REIT hasn’t been done before, and there’s been a lot of investor interest,” he said. “PRS is a very attractive market, and it’s going to grow.”
With an opportunistic and value-added approach, Mill Group will target the south east of England and West Midlands – avoiding prime and central London and focusing on areas of growth.
“We will look to invest where there is a good combination of infrastructure and employment,” Phillips said.
In the greater London area, the choice facing “generation rent” was dominated by commute time as well as quality of stock.
The company has bought an initial portfolio of seven properties “substantially let and generating income, in desirable locations”.
The assets range in value from £180,000 to £430,000.
With REITs constrained by limits on the “churn” of properties, Phillips said the vehicle was more aimed at investing with a view to “longer-term holds”.
In April, Andrew Smith joined Mill Group as executive director as the company launched its first PRS project in a joint venture with Bovis Homes.
The pair bought 190 new-build homes in the south of the UK for £45m.