Barings has provided a £62.9m (€72m), 15-year loan to finance the acquisition of a social housing portfolio in England by Domus Social Housing.
The investment was made on behalf of UK savings and retirement business Phoenix Group, through an existing separate account.
It is Barings’ first real estate debt exposure to affordable housing in Europe.
Domus, a new social infrastructure platform established by fund manager Fiera Infrastructure, acquired the portfolio, consisting of 54 properties in London, the Midlands and the Northwest of England, with more than 850 beds.
Domus and Fiera were advised by Excellion Capital on the transaction.
Chris Bates, head of European real estate debt origination at Barings, said: “Having been actively lending against UK and European residential property for some time now, we were keen to explore opportunities in the affordable-housing sector and believe this portfolio is a substantially attractive one to launch us into the market.
“We are increasingly seeking out opportunities to invest in residential property, given that it provides a long-duration, reliable income that hedges against rising inflation, and are interested in a range of asset classes such as affordable housing, student accommodation, build to rent and the private rental sector.”
Sam Mellor, managing director and head of Europe and Asia–Pacific real estate debt at Barings, said: “Increasing our exposure in affordable housing is the right thing to do from both a social impact and a financial investment perspective, reflecting both Barings’ values as a company and our investors’ priorities.
“With a housing crisis in the UK, as across much of the world, the social case is crystal clear. Barings has significant expertise and experience in the affordable housing sector in the US, upon which we’ve drawn for this investment, and we’re eager to continue to combine our global research capabilities with our on-the-ground knowledge to seek to secure returns for our investors.”
Prabjot Mann, head of property at Phoenix Group, said: “Phoenix is delighted to have provided £62.9m for Barings’ first loan supporting affordable housing projects in Europe.
“Phoenix Group is committed to investments that have a clear social benefit and this loan forms part of our growing portfolio of investments in affordable, supported and social housing. This funding will provide housing to those most in need, and is fully aligned with our approach to responsible investment.”
Alina Osorio, president of Fiera Infrastructure, said: “Domus is a new social infrastructure platform focused on providing critical shelter and support to the most vulnerable members of the community.
“The investment addresses the social housing supply imbalance in the UK by providing quality accommodations in the areas most at need. We plan to grow our footprint through additional acquisitions, which have been identified and secured in areas experiencing housing supply shortages.”