Hearthstone Investment Management has carried out the first acquisition for its new private equity vehicle that invests in private rented homes in the UK.
Hearthstone, a property focused institutional investment manager, announced the acquisition of 171 homes on behalf of Hearthstone Residential Fund 1 (HRF1).
The deal comes after HRF1 had its first capital raising close in December last year.
HRF1 is acquiring the portfolio for £24.3 mln (€27 mln) from the Vista UK Residential Real Estate Fund, managed by Hermes Investment Management and Countrywide.
The portfolio
Hearthstone said that the portfolio contains four modern low-rise, mid-sized apartment blocks with a combination of one and two bedroomed apartments 'in areas of strong rental demand and excellent local infrastructure'.
Two of the blocks are in Manchester with one close to the city centre and another in the city’s eastern suburb of Droylsden. The other two blocks are well positioned in Birmingham and Nottingham.
Andrew Smith, partner and chief investment officer, at Hearthstone Investment Management, said, 'This acquisition is consistent with HRF1's strategy to build a regionally-diversified private rented sector portfolio comprising houses and low-rise blocks including both new-build schemes and high quality standing stock. We are confident this is an excellent start for the new fund.'
The blocks, currently occupied by professionals and young families, will be managed by Hearthstone IM's asset management team headed by Richard Otten.
'The purchase of an existing privately-rented investment portfolio offers the benefit of an immediate income,” Otten said.
Advising the vendor were Lambert Smith Hampton acting as agent and Pinsent Masons. Charles Russell Speechlys advised Hearthstone IM in connection with the acquisition.
The fund
HRF1, a ten-year closed-end private equity vehicle is advised by Hearthstone IM, a 50:50 joint venture between the senior management team and Hearthstone Investments Plc.
At first close, the fund received commitments of £100 mln from a cornerstone investor group of five local authority pension funds, including the Derbyshire Pension Fund, Nottinghamshire Local Government Pension Fund, Staffordshire Pension Fund, Teesside Pension Fund and West Midlands Pension Fund.
