A new REIT which will attempt to tackle the homelessness crisis in the UK has announced its intention to float on the main market of the London Stock Exchange (LSE), targeting an issuance of £250 mln (€279 mln) in shares.
Home REIT will be dedicated to providing accommodation to the homeless, through accommodation assets let or pre-let on very long (20-30 years) inflation-linked leases to registered charities, housing associations, community interest companies and other regulated organisations.
The company said it would target tenants with a proven operating track record in providing low-cost accommodation to the homeless, and which receive housing benefit or comparable support from local or central government to fund the provision of such accommodation to the homeless.
Alvarium Home REIT Advisors is assisting Home REIT in the IPO, which will list its shares on the premium segment of the LSE's main market. The company is offering up to 250 million ordinary shares at an issue price of £1 per share.
Lynne Fennah, chairman of Home REIT, said: 'The Alvarium team has capitalised and transacted over £1.5 bn of real estate assets with a particular focus on accessing secure, long-let and index-linked UK real estate with extensive expertise in the homeless accommodation asset sector.
'We believe a significant investment opportunity now exists in the UK homeless accommodation asset market and the Alvarium team has already identified a substantial pipeline of homeless accommodation assets that we, and the Alvarium team, consider are at low and sustainable rent levels.
'We aim to be part of the solution to the homelessness crisis in the UK, drawing on the Alvarium team’s sector specialist expertise to achieve our objective of delivering secure inflation-protected income and capital returns to shareholders, whilst delivering a positive social impact.'
Target properties
The firm said that it had already identified, off-market and in exclusivity, a substantial pipeline of homeless accommodation assets with an aggregate value of over £350 mln which meet the company’s investment objective and investment policy.
Home REIT will seek to acquire or create new accommodation for the homeless, a segment where it sees 'significant demand'. It expects to generate savings to local authorities and other providers of accommodation to the homeless via lower rents versus more expensive alternative accommodation. Assets acquired by the company will benefit from triple net, full repairing and insuring leases.
The assets will be diversified across various sub-sectors within homelessness including women fleeing domestic violence, people leaving prison, individuals suffering from mental health or drug and alcohol issues and foster care leavers. Alvarium Home REIT Advisors said it was working in collaboration with establishd homelessness charity Crisis.
Gareth Jones, partner at Alvarium Home REIT Advisors, said: 'The national homelessness charity, Crisis, has described current levels of homelessness as a ‘national emergency’ and Shelter estimates that there are over 320,000 people sleeping rough, in homeless shelters or other temporary housing in Great Britain, which has a significant impact on individuals as well as a wider social and economic cost.
'Local housing authorities are under a statutory duty to secure accommodation for individuals who are unintentionally homeless and in priority need but current accommodation for the homeless is limited in quantum and often sub-standard and uneconomical.
'Home REIT plc will seek to capitalise on Alvarium’s specialist knowledge, strong relationships and insights to secure high-quality homeless accommodation assets on a largely off-market basis and help to alleviate the homeless crisis in the UK.'
The new firm is targeting a minimum annual dividend of 5.5 pence per ordinary share, starting from the financial period commencing 1 September 2021, with a target net total shareholder return of at least 7.5%. It will adopt a conservative borrowing approach to a maximum level of 35% of the company's gross assets at the time of drawdown.
Home REIT will be managed by Alvarium Fund Managers (UK) and advised by Alvarium Home REIT Advisors (both members of the group trading as Alvarium Investments (formerly LJ Partnership), whose ultimate parent is Alvarium Investments).
Dickson Minto W.S. is acting as sole sponsor to Home REIT.
Alvarium Securities is acting as sole broker, placing agent and intermediaries offer adviser to the company.
