A £300m listed vehicle is about to be launched by one of the UK’s largest social housing bond arrangers to be invested in affordable housing.
Residential Secure Income (RESI) REIT has been supported with a pipeline of £263m investment to be placed into all affordable housing tenures, as well as sub-market rent and shared ownership, which has all been sourced from housing associations.
A REIT is a tax-efficient listed property investment vehicle.
RESI capital management, the company’s new fund manager, has employed Ken Youngman (formerly of Family Mosaic) as its chief financial officer. The company also has multiple Traderisks staff acting on its board, including the chief executive, Jon Slater.
There have been three REITs launched within the last few months, including the new RESI. Coming before RESI were social housing investor Civitas and a new PRS REIT.
Seeking to distinguish itself from others in the market, RESI REIT will focus its attention on social landlords of a larger size, including local authorities and housing associations. These larger landlords will hold investement-grade stock which is closely regulated by the Homes and Communities Agency. This should mean that agreements will be with landlords holding 1,000 homes or more.
The target of the find will be quarterly paid, long-dated, inflation-linked yield of 5%. The fund could exceed £600m with gearing.
There have been other appointments onto the staff, including Ben Fry and Alex Pilato both formerly of Traderisks, who are taking up the roles of managing director and investment manager and chairman respectively.
The group are seeking to secure particularly low-cost debt by focusing their drive on the quality and investment-grade nature of their pipeline.
“[RESI] aims to become a long term capital partner of housing associations and local authorities, enabling them to increase their development of new homes by re-cycling capital whilst continuing to manage, maintain and rent out the homes.” Baroness Dean of Thornton-le-Fylde.
The current estimations state that the issue will probably open in the week beginning 19th June, and end around the 6th July. The commencement and admission of trading are predicted to occur around the 12th July.
WHAT IS A REIT?
A REIT is one of many different special vehicles for investment into real estate. A REIT is always a listed vehicle and in general, a REIT would not pay any corporation tax on its property rental profits nor on any profits from disposals of property.
As a result of this tax benefit, REITs must distribute a minimum of 90% of their profit to shareholders whilst also withholding the 20% income tax. There are some investors who are exempt from this.