Responsible Housing REIT is targeting a listing on the main market of the London Stock Exchange to raise £250 million to invest into a diversified portfolio of supported housing accommodation across the UK.
In its intention to float announcement yesterday the group said they will deliver a sustainable income with low volatility to investors, underpinning a minimum 5% dividend yield target with a total NAV return target of a minimum of 7.5% per annum over the medium term. The prospectus will be published by mid-September, with publication of the results of the share issue and the admission of ordinary shares by the end of the month.
The REIT is seeking to acquire and develop assets to address a lack of quality accommodation for supported residents across a number of care sectors, including adults and young people with learning disabilities, mental health issues, physical disabilities, addiction as well as the elderly, those in need of temporary accommodation and those with addiction problems or needing support.
According to the group, demographic trends strongly support the sector. Projections suggest that the overall number of supported homes may increase by 30% by 2030, rising from 650,000 to 845,00 in the UK. Additional demand is expected to arise from the continued implementation of the Government’s Transforming Care Agenda, which aims to improve the overall quality of care.
Properties will be let on tailored leases with a variety of lengths to registered charities, housing associations, community interest companies and other regulated organisations with a proven operating track record.
Leases will be aligned to the length of care-provision packages and underlying contractual documentation and, where appropriate, contain break options. This creates a new model which seeks to balance the needs of registered providers and investors and which will ensure transparency in the setting of rents with appropriate benchmarking against private market rents.
“Responsible Housing REIT offers the opportunity to invest in a much-needed social resource, where demand is on an upward trajectory and yet there is a lack of suitable Supported Housing accommodation to cater for these vulnerable groups” said Robin Minter Kemp, Chairman, Responsible Housing REIT. ““This will be an impact-led strategy, with a peer leading ESG framework, that also offers an attractive dividend underpinned by inflation-linked income supported by sustainable rents.”
The company will be managed by BMO Real Estate Partners, part of BMO Asset Management which has over £229 billion of AUM and over twenty years’ experience. Responsible investing is a core competency of BMO, which has £8 billion of AUM in responsible funds.
“We believe the Responsible Housing REIT model offers a new and compelling proposition for investors”, said Guy Glover, lead manager, BMO. “The UK faces a shortage of suitable accommodation, underpinning our conviction in a strategy delivering a balance between all stakeholders to create a truly sustainable model”.