Home Reit (HOME ), the first real estate investment trust (Reit) tackling homelessness in the UK, has plans to grow to more than £1bn in the next five years and house 10,000 homeless people.
The trust, which is targeting a 5.5p annual dividend, raised £241m when it launched in October last year and is just weeks away from fully deploying that money, snapping up properties that it lets to charities helping to alleviate homelessness.
Managers Jamie Beale and Gareth Jones of Alvarium Home Reit Advisors have already built up the portfolio to 500 properties providing 2,500 beds to homeless people or those at risk of homelessness.
The Reit, which is not only the first of its kind to list in London but also a global first, currently works with 14 charities that specialise in tackling homelessness in particular areas, such as women fleeing domestic violence, those leaving prison and those exiting the armed forces. It leases properties to the charities, which provide care and support to tenants and help them to get established, Beale said.
As the charities collect housing benefits on behalf of the tenants, the trust is able to collect rent from the charities directly, meaning it operates in the same government-backed arena as Civitas Social Housing (CSH ) and also that the charities do not rely on donations in order to remain solvent.
‘We are working with charities across the country that have exceptional relationships with local authorities and have specialisms within homelessness,’ Beale said.
Crisis reported that there were more than 200,000 people sleeping rough or without a permanent home in the UK and Beale described it as a long-standing problem that is likely to get significantly worse after the coronavirus pandemic.
By building up the trust to £1bn over the next three to five years, the managers hope to do their part to tackle the issue – with the expectation that they will go back to the market to raise more money this year.
‘If we get to £1bn of assets, we will be able to provide accommodation to 10,000 individuals,’ Beale said.
‘It is a crime that the UK is such a wealthy country and we have such a significant homeless problem.’
Beale said the trust was tackling a ‘genuine social and economic problem’ that could gain traction in a more socially conscious world, but the fund’s strategy had only been made possible in the last few years due to a change in regulation – specifically, the 2018 Homelessness Reduction Act.
‘It is such an important and significant piece of legislation because it placed a legal obligation on local authorities to house homeless people or those at risk of homelessness,’ he said.
Beale said the fund was offering local authorities quality property and saving them money while helping people find permanent homes and pulling them out of the cycle of homelessness.
‘We provide proper homes where people can live. They have an address that means they can apply for a bank account and apply for jobs,’ Beale said.
‘It is cheaper for local authorities because the rent is in line with the local housing allowance rent and, unlike the alternatives, we work with charities that can provide the care and support that is needed.’
The drive to create long-term homes for people rather than offering stop gaps means that the managers are selective about the properties they buy.
The investment duo does not buy tower blocks but small apartment buildings with a maximum of 25 flats.
‘We also buy small blocks with five to six flats and acquire individual homes. We look at what the use is. Women fleeing domestic violence need the housing to be secure, and if people are coming out of the armed forces or prison, we need to make sure they don’t become lonely or isolated,’ Beale said.
The buildings are located in areas where there are good amenities, transport links and access to jobs. The manager added that while they may only be scratching the surface of the homelessness problem, ‘at least they are scratching it’.
Since beginning trading on 12 October at 100p, Home Reit’s shares have risen 8.5% to 108.5p. A maiden interim dividend of 0.83p per share will be paid later this month.
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