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New £30m partnership targets lease-based temporary accommodation
Fiera Real Estate has partnered with Phi Capital Investments (SimplyPhi) to spend £30m on acquiring a portfolio of affordable housing.
The initial investment will see Fiera’s long-income fund (FRELIF) let homes to local authorities on 20-year-plus leases for use as temporary accommodation or longer-term housing.
Fiera said authorities would receive upgraded and refurbished housing without the need for a large capital commitment.
The company added that the partnership was FRELIF’s first investment in the affordable housing sector and would target the shortage of social housing in the UK.
Fiera has called on others within the real estate sector to address this issue.
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Anne-Marie Keane, co-fund manager of FRELIF, said: “We have been looking closely at the affordable housing sector for some time and this new partnership with SimplyPhi is unique in that it will deliver diversified government-backed income let on 20-plus-year leases whilst benefiting from annual CPI.”
The Consumer Price Index (CPI) plus inflation currently stands at around 10.4%.
Ms Keane added: “Importantly, whilst achieving all of the fund’s key investment themes, we are also helping to address one of the biggest crises of our time, being the woeful and ongoing undersupply of affordable accommodation for the most vulnerable in our society. We are happy to be leading the way in this most important of investment areas.”
Athesan Guna, chief investment officer at SimplyPhi, said: “Our partnership with Fiera enables us to continue to help our public sector customers acquire much-needed affordable housing to meet the ever-growing challenges presented by the rising cost of temporary accommodation.
“Retrofitting homes to net zero and upgrading housing standards are core to our objectives, ensuring families living in these homes are able to do so in comfort and safety.”
The lease-based model has been under scrutiny recently, and Inside Housing has published several articles that show funds looking to pay down debt and charity clients stopping rent payments.
Home REIT, a homelessness accommodation investment fund that leases beds across 135 local authorities, agreed this week to reduce its outstanding debt to a lender from £250m to £220m by repaying £30m.
In March, it was announced that two of Home REIT’s charity clients had entered voluntary liquidation.
This news followed a story the previous month, which reported that the fund was considering a possible sale after a report revealed more than £10m in outstanding rent for the quarter ending November 2022.
In January, one of the firm’s clients revealed that it had not paid rent for months amid a dispute over the quality of its properties.
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