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REIT strikes £300m deal with university pension scheme to buy up homes for shared ownership
Real estate investment trust (REIT) Residential Secure Income (ReSI) has entered into a £300m, 45-year debt facility with one of the UK’s largest pension schemes.
The facility agreed with the University Superannuation Scheme (USS) is drawable against acquisitions over the next three years. ReSI has said it represents the first-ever standalone investment grade debt financing secured for shared ownership.
ReSI secured an annual coupon of 0.461% for the deal and will initially draw £34m from the facility which is secured against its 166-unit shared ownership portfolio located between sites in Totteridge and Clapham Park.
Since its launch in 2017 ReSI has assembled a portfolio of 2,717 residential units including 203 shared ownership, 289 local authority units and 2,223 retirement rental housing.
The REIT said it will pay no commitment fees on undrawn amounts and expects to make further drawdowns from the new facility as it continues to grow its shared ownership portfolio with £36m expected to be deployed into an identified pipeline of shared ownership opportunities in the near term.
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Alex Pilato, chief executive of ReSI Capital Management, said: “This is a significant milestone both for ReSI, as well as the social housing sector, representing the first standalone investment grade debt financing secured for shared ownership.
“The facility has been obtained at an extremely attractive rate with a great partner in USS and maintains our stated strategy of securing long-term amortising investment grade debt which ensures asset quality, while minimising refinancing and covenant risk as well as interest rate exposure.”
Shortly after the announcement of the debt facility last week, ReSI acquired 39 shared ownership homes from Step Forward Homes, boosting its shared ownership portfolio further.
The properties are located in the North West of England and comprise 24 two and three-bedroom homes that will be immediately income generating.
The deal used funding from the £300m debt facility and the remaining 15 homes will be acquired by ReSi within six months once construction is completed and the homes are occupied.
For-profit ReSI Housing, a wholly owned subsidiary of ReSI, was awarded investment partner status by Homes England earlier this year.
