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Octopus makes first acquisition after raising further £10m from social impact investor
Octopus Real Estate has acquired the first homes through its new affordable housing fund, after raising an extra £10m from social impact investor Big Society Capital.
Octopus Investments, part of Octopus Group, said it had committed to buy 26 homes in Peterborough from Vistry Homes. The scheme comprises eight houses and 18 flats for affordable rent and shared ownership tenures.
The homes will be owned by NewArch Homes, Octopus’ registered provider of social housing, with an expected completion date of April 2025.
It comes after the real estate giant announced the fund’s first capital raise of £50m in December from an investment pool for 32 London Local Government Pension Schemes.
The new funding from Big Society Capital brings the total raised so far to £60m.
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Drew Ritchie, investment director at Big Society Capital, said: “We believe that impact-driven private capital has a vital role to play in addressing the country’s housing shortage and we seek to invest in best-in-class managers and investment models that we believe can unlock capital at scale.
“This is one of the reasons why we have invested into Octopus’ affordable housing fund, as well as its strong focus on supporting low-income families and older households to access a quality, secure and affordable home.
“We were keen to back the fund’s equity partnerships model that can work hand-in-hand with the housing association sector to maintain and increase new affordable supply.”
Octopus explained that its fund was set up to speed up delivery of affordable homes in the UK, with a specific focus on sustainability. Its overall target is to help deliver 5,000 homes over the coming years.
Octopus Group is also known for its energy subsidiary, Octopus Energy, which specialises in renewable energy.
Jack Burnham, head of affordable housing at Octopus Real Estate, said: “While the affordable housing investment market is still relatively nascent, it is growing, and we continue to receive strong demand from investors.
“They are attracted by the potential to generate long-dated sustainable income, low correlation to other real estate sectors and the ability to have real tangible impact.”
Mr Burham said it was a sign of Big Society Capital’s conviction in his firm’s funding model.
He added: “We also see it is a stamp of approval in terms of the impact we are trying to achieve.
“And we’re not wasting any time. To be able to deploy the first capital just five weeks after our initial fund close is something we are really proud of.”
Octopus previously outlined plans to target institutional investors with £300m in commitments throughout the next year as part of its affordable housing strategy.
Mr Burham told Inside Housing last year that Octopus Investments “aspires to build and own at least 3,000 homes over the next few years”.
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