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REIT buys homes from builder to convert to shared ownership
A real estate investment trust (REIT) has acquired a portfolio of homes from a private house builder, planning to convert them to shared ownership.
In an update to the stock market, ReSI said that it had bought 34 new build homes in Barnet, which will be converted for use as shared ownership homes.
They bought the homes from builder Crest Nicholson for £16.45m, and will hold them through its subsidiary, ReSI Housing which is a for-profit registered provider of social housing chaired by David Orr, former chief executive of the National Housing Federation.
ReSI paid on average £483,823 per home. Two-bedroom properties in Barnet are currently advertised on the Crest Nicholson website for £599,950.
The homes will be managed by newly-merged Metropolitan Thames Valley, one of the largest housing associations in London.
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David Orr said: “We are excited that ReSI Housing is combining private sector equity with grant funding to enable the provision of further shared ownership homes, allowing new buyers to take their first steps onto the housing ladder.
“This transaction shows how those for-profit providers that are long-term asset holders can make a positive contribution to the social housing sector, by enabling developers to accelerate their development ambitions and increase the provision of affordable homes.”
ReSI differs from other REITs and investment funds in the sector in that it is not focused on supported housing and looks to strike deals with large housing associations.
It also does not agree lease deals with housing associations. Instead, it signs a management agreement which, unlike the index-linked leases used by other investors, sees the fund carry the risk over rental income.
Unlike other for-profit investors, its business model does not rely on selling the properties it acquires after a period of time to cash in on any increases in value.
It is targeting £1bn of assets over the next 18 months to two years, and currently owns properties worth a combined £240m.
Ben Fry, fund manager of Resi Capital Management, said: “Closing our first shared ownership acquisition, in partnership with Crest Nicholson and Metropolitan Thames Valley Housing, is a significant milestone and the start of what we anticipate will be long-term partnerships with both organisations.
“Becoming a registered provider positions ReSI Housing to support the delivery of affordable accommodation across the UK, while at the same time identifying new ways to leverage our private and public sector relationships to deploy capital into long-term, visible income streams.”
