First for Real Estate Investment Trust
The Social Housing Investment Trust is reported to be planning to be the first to list on the full London Stock Exchange as it plans to raise at least quarter of a billion pounds to fund new property acquisitions.
It has been reported that the company known as Civitas is about to make an application to trade on the London Stock Exchange in the main markets. This would enable it to raise the substantial funds that it requires to further invest in social housing across England and Wales. This would be first social housing-based real estate investment trust to do so.
Real Estate Investment Trusts (REIT) are vehicles set up to invest in property, whilst at the same time allowing for the apportionment of shares. This enables liquidity, which can be a challenge to achieving long term property investments.
Civitas has a policy of buying existing properties from housing associations who need to improve their liquidity to enable the social housing operators to further invest in creating new social housing. The local housing associations then continue to manage the properties on long leases, thereby being responsible for collecting the rents.
The long leases effectively enable Civitas to receive a stream of income on a secure basis that is in backed by the public sector. As a consequence, it is considered that investors may receive quasi government backed incomes at a prospective anticipated yield sum of close to 5%, whilst at the same time having a long term opportunity of capital growth.
The social housing sector in England and Wales is valued in excess of £300 billion. There are currently between 4 and 5 million people on local authority waiting lists across the UK.
Social Housing Real Estate Investment Trusts are seen by many as a way of greatly assisting the capital funding for housing associations as well as local authorities who have seen grant funding for new developments slashed. As a consequence, and in order to further increase their property holdings, they have needed to find alternative means of generating their own capital.
Paul Bridge, CEO of Civitas Housing Advisors Ltd, said “There is a significant need for additional social housing across England and Wales. Meeting this need requires innovative solutions to support the current network of providers.
This includes enabling providers to gain access to capital that is currently tied up in existing housing stock. Releasing this capital will allow providers to fund the additional developments required to increase social housing.
With the teams’ experience, knowledge and relationships in the social housing sector, Civitas Social Housing PLC is well positioned to play a role in this important process.”
The news of the flotation still comes as a surprise, despite several investment trusts also looking to raise money on the stock market over recent weeks and who have been pooling plans. There is, however another quasi, public sector investment trust who is also considering raising some £200 million through a public offering known as ‘Bellevue Asset Management’, as well as the BB Healthcare Trust, which has in excess of 3 billion under management and healthcare industries across numerous areas.
Civitas proposes to only float the Social Housing Investment trust in early December, although final plans have not been confirmed.
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3.11.16