Investors will get the opportunity to invest in what its backers see as a new niche in UK real estate later this month with the launch of the The Multifamily Housing REIT.
The £175m IPO is being conducted through intermediaries with a closing date of 25 September and the shares should be admitted on 28 September.
The real estate investment trust is focused on pre-built privately rented homes in ‘regional’ England (i.e. outside London) with £70m of the proceeds from the float (assuming its successful) going towards the acquisition of a portfolio of properties in Bristol, the West Midlands, East Anglia, Manchester and Leeds.
MID-MARKET PROPERTIES
These are ‘mid-market’ properties with average rents of £500 to £700 per month - equating to 30% of the median salary for around 70% of the local populations in these areas. The trust says this compares with average one-bedroom build-to-rent propositions requiring 46% of average local regional salaries.
Most of the properties are low-rise apartment blocks of traditional brick construction. As well as the initial seed portfolio, an immediate pipeline of £422m has also been identified. A total return of 10% is being targeted including a 5% dividend yield and the trust intends to have a progressive dividend policy.
The company will operate a ‘hub’ strategy with four separate hubs dedicated to managing the properties which, because they are in close proximity to each other, should result in efficient operations.
‘REAL HOMES FOR REAL PEOPLE’
Jonathan Whittingham, CEO of Harwood Real Estate Asset Management and non-executive director of The Multifamily Housing REIT tells Shares: ‘We have first mover advantage and a sustainable bespoke hub operation.’
Focusing on what Whittingham characterises as a sweet spot with a niche which is currently too small for institutions and too large for large for individual buy-to-let investors, he says there was a perception that this market didn’t exist with most institutional capital going to the build-to-rent market instead.
‘Build-to-rent, including those already built and those in planning, account for just 1.75% of the regional residential market proposition, we are targeting the market with the broadest possible appeal.
‘These are real homes for real people, housing the likes of office workers, nurses and teachers,’ he adds, noting renters in arrears account for less than 0.5% of the prospective rental roll.
