- Horizon Housing REIT plc (Horizon REIT) is a proposed new UK real estate investment trust that will have a Premium Listing on the main market of London Stock Exchange, to be launched in May 2018
- Investment strategy: direct participation in secure, inflation-linked long lease income from ownership of social and affordable market rent housing, backed by government regulated, and / or corporate counter-parties.
- Horizon REIT will invest in Fully Repairing and Insuring (FRI) long leases, backed by Registered Housing Providers (RHPs) / Local Authorities / Corporate Counter-parties, generating secure, inflation-linked income from two sub-sectors:
- specialist social housing; and
- affordable market rent housing
- Target gross issue proceeds of up to £125 million, for investment in
- Initial portfolio of c. £75 million (GAV) – East Riding of Yorkshire Pension Fund (ERPF) has confirmed it will cornerstone the IPO by committing its equity stake of c. £56m in the initial portfolio (NAV) in exchange for shares
- Existing healthy pipeline
- Targeting 5.0% p.a. dividend yield on issue price from year 2 (4.0% in year 1), paid quarterly, with potential to rise in line with inflation
- Attractive, lower risk investment proposition with positive social impact, generating attractive levels of income
The UK faces a deepening housing crisis, with demand growing and supply constrained and Significant household growth, low levels of affordability, and a lack of access to mortgages are driving the strong, long-term demand for rental homes.
Longevity, migration and higher birth-rates are projected to increase to 70 million by 2029 (Source: ONS). The housebuilding industry is producing 210,000 new homes per year in England, more than at any time since the global financial crisis (GFC) in 2007. But it is still not enough. The Government’s consultation on assessing housing need sets annual housing need in England at 266,000, while the House of Lords Economic Affairs Committee suggested over 300,000 new homes are needed each year to have any impact on affordability. The white paper explicitly identifies slow delivery as one of the major difficulties facing the housing market (Savills Residential Property Forecasts, Autumn 2017
Recognising the wide and growing supply-demand gap, there is now also strong political support for institutions investing in residential property, which has been in evidence recently, via the Montague Review of Housing Investment, institutional support from the likes of the HCA and more general direct aid to the development industry.
Accordingly: (i) the sector is very large and capital intensive; (ii) the embedded UK housing supply and demand gap is attractive for investment, and (iii) long-term private sector (equity and debt) financing is required.
There is an opportunity to invest substantial capital into long term UK property assets at a time where the investment case is attractive.
Horizon REIT intends to invest in a broadly balanced portfolio of residential property assets consisting of Affordable Market Rent Housing and Specialist Social Housing. More information can be found in the Fund Strategy section.