Boost for house­builders and real es­tate firms

Help to Buy ex­tended and two op­por­tu­ni­ties to back prop­erty in­vestors’ plans

Shares - - CONTENTS -

The real es­tate space is grab­bing in­vestors’ at­ten­tion once again. Shares in house­builders are march­ing higher on the prom­ise of fur­ther state sup­port for the sec­tor and two real es­tate in­vest­ment trusts (REITs) have an­nounced sub­stan­tial fundrais­ing plans.

Among the key early take­aways from the Con­ser­va­tives’ an­nual con­fer­ence in Manchester was a £10bn ex­ten­sion to the ‘Help to Buy’ pro­gramme as the party looks to win over younger vot­ers who are in­creas­ingly grav­i­tat­ing to­wards Labour.

FAVOURED HOUSE­BUILDER IS A BIG WIN­NER We wrote about af­ford­able homes spe­cial­ist MJ Gleeson (GLE) in last week’s is­sue of Shares (28 Sep 2017), not­ing two thirds of its cus­tomer base made use of Help to Buy. It is seen to be one of the big­gest ben­e­fi­cia­ries of the scheme ex­ten­sion.

So­cial hous­ing in­vestor Civ­i­tas So­cial Hous­ing (CSH) has an­nounced plans (28 Sep) to raise £350m to help it take ad­van­tage of an iden­ti­fied £500m in­vest­ment pipe­line in its space.

The in­vest­ment trust is fo­cused on pro­vid­ing ac­com­mo­da­tion for in­di­vid­u­als with spe­cific needs, such as those with dis­abil­i­ties or which are com­ing out of prison. This is Civ­i­tas’ first fundraise since a £350m over­sub­scribed IPO (ini­tial pub­lic of­fer­ing) last Novem­ber.

To avoid the value of its ex­ist­ing port­fo­lio be­ing di­luted the in­vest­ment trust is rais­ing the money through the is­sue of C shares which will re­ceive a fixed quar­terly div­i­dend of 3% a year. The C shares will con­vert to or­di­nary shares after a year or when 90% of the pro­ceeds have been in­vested. A prospec­tus for the new is­sue is ex­pected in mid-October.


A more mod­est sum is be­ing raised by real es­tate in­vest­ment trust AEW UK REIT (AEWU) which has al­ready pub­lished a prospec­tus on its £40m-to-£60m is­sue (28 Sep).

The REIT in­vests in a range of com­mer­cial prop­er­ties from in­dus­trial units to of­fices and shops. The fo­cus is on prop­er­ties in ar­eas with good sup­ply and de­mand dy­nam­ics, typ­i­cally with ten­ants on shorter than av­er­age leases. Port­fo­lio man­ager Alex Short says there is a ‘big pipe­line of po­ten­tial as­sets’. She adds more lim­ited di­rect com­pe­ti­tion in this part of the mar­ket means it is not too dif­fi­cult to find op­por­tu­ni­ties of­fer­ing suf­fi­ciently gen­er­ous yields to un­der­pin a promised yield from the REIT of 8%. (TS)

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