ONE TO WATCH: PRI­VATELY RENTED HOMES

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THE MUL­TI­FAM­ILY HOUS­ING REIT

Keep an eye out for The Mul­ti­fam­ily Hous­ing REIT which is sched­uled to join the stock mar­ket on 26 Oc­to­ber.

The in­vest­ment trust hoped to float in Septem­ber but pushed back the date to give po­ten­tial in­vestors more time to do due dili­gence.

As­sum­ing the list­ing does hap­pen, we think it could be a good op­tion for in­vestors who want to add some­thing prop­erty-re­lated to their port­fo­lio which of­fers a more re­silient slant.

The real es­tate in­vest­ment trust is fo­cused on pre­built pri­vately rented homes in ‘re­gional’ Eng­land (or in other words out­side Lon­don).

In other ge­ogra­phies most in­sti­tu­tional in­vest­ment goes into pre-built stock but in the UK the fo­cus up un­til now has been on build-to- rent schemes.

Jonathan Whit­ting­ham, CEO of Har­wood Real Es­tate As­set Man­age­ment and non-ex­ec­u­tive di­rec­tor of The Mul­ti­fam­ily Hous­ing REIT, notes there was a per­cep­tion from some po­ten­tial in­vestors that the mar­ket it is tar­get­ing sim­ply doesn’t ex­ist.

He says: ‘We have first mover ad­van­tage and a sus­tain­able be­spoke hub op­er­a­tion. Build-torent, in­clud­ing those al­ready built and those in the plan­ning stage, ac­counts for just 1.75% of the re­gional res­i­den­tial mar­ket propo­si­tion. We are tar­get­ing the mar­ket with the broad­est pos­si­ble ap­peal.’

The plan is for the pro­ceeds from the float to go to­wards the ac­qui­si­tion of a port­fo­lio of prop­er­ties in Bris­tol, the West Mid­lands, East Anglia, Manch­ester and Leeds.

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-torent 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.

‘These are real homes for real peo­ple, hous­ing the likes of of­fice work­ers, nurses and teach­ers,’ Whit­ting­ham adds. He notes renters in ar­rears ac­count for less than 0.5% of the prospec­tive rental roll.

Set to fo­cus on mid-mar­ket rental prop­er­ties out­side of Lon­don

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