ONE TO WATCH: PRIVATELY RENTED HOMES
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