Alvarium Investments has targeted a £250m initial raise as it looks to float a real estate investment trust (REIT) aiming to "contribute to the alleviation of homelessness in the UK".
Home REIT will look to invest in a diversified portfolio of assets across the UK which will be dedicated to providing accommodation to the homeless. It will target an annual dividend yield of at least 5.5% and total shareholder returns of at least 7.5% per annum over the medium term.
The accommodation assets it purchases are expected to be let or pre-let to registered charities, housing associations, community interest companies and other regulated organisations providing houses for the homeless that receive Housing Benefit or comparable funding from local or central government. The leases will run typically for between 20 to 30 years, with inflation linkages.
The company will be managed by Alvarium Fund Managers and advised by Alvarium Home REIT Advisors, both subsidiaries of Alvarium Investments, which has real estate AUM of around $7bn.
Lynne Fennah, chairman of Home REIT, said "a significant investment opportunity now exists in the UK homeless accommodation market", with Alvarium having "already identified a substantial pipeline" of assets.
"We aim to be part of the solution to the homelessness crisis in the UK, drawing on the Alvarium team's sector specialist expertise to achieve our objective of delivering secure inflation-protected income and capital returns to shareholders, whilst delivering a positive social impact," Fennah said.
Partner at Alvarium Home REIT Advisors Gareth Jones noted estimates from charity Shelter that more than 320,000 people were sleeping rough, are in homeless shelters or other temporary housing facilities. This "has a significant impact on individuals as well as a wider social and economic cost," Jones added.
"Local housing authorities are under a statutory duty to secure accommodation for individuals who are unintentionally homeless and in priority need, but current accommodation for the homeless is limited in quantum and often sub-standard and uneconomical.
"Home REIT plc will seek to capitalise on Alvarium's specialist knowledge, strong relationships and insights to secure high-quality homeless accommodation assets on a largely off-market basis and help to alleviate the homeless crisis in the UK."
The company said it would look to diversify its portfolio across various sub-sectors within homelessness, including women fleeing domestic violence, people leaving prison, individuals suffering from mental health problems, those suffering from drug and alcohol related issues and foster care leavers.
It would focus on training and rehabilitation within its assets, looking to provide tenants with "the skills and confidence to find long-term accommodation and help enable them to reintegrate back into society".
Its identified pipeline adds up to £350m worth of assets found off-market through Alvarium's contacts and are under exclusivity, it said.