Breaking New Ground: Homeless accommodation provider to float on London Stock Exchange

September 24, 2020

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2 min read

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What's going on here?

A homeless accommodation provider has announced its plans to float on the London Stock Exchange (LSE).

What does this mean?

Home Reit is a real estate investment trust or “REIT” that manages property on behalf of shareholders. The REIT regime provides a means of access to investment in UK real estate without the high price tags and with increased ability to liquidate. This is achieved through the purchase of shares in the REIT which owns the properties. These properties are then rented out with the rental income providing a dividend to the investors. 

Home Reit aims to acquire a portfolio of real estate which will be rented to charities, housing associations, and other regulated organisations which receive government funding, in order to provide accommodation for the homeless. Home Reit has already identified suitable assets worth £350m. In order to fund the investment Home Reit is seeking to raise £250m by floating on the LSE.  This would be done through an issue of £250 million shares at £1 per share, and Home Reit have stated that they would be willing to increase their issue to £300mn if there is demand (thereby raising £300mn). 

With the backing of Alvarium Investments, Home Reit aims to complete the IPO and start trading by mid-October.

What's the big picture effect?

While the LSE has over 100 real estate companies and REITs listed, this is the first REIT to float in London since 2018. With a target of 7.5% per annum in returns this looks like an attractive investment opportunity for many, and it also delivers a positive social impact. It has been estimated there are 320,000 homeless people in Britain. Local authorities are legally required to secure accommodation for homeless people in need, but the current accomodation available is insufficient for the rising demand. Home Reit aims to be part of the solution to this crisis. The company has said that they would look at diversifying their portfolio across different sectors of homelessness to include housing for those escaping domestic violence, mental health and drug related issues, and foster care leavers among others. Home Reit has said it would focus on training and rehabilitation in order to help people develop the skills and confidence to reintegrate back into society. While it is unlikely that Home Reit is alone able to solve the homelessness problem, it is a step in the right direction. 

However, whether or not people have money to spare in order to invest during the Covid-induced recession remains to be seen.

Report written by Julie Lawford

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