A homeless man sits with a hand-written sign, collecting money from passers-by in central London

Summary List Placement

Environment, Social and Governance investing hit the mainstream this year with a wide range of new investment products being launched. It is expected that ESG funds will outnumber conventional funds by 2025, according to PWC.

Despite the rise in ESG products, the ‘Social’ element is the most complex to quantify. A BNP Paribas’ 2019 Global ESG Survey, found 46% of asset managers found ‘Social’ the most difficult to analyse and embed in their strategies.

However, a new real estate investment trust, HOME REIT, is turning that on its head, with an emphasis on the ‘S’ as the first ever REIT focused on alleviating homelessness.

HOME REIT (HOME) recently listed on the London Stock Exchange as the largest UK-based REIT initial public offering in three years, raising £241 million to alleviate homelessness through investing in good quality properties that charities and housing authorities can use to house the homeless for the long-term.

The past year has not been especially kind to investors in UK assets. The FTSE 100 is the worst performing major stock market of 2020,  having lost nearly 15.5% so far, compared to the near-11% gain in the S&P 500, the 8% rise in the Nikkei or the whopping 26% rise in Copenhagen’s OMX 25. 

UK benchmark bonds yield next to nothing in the short term. Even a five-year gilt barely yields a basis point. But the managers of this REIT expect juicy returns of over 7%.   

The state of homelessness in the UK

In the UK, 320,000 people were recorded as homeless in 2018, according to Shelter, the leading homelessness charity. This means one in 20 people in the UK are homeless and either living on the streets or in temporary accommodation, such as hostels and B&Bs.

The pandemic is expected to make this figure worse. 

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The UK unemployment rate continues to rise and the first national lockdown created a 14% increase in the number of individuals in emergency accommodation in England within three months; almost 100,000 households were stuck in temporary accommodation.

And with COVID-19 creating a drop in housebuilding, it will become increasingly challenging to house the homeless, as new real-estate supply has been in short order.

“The fact that the UK, being one of the wealthiest countries in the world, has such a significant homeless problem is frankly abhorrent and wrong,” said Jamie Beale, partner at the REIT’s investment adviser, Alvarium Home REIT Advisors.

What is a REIT?

A real estate investment trust enables investors to provide capital for fund managers to go out and purchase a portfolio of properties, often targeted toward specific sectors such as storage or retail. 

In return, investors will gain exposure to the properties by receiving income from the rent paid.

Some of the main advantages of REITs is that they are tax-efficient, provide high yield for low entry costs and can add diversification to an investor’s portfolio.

How can a REIT alleviate homelessness?

Working in partnership with UK charity Crisis and local housing authorities, HOME REIT will invest in a diversified portfolio of high quality …read more

Source:: Business Insider


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