Investment trust to compete against Buy To Let and Build To Rent

An investment trust has been launched and looks likely to be competing for individual investors who may see it as an alternative to the increasingly complex buy to let market. 

The Multifamily Housing REIT is a Real Estate Investment Trust - a financial services category broadly defined as a publicly traded company providing individual and large scale investors with purpose-made tax-efficient vehicles in which to invest in property.

In the UK most REITs have targeted commercial property but the Multifamily Housing REIT is the first listed vehicle to focus exclusively on pre-built rental homes; it says it will ultimately float on the London Stock Exchange and hopes to raise £175m. 

Nick Jopling - a well-known figure in London residential development circles - will be its chairman, although the REIT itself will invest solely in already-built private sector homes outside of the capital.

A launch statement from the REIT says: “These homes offer an affordable mid-market rental proposition for the majority of the working population with rents at 30 per cent of the median salary for approximately 70 per cent of the local regional population. This compares to average one bedroom Build To Rent [units] requiring 46 per cent of an average local regional salary.”

The REIT - which by definition is a company - says its wholly-owned subsidiary, Multifamily Asset 1 Limited, has already entered into share sale and purchase agreements which - conditional on the parent company’s admission to the London Stock Exchange - will lead to acquiring 658 private rental sector units and five commercial units across 22 properties which it refers to as the Seed Portfolio. 

“The Seed Portfolio is located across regional England with properties in Bristol, the West Midlands, East Anglia, Manchester and Leeds, amongst others. These locations form the basis of a bespoke management model with concentrations of properties located in close geographical proximity permitting operational efficiencies (the Hubs)” says the launch statement. 

“The Hubs are in the Midlands, the South West, the East and the North and North West of England. Locations have been chosen based on fundamentals providing tenant demand and opportunity for rental growth” it continues.