Schroders Capital and Investment Management Firm Raise $263m for Supported Housing Fund

Global asset manager Schroders Capital and Civitas Investment Management have closed their Social Supporting Housing Fund after raising $263m from investors.

The pair formed the SoHo investment to forward-fund the development of new supported housing for vulnerable adults with care needs. The $263m in equity commitments will be leveraged to create a $411m fund to invest in purpose-built specialist units.

Capital was raised from investors, including pension funds, insurance companies and charitable foundations, in the United Kingdom, United States and Singapore.

CIM, an impact investment manager with $3.4bn of committed capital for social impact projects, will oversee the development of the properties. The homes will then be leased on a long-term basis to specialist housing associations. The SoHo fund has 11 supported housing schemes operational and another 50 in the pipeline.

CIM also founded the publicly listed Real Estate Investment Trust (REIT) Civitas Social Housing in 2016. Civitas Social Housing holds investment property worth more than $1.2bn.

Its portfolio of specialist housing includes 619 properties providing homes to more than 4,200 residents. Civitas Social Housing has properties in 164 local authority areas in England & Wales, leased to 16 housing associations with support provided by 118 care providers.

According to the Regulator of Social Housing’s (RSH) Global Accounts of private registered providers, leases for supported housing across the sector totalled around $685.8m  as of 31 March 2020.

It has acknowledged that the new lease-based funding model allows “a rapid expansion” of supported housing supply.

The RSH has however also raised concerns however about the concentration of risk to housing associations using lease-based funding models, particularly if they are thinly capitalised or they are over-relying on a long -term, low-margin, inflation linked leases as a source of finance. It has placed several registered providers operating lease-based funding models on its list of non-complaint organisations.

Earlier this month, the SHR found provider Auckland Home Solutions (AHS), which leases properties from Civitas, to be non-compliant with its governance and financial viability standard. The SHR cited concerns about AHS’s risk management under its lease-based funding model.

Ian Ramshaw, chief operating officer at AHS, told Housing Today however that its model is sustainable, often backed by ethical investment and meets the needs of care providers and local authorities by offering greater choice and a range of services.

He added that AHS has committed to work with the regulator to address the issues.

Civitas, in a statement to the stock market, said: “Auckland remains fully up to date with all lease payments due to Civitas and this is expected to continue to be the case. Auckland has committed to continue to engage with the RSH and in turn Civitas will continue its supportive relationship with Auckland and all other counterparties with the shared objective of further enhancing standards across the sector.”

Source: Trade Wind News

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