CBRE Global Investors, the Los Angeles-based real estate investment management firm, has made its first foray into the social housing sector having invested £8.9 million (€12 million; $13 million) on a portfolio of stakes in residential properties in the UK. The transaction was made on behalf of a local authority pension fund.
CBRE GI acquired the stakes in 218 properties – 137 houses, 78 flats and three bungalows – which are located mainly in the East Midlands from Derby-based housing provider Derwent Living.
The deal means CBRE GI has become the co-owner of the properties with the properties’ occupiers remaining as the other co-owners.
The rationale behind the investment is that shared ownership housing mitigates a lot of risks that can be associated with residential investment, particularly as each shared ownership tenant has their own equity in the property making them long-term tenants, commented Ian Wilson, director and fund manager, CBRE GI.
“This is a very exciting and innovative deal for us and for our client from a number of different angles. It is the first deal that we have entered into in the social housing sector and the potential of this type of shared ownership investment is huge,” Wilson commented.
“The RPI [retail price index] linked leases provide long term index beating income returns from a diverse occupier base. It offers our client attractive real returns whatever the future inflationary environment as well as meeting a wider government objective of helping to solve the housing shortage through institutional investment in the residential sector.”
Chaco advised CBRE GI on the investment and Lewis Silkin acted as lawyers; Anthony Collins acted as lawyers for Derwent Living.