Investment manager Barings has provided a £62.9 mln (€72 mln), 15-year loan to finance the acquisition of a social housing portfolio in England by Domus Social Housing.
Provided under its separate account with investor Phoenix Group, the UK’s largest long-term savings and retirement business, it is Barings’ first real estate debt exposure to affordable housing in Europe.
Domus and Fiera Infrastructure, an investment firm with CAD$3.7 bn of assets under management, were advised by Excellion Capital on the transaction in which Domus acquired the portfolio, consisting of 54 properties in London, the midlands and the northwest of England with more than 850 beds in the underlying units.
The assets are let to UK housing providers that specialise in managing homes for residents with a range of needs, including those experiencing homelessness and domestic abuse.
While Barings’ first real estate loan against an affordable housing portfolio in the UK, the global investment manager headquartered in North Carolina has been active in the sector for 25 years in the U.S. To date, it has committed to over $4.5 bn of total investments in affordable housing across the country.
Chris Bates, head of Europe Real Estate Debt Origination at Barings, said: ‘Having been actively lending against UK and European residential property for some time now, we were keen to explore opportunities in the affordable housing sector and believe this portfolio is a substantially attractive one to launch us into the market. We are increasingly seeking out opportunities to invest in residential property, given that it provides a long-duration, reliable income that hedges against rising inflation, and are interested in a range of asset classes such as affordable housing, student accommodation, build-to-rent and the private rental sector.’
Sam Mellor, managing director and head of Europe & Asia – Pacific Real Estate Debt at Barings, added: ‘Increasing our exposure in affordable housing is the right thing to do from both a social impact and a financial investment perspective, reflecting both Barings’ values as a company and our investors’ priorities. With a housing crisis in the UK, as across much of the world, the social case is crystal clear. Barings has significant expertise and experience in the affordable housing sector in the U.S., upon which we’ve drawn for this investment, and we’re eager to continue to combine our global research capabilities with our on-the-ground knowledge to seek to secure returns for our investors.’