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Institutional Investment Fund – UK Housing…a new asset class

25/02/2010 12:00

HCA Newcastle… I’m back for the 3rd round of presentations on our proposals to attract institutional investment into the UK residential sector. We’re trying to get the HCA (Private Finance team) on-board as we understand they want to see the institutional funds investing in the housing sector as long term investors.   The private rented sector model hasn’t met the needs of the institutions and we seem to be in a stalemate.   Nevertheless, we have spent the last 2 years championing this initiative and or gut instincts tell us it’s only a matter of time we just need the barriers to entry removed and we’ll kick start the sector.   This approach works in the USA, it works in Europe we desperately need it in the UK.

I’m back now to present more detail on issues like internal rate of return, cost of finance who enjoys the capital growth at the end of the term.   Now I’ve got the answers to most of these questions but what I don’t have is the fine detail from the fund manager himself….and I could really do with the steer on the finance rate.   So, I’m in the foyer waiting to be called into the meeting when I take a call from the fund manager who advises me that the board have just given approval for a £250M tranche for investment and I can work on the rate of between 100 and 200 basis points above long-term gilts… “assume around 5% Norm and you’ll be okay at thatgood luck and let me know how it goes“!! said Nigel.   This was good news and I felt that we were at a turning point, we had a major investor ready to enter the market…now its about getting the message out to the market about the benefits of this long term funding to kick-start development and acquisition programmes.

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