If Ken Livingstone is elected to Mayor of London he plans to ask local authorities to invest directly into social housing.   We like this plan indeed, we presented a similar proposal to the HCA and the Local Authorities Strategic Team back in February 2011.   There are clear benefits in this proposal which apart from the new homes that are delivered, the pension trustees can match their liabilities, kick start regeneration and promote co-investment.   The other strong message it sends out is that the LA are in the play with their own pension funds and this sends out a strong message to other potential investors to support the project if required.    Institutional asset developers, Carlton & Co, support this type of approach and we hope that LA’s pension trustees rise to the challenge and use their considerable pension resources to ignite projects in their region with the resultant outputs of new homes, jobs and not forgetting “New Homes Bonus” for the LA.

An interesting article in the Investment & Pension Real Estate, 01 March 2012, which comments on the performance of the residential index versus the other main real estate asset classes.   Interesting to see that the residential index outperforming the commercial index.  The latest figures from IPD did indeed show the residential sector to have outperformed all commercial sectors in the UK last year: delivering 11.3% in 2011 versus 10% for the highest performing commercial sector, offices.    The challenge ahead is to create institutional grade assets in the residential sector and of the right scale which deliver stable income streams of 4-5% along with asset growth.

Institutional asset developer, Carlton & Co, are working on projects that deliver the required income streams to meet the requirements of the fund managers.

http://www.thesundaytimes.co.uk/sto/business/Companies/article877565.ece

Bankers circle cash-starved housing associations – Carlton responded to this article and we briefly explained that some HARP’s are making real progress with regards to funding and in particular, long term finance (40yr-50yr) working with institutional investors.   Our response was printed in The Sunday Times, 26th February 2012.

We read with interest the above article which was published in The Sunday Times, 19.02.2012 about the pressures on housing associations/registered providers (“HARP’s”) to fund future development programmes.   As banks increasingly become lenders of short-term finance this move has left a gap in the market for providers of long-term funding… enter the institutional investors.   There are substantial financial resources that are seeking a suitable investment into the market and we have to ensure that we create the right grade of investment to attract the funds.

We have been in dialogue with a number of HARP’s and we find that the Development Directors/Finance Directors are receptive to these new funding sources using institutional finance, in particular, long term finance (40yrs-50yrs) as a resource to refinance part their existing stock and release some of the proceeds in order to ignite their development program.   Deals have been done and we are working with one client who is accessing funding to work on two expansion fronts; (1) refinancing their completed new build stock to unlock capital, in order to invest into further new-build homes and (2) to acquire more new build homes from a national house builder and financed through fund.   The acquisitions are part of a strategic expansion to grow their homes under management.   This is just one example of how institutional finance can assist the delivery of new homes and meet a proportion of the 150,000 new homes target by 2015.

The Enterprise Hub will create 18,000 ft.² of net lettable workspace with the capability to house up to 30-40 SME’s employing 150-180 people.   The USP of the Enterprise HUB is the quality of the business support service to support its tenants.   Commenting on the news, Carlton MD, Craig Peterson said “this is extremely positive news and we are now moving to submitting a full business case with the objective to formally launching the HUB in July 2012.   We have market tested our Workspace+ offer and it’s been very successful, we now want to start rollout of this business and the ERDF support is key to growth“.

Carlton CEO, Norman Peterson, commented further saying “our plan is to open 6 HUB’s by the end of 2013 to provide a portfolio of 120,000 ft.² of Workplace+ space across the region.   There is clearly a gap in the market for a workspace provider that provides first-class business support as differentiators to the competition.   Our goal is to ensure the tenants enterprise is successful by providing as much support as they require.   Our proposal is really quite simple, we want our tenants to be successful because if they’re successful, so are Carlton“.

The investment will help part finance the development of 20,000 ft.² of office space to accommodate up to 40 SMEs employing up to 180 to 200 persons.   The HUB will focus on sustainability in the context of the construction sector and Modern Methods of Construction.   The HUB will support start-up and fledgling companies who have an interest in sustainability.   One of the UK Governments’ drives is to reduce CO2 emissions and the businesses attracted to the Sustainability HUB will help support this agenda.

Carlton will construct the HUB using sustainable building techniques and use energy efficient solutions to operate the building.

Commenting on the vision, Carlton MD Craig Peterson, said “one of our main aims is to collaborate with the building supply chain in order to develop challenging solutions to drive down the delivery costs for the supply of new homes as well as meeting the challenges of the Code for Sustainability.   The sustainability agenda connects and supports our work to attract institutional investment into the housing sector.   By building homes more cost effectively, this improves yields and makes the investment more attractive to the institutional funds“.

Carlton CEO, Norman Peterson, further commented that “the Sustainability HUB will bring new jobs to the sectors by attracting new start-ups and fledgling businesses to make the hope that this and draw on their specialisms to create new jobs for the area.   Our vision is that the HUB will act as a focal point in the region and the wider area for the sustainability agenda for social and economic regeneration projects“.

An additional 296 Home Group properties are also being transferred to Derwent Living with the funding being provided by Clydesdale Bank and The Royal Bank of Scotland.

The total funding for both of the deals amounts to £55 million for the transfer of 1135 social properties to the Derby-based provider from housing association Home Group which is rationalising stock outside its key area in the north east. The transfer will bring Derwent Living’s stock total to around 15,000 properties – making it one of the largest housing associations in the Midlands.

The funding was provided by the Aviva Investors REaLM Social Housing Fund which is part of the asset manager’s Return Enhancing and Liability Matching (REaLM®) strategy which aims to address the current underfunding issue being experienced by UK pension schemes by hedging against inflation risks and generating returns in excess of liabilities.

Carlton MD, Craig Peterson was awarded an MBA (Enterprise) at the Teesside University degree ceremony yesterday.   The award marks the end of three years knowledge learning and research.   Commenting on the event, Craig said “I’ve really enjoyed the whole experience and learnt so much from the course which focusses on Enterprise and Entrepreneurship…I’ve put most of the knowledge to work immediately advising on strategy for our clients as well as the investment arm of the Carlton group“.   Craig made the most of the research element and produced a dissertation on “Attracting Institutional Investment into the UK Residential Market”  which is part of Carlton”s strategy to create investment ready opportunities for the Institutions.

(London): Aviva Investors today announced the launch of four new real estate funds designed with the aim of addressing the current under-funding issues being experienced by UK pension schemes.   The four funds form part of the Return Enhancing and Liability Matching (REaLM®) strategy that aim to hedge against inflation risks and generate returns in excess of liabilities.

The four funds, Aviva Investors Ground Rent Fund, Aviva Investors Student Assets Fund, Aviva Investors Social Housing Fund and the Aviva Investors Commercial Assets Fund, will invest directly into ground rent, student assets, social housing and commercial assets within the UK.

The Social Housing Fund aims to generate long-term returns of index-linked gilts plus 150 basis points net of all fees and expenses and the other funds will aim to generate long-term returns of index-linked gilts plus 200 basis points, net of all fees and expenses.   The funds are open ended and investors will benefit from long-term (25 years plus) income streams, high levels of income security, inflation protection and high asset diversification as the funds grow.