The UK real estate industry has welcomed the debut of the reserved investor fund (RIF) structure, with domestic developers including Cityheart and the Galliard Apsley Partnership already weighing their own onshore launches to channel institutional capital into housing.
Last week, UK social impact manager Resonance announced plans to raise £700m (€817m) to tackle homelessness across the country.
The manager secured £118m at first close for the Resonance Housing Pathways Fund (RHPF), its first open-ended vehicle, backed by investors including Oxfordshire Pension Fund, Westminster City Council, City Bridge Foundation and Better Society Capital.
RHPF is the first to be structured as a RIF, an onshore structure introduced by the UK government to make institutional investment into property and other illiquid assets more efficient.
The launch marks the first practical application of the vehicle developed by real estate lawyer Melville Rodrigues, who devised the fund concept to help address the housing crisis with private sector capital.
Rodrigues, co-chair of fund policy committee at Real Estate:UK and head of real estate Advisory at Apex, said: “This is a big moment, as the real estate industry addresses the housing crisis. And, as further launches follow, we expect more capital to flow towards the housing and urban regeneration projects Britain needs.
“Particularly delighted that the Resonance RIF addresses head-on homelessness: enabling occupants to progress into self-sufficient living: their rent financed by local housing allowance. A solution which can help deliver on the Burnham’s government pledge to bring an end to homelessness.
“On a personal level, very special: a fund idea in 2019, last year implemented in legislation – and now delivering on a better way to fund the projects that can make Britain better. It’s taken persistence and patience but government departments, Parliament, local authorities and the real estate industry have been persuaded and responded splendidly. And now the financial taps are turning on.”
Vanessa Hale, CEO of Real Estate:UK, said: “This is a welcome measure and we expect it to be the first of many. There is a viability crisis for development generally and housing particularly, and anything than makes it easier and cheaper to build more homes is to be cheered.”
Simon Chisholm, CIO at Resonance, said: “We’re proud that the Resonance Housing Pathways Fund is the first to launch using the Reserved Investor Fund structure. With a first close of £118m, our ambition is to raise up to £700m of investment by the end of 2030 to provide settled, affordable homes for people facing a housing crisis, while also aiming to delivering stable, long-term returns for investors. We hope the RIF will encourage wider investment into housing and other essential infrastructure that communities across the UK urgently need.”
Jeff Rupp, public affairs director at INREV, said: “The introduction of the RIF provides a welcome new UK fund vehicle for channelling institutional investment into affordable housing and other important urban development projects. We anticipate it will lead to capital flows into many similar projects in the months and years ahead.”
Luke Piggin, finance director at Cityheart, said: “We’re supporting urban centres like Stockport and Darlington, and have some 2,000 homes in the pipeline. We can better fulfil all this potential if we have a way of financing that’s onshore, low cost, transparent and investable. The reserved investor fund is all of the above.”
DJ Dhananjai, director, Galliard Apsley Partnership, said: “The need for more housing, build to rent or affordable, is well documented where international institutional investors are asking for onshore and tax transparent structures for deployment of capital. The RIF has sufficient transparency – and it is a useful mechanism to join institutional capital with economic, social and policy need.
“For the growing demand from domestic capital, focused on delivery of housing across major urban centres, RIF is well aligned with many elements of government policy/agenda.”
Amy Ingham, residential and real estate lead, The Good Economy, said: “The launch of Resonance’s Housing Pathways Fund is an important moment, not only for tackling homelessness through investment, but also for demonstrating the potential of the reserved investor fund as a vehicle for impact-led capital.
“As monitoring, evaluation and learning partner across Resonance’s homelessness property funds, we’re delighted to be supporting the team in assessing the impact of these investments. As the RIF market develops, combining innovative investment structures with robust impact practice will be critical to ensuring more capital can flow towards solutions that deliver meaningful outcomes for people and places.”
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