Barings has underwritten its first real estate loan in the UK affordable housing sector, in a deal the manager said generates reliable income through a socially conscious investment.
The investment manager, a subsidiary of US insurer MassMutual, has provided Domus Social Housing, a UK social infrastructure platform, with a £62.9 million (€71.9 million), 15-year facility to fund its acquisition of 54 properties in London, the midlands and the northwest of England.
Although the loan is Barings’ first in the affordable housing sector in Europe, the company has been active in the sector in the US for 25 years, where it reported making $4.5 billion of total investments to date. Sam Mellor, managing director and head of Europe and Asia-Pacific real estate debt at Barings, explained that increasing its exposure to affordable housing with this UK loan was “the right thing to do” from a social impact and a financial investment perspective.
“With a housing crisis in the UK, as across much of the world, the social case is crystal clear,” Mellor added. “Barings has significant expertise and experience in the affordable housing sector in the US, 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.”
The loan, which was provided under Barings’ separate account with Phoenix Group, the UK long-term savings and retirement business, is secured against assets that 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.
Prabjot Mann, head of property at Phoenix Group, said it was committed to investments that have a “clear social benefit”, adding that the loan formed part of its growing portfolio of investments in affordable, supported and social housing. “This funding will provide housing to those most in need, and is fully aligned with our approach to responsible investment,” she added.
Barings said it is increasingly seeking opportunities to invest in residential property because it provides a long-duration, reliable income that hedges against rising inflation, adding that student accommodation, build-to-rent and the private rental sector were also of interest.