For investors who want to put their money to work in ESG (environmental, social and governance) stocks it can be hard to find companies which really meet the ‘S’ or social part of the equation.

Step forward property firm Home REIT (HOME), whose whole purpose is to help solve one of the biggest social issues facing the nation right now.

The real estate trust buys and maintains high-quality properties throughout the UK to provide accommodation to the homeless at a fraction of what it costs local councils to house people in often less than suitable B&Bs and multi-occupancy properties.

The company floated in October 2020 at 100p, raising £240 million in the largest REIT listing of the year and the largest UK-focused REIT listing for three years.

While its aim is to alleviate homelessness, it also has a
target of 7% per year inflation-protected income and capital returns.

In its results for the financial year to August 2021, published last November, the firm reported it had bought 711 properties with a year-end valuation of £328 million, 4.5% above the cost of acquisition.

The net asset value total return from flotation to the end of August 2021 was 8.9%, including a dividend of 2.5p per share which is set to rise to 5.5p per share this year.

By the end of the six months to February, following a heavily over-subscribed issue of new shares for £350 million last September, the portfolio had increased to 1,585 properties with a market value of £713 million while the NAV had risen a further 5.8% to 111.2p per share.

The trust has since acquired a further 156 properties for £42 million, taking its total investment since floating to £700 million and its number of beds for the homeless to 8,556.

The properties are rented to charities, housing associations and local councils at low and sustainable rents – typically £95 per bed per week against an average estimated £245 weekly B&B rate in England – with an index link to provide protection against inflation and an average lease length of 25 years.

In 2022, the trust is seeing more and more demand from its partners to find suitable accommodation as the homeless population increases.

‘As support measures put in place by the UK Government during the Covid-19 pandemic are unwound and the cost of living in the UK surges, the number of those individuals facing homelessness is sadly expected to increase,’ admits the trust’s chairman Lynne Fennah.

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