BMO Global Asset Management’s real estate arm has launched a UK social housing fund with Home Group, one of the UK’s largest housing associations providing affordable homes.
The fund, managed by BMO Real Estate Partners (BMO REP), has an environmental, social and governance (ESG) ‘impact’ policy and has attracted money from Big Society Capital, an impact investor tackling the UK’s “housing crisis”.
BMO UK Housing Fund will target a 4.5% annual distribution yield and currently has an investment pipeline of £250 million (€293 million) to build mid-market rental homes for local key workers.
Overall, the fund is targeting around £500 million of equity to deliver an inflation-linked income.
Angus Henderson, head of business development at the firm, said: “This fund enables us to provide a much-needed housing solution to low and middle income earners.”
Mark Henderson, Home Group’s chief executive, said the UK needs innovative approaches to build homes.
“A larger, professionally managed private rented sector will have a positive impact in driving up standards. Making private renting better is crucial to ensuring everyone has a safe and affordable home to live in,” he said.
The ESG policy will be overseen by an independent advisory group.