Dubai-backed supported housing specialist wins approval for first scheme
NEWS 12 Jul 2018 BY GAVRIEL HOLLANDER
A Dubai-based investment fund’s UK registered provider arm has won planning permission for its first specialist supported housing scheme.
Auxilia Homes, a wholly owned subsidiary of Phoenix Fund Investments, was also last week registered as a social landlord with the Regulator of Social Housing.
The investment model involves Phoenix funding the building of new homes on a scheme-by-scheme basis, owning the leaseholds on the completed assets, and then entering management agreements with local housing associations or councils.
Auxilia will also use grant from Homes England to part-fund schemes, allowing it to deliver homes with rent at 80 per cent of market rates.
Phil Shanks, UK head of real estate for Phoenix Fund Investments, told Social Housing that investors could expect returns similar to those achieved by social housing real estate investment trusts.
The fund has around £45m ready to invest in specialised supported housing schemes for rent, as well as private sale retirement homes.
“The fund will do as much of this as we can,” said Mr Shanks when asked how quickly the fund could spend the money.
“It will be driven by how much the sector wants to work with us. We encourage them to bring forward schemes that meet strategic housing need. If they engage with us and come forward with things we can go back to our investors.”
Phoenix has set up Auxilia as a ‘capital call fund’, meaning money can be drawn down from investors on a project-by-project basis. Investors have typically been drawn from small international investment funds, including private wealth funds.
The first scheme to be built under the Auxilia model – Dingle Farm in Middleton, Greater Manchester – will see a £5.3m investment help build four self-contained flats and 11 bungalows, designed for adults with autism.
The scheme will be managed by Partners Foundation, a specialist supported housing landlord founded by Mr Shanks in 1994.
The landlord has already been contacted about working with another local authority in the Manchester region and one in the North East to deliver supported housing schemes.
Mr Shanks said that political instability in the UK influenced what assets the Dubai fund was looking to invest into.
“A big part was looking at what assets would be easiest to manage through the Brexit process,” he said. “We had looked at mid-price housing for sale but we didn’t like the risk at the moment.”
In contrast to a number of other new investors in supported housing, Auxilia will not lease its homes to other housing associations, but will instead pay them a management fee.
“We don’t use leases so there’s a direct link between the investment fund and housing provision,” explained Mr Shanks. “That puts the onus on to us. With direct ownership we don’t need the same level of securitisation.
“We want to use housing associations’ imagination and expertise, and it’s easier to do that if they are not worried about how your balance sheet can accommodate the effect of a lease.”
Auxilia will also use an in-house development team to build its projects, with the tender for its first scheme set to go to market next week.
Aamer Abdulaziz Salman, founder and chief executive of Phoenix, said: “I am delighted that our first scheme in the UK, has launched. This is the result of more than three years’ hard work from all the team members involved where we worked collectively with our future tenants, their relatives, their nominated care providers, our local delivery registered social landlord and the local authority.
“We are pleased of the fact that we are producing splendid homes and providing great outcomes for our tenants.
“Our first scheme sets a very high bar, in terms of participative development, but it is a bar that we are determined to maintain as we continue to bring forward new, sustainable housing choices for people.”