Hermes Investment Management and Countrywide, the UK’s largest property services group, are to launch a new residential property fund for institutional investors.
The fund, to be called Vista, will be an open-ended vehicle giving access to the UK private rented sector (PRS). Residential property has outperformed all other UK real estate sectors over the last decade, while exhibiting low correlations, according to both firms. The new fund will be managed by Hermes’ fund director, Philip Nell, and will target high-quality, modern residential property assets in the UK, with a bias to regional towns and cities with strong underlying economies. No more than a third of the portfolio will be invested in Greater London. The fund has received £95 million in commitments from cornerstone investors and have invested in three assets in Manchester, Birmingham and Nottingham, with a combined value of £13 million.
Hermes Real Estate chief executive, Chris Taylor, commented: “The UK PRS sector has delivered attractive, risk-adjusted returns over recent years and we believe that it will continue to perform in a market which is facing a chronic mismatch between demand and supply. This demand for PRS is further underpinned by demographic and lifestyle trends and, coupled with a shift towards greater urbanisation, long-term institutional capital invested in PRS can play a key role in delivering much needed new housing supply. This, alongside low correlations and strong returns relative to other real estate sectors and asset classes make UK PRS an attractive portfolio diversifier for institutional investors.”