USS invests £300m in shared ownership housing

The Universities Superannuation Scheme (USS) has entered a £300m, 45-year debt facility with Residential Secure Income (Resi) to develop shared ownership housing in the UK.

The investment is drawable against acquisitions over the next three years and Resi will initially draw down £34m, which will be secured against its 166-unit shared ownership portfolio in Totteridge and Clapham Park.

According to Resi, shared ownership has proven “highly defensive” throughout Covid-19 and the new agreement will help support its portfolio growth.

USS Investment Management head of private credit, Ben Levenstein, said that the investment will provide “highly attractive inflation-linked cash flows to help pay our members' pensions”.

“As a long-term, responsible investor, USS has been looking to make an investment in social housing for some time and we are pleased to be able to announce a long-term partnership with Resi,” he added.

“This investment will not only drive growth for Resi, but also deliver much-needed supply to key workers and others looking for affordable homes."

The RPI-linked debt has an annual coupon of 0.461 per cent, whilst the debt principal will inflate in line with the RPI linked rent in Resi's shared ownership leases, with an RPI collar of 0 per cent and 5 per cent a year.

The debt was arranged for Resi by TradeRisks Limited and is interest only for the first three years and then will fully amortise over its remaining 42 years.

USS Investment Management senior director, Eamon Ray, commented: "We are pleased to be able to support the provision of affordable shared ownership homes throughout the UK, partnering with the team at Resi to create a unique financing structure within the housing sector.

“This facility is an exciting opportunity to create a significant scale portfolio of affordable homes, delivering long-dated inflation-linked cashflows to USS with asset and cash flow backing."

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