Making supported housing development a reality - Supported Housing Investment Limited Partnership (“SHIP”)

Setting the scene

In the UK, there is a chronic shortage of fit-for-purpose supported housing for vulnerable people, leaving many trapped in unsuitable accommodation. Supply of purpose built and adapted supported housing has not kept pace with growing demand, leading to a national shortfall and longer waiting lists. A survey by charity Leonard Cheshire Disability (based on a survey of councils) estimated that the number of disabled people on council housing waiting lists increased from 163,598 in 2010/11 to 187,597 by 2015, and that one in 7 people on the list was disabled (up from 1 in 11 in 2011) - an indication of the severity of the situation in the UK.

The supported living model provides purpose built accommodation for vulnerable adults with learning or physical disabilities, and is designed to give individuals a greater level of independence and the ability to live in their own home whilst receiving the care and support that they require. Each development typically comprises 16 self-contained apartments located in residential areas and close to transport and local amenities, with on-site manned care facilities.

HBV (owned 50% by MSIL – PwC’s client) was established in 2011 with a strategic focus on the development of specialised supported housing for vulnerable adults with learning or physical disabilities, in partnership with industry-leading housing and care providers.

The model is entirely funded by the private sector, not relying on any public sector grant. HBV already had a strong track record of sourcing, constructing and forward selling developments to a number of institutional investors, having sold assets with a total gross development value in excess of £100m.

"We are delighted to be partnering with MSIL to launch SHIP, which continues our strategy to grow a significant portfolio of properties producing long term, stable returns for our participating employers and members."

Graham Burnett, head of property at USS Investment

“This investment makes the clear statement that specialist supported housing is here for the long term as an established asset class within the UK’s social infrastructure investment arena.”

Lisa Scenna, managing director of MSIL

How we helped

PwC’s Real Estate Corporate Finance team advised on the formation of the joint venture partnership between MSIL and one of the largest pension schemes in the UK, Universities Superannuation Scheme (“USS”), to raise equity to fund a portfolio of supported living developments – known as the Specialised Housing Investment Partnership (“SHIP”).

We assisted MSIL in identifying a financial solution which would fund the scheme during the development phase before seeding these assets into a fund jointly owned by MSIL and USS, one of the largest pension schemes and real estate investors in the UK.

By bringing in expertise from across the firm, maximising the value of our extensive relationships and working in close collaboration with MSIL, we have supported the business in finding a strategic partner.

Making a difference

Prior to the formation of the joint venture, HBV sourced and forward sold new developments in small portfolios to a number of different investors. Going forward, SHIP will drastically increase the scope for future developments. It aims to deliver over £100 million of purpose built supported living accommodation, which equates to over 500 new purpose-built supported independent living apartments across the UK.

The joint venture will generate stable, long term income, linked to CPI and backed by a lease to a Registered Provider, which is in turn supported by funding from central government. MSIL will act as asset, property and portfolio manager to the joint venture.

This investment was a significant transaction for the specialised supported housing sector in the UK and the largest commitment by an institutional investor to date. This investment will transform the living standards for hundreds of people with care needs, and those within their support networks.

To date, the JV has reached completion on 6 schemes representing a total commitment of c. £23milliom with rapid growth.

“This is an important transaction for Real Assets and represents a perfect example of where matching core institutional capital with the skills provided by high quality developers such as HB Villages and MSIL can drive effective returns - whilst also providing the social infrastructure our society desperately needs.”

Simon Hampton Real Estate Deals Leader at PwC