Building A Position in U.K. Social Housing

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Building A Position in U.K. Social Housing: An Introduction to the
Asset Class for
Institutional Investors

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Annette Bannister Giulia Noli
MAY 18, 2022

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Investments in U.K. social housing increasingly are attracting the attention of institutional Investors who seek to achieve portfolio diversification along with the potential for superior risk-adjusted returns. As a subsector within infrastructure investment, the market for U.K. social housing bonds is sizeable and growing. A recent government survey noted that as of year-end 2021, Private Registered Providers (the main owners of social housing) had a total of £117 billion in financing facilities in place.1 It is expected that an additional £41 billion in debt facilities will be needed over the next five years.2 The asset class is characterized by long duration that can also offer attractive cash flows: average maturity at issuance is 25-30 years, and the issuers are typically viewed as single A credit quality.3 Importantly, the projected strong demand for new high quality, affordable rental units, as well as renovations and maintenance of existing units, could create a substantial flow of new investment opportunities for the foreseeable future. At the same time, the ESG-related aspects of social housing can help enable investors to invest in assets with a positive impact.

As a participant in the social housing sector for more than six years, MetLife Investment Management believes that a compelling argument can be made for including a strategic allocation to U.K. social housing in a multi-asset institutional portfolio. Accordingly, we believe institutional investors would be well advised to educate themselves about the track record, investment characteristics and demand drivers of this unique asset class.