Case Study
Nacro was the first charity to reach out to Assetz Exchange, and our very first supported housing investment project. Paul Philips, Head of Property and Asset Management at Nacro, and James Tedrake Director of Strategic Partnerships at Assetz Exchange, talk about how the partnership started and how they work together to provide supported housing to some of the more vulnerable groups in society.
Providing supported housing to vulnerable groups in society with the charity Nacro
Nacro is a social justice charity operating in England and Wales providing housing, health services and education to provide second chances to some of the most vulnerable groups in society. Housing is one of their largest areas of operation with 2,500 bed spaces currently being provided to local authority and central government schemes.
How did the partnership start?
PP: “About 2 years ago, we decided to be more proactive in finding landlords and investors to lease property to us for the 30 or so contracts we hold with local authorities and central government. We wanted to be in the position where we could effectively have ‘property to order’ as and when it was needed. We attended exhibitions and generally put the word out that we were looking for partners that aligned with our way of working. One of our leasing team put me in touch with James at Assetz Exchange and, from our first quick zoom meeting, it was clear that we could work together.”
JT: “It was evident from the outset that there was mutual benefit in working together and that we were both as committed as the other to put the hours in to build an effective working relationship. The key to the partnership has always been flexibility around lease agreements and lengths, finding a way to make properties work for Nacro and their partners whilst delivering the longer term stability that our investors require.”
What type of supported housing did you need to fund?
PP: “At the time we started to talk to Assetz Exchange, we needed to source additional properties for our local and central government contracts in locations such as Nottingham, Bristol, Sussex, London and the West Midlands. As with all our properties, the houses needed to be of a high standard and in good repair, but there were also more detailed specifications for the location of the properties which meant we were struggling to secure properties.”
JT: “From the start, it was evident that the types of properties Nacro were asking us to find were also good for property investment – terraced or semi detached homes in city centres or in demand areas with good capital growth prospects. This also meant that our property searches were very time intensive, particularly with an added list of specifications, but that’s one of the roles we play in this partnership.”
What social outcome do these property investments deliver?
PP: “Often people are homeless or living in unsuitable accommodation at the point of referral to the various schemes we operate. These houses, and the support services we put in place for them, put them on the right path to independent living and a more permanent home. Individuals may be dealing with substance abuse issues, debt problems or need help with life skills such as money management or just generally making their lives less chaotic. Not everyone is ready to receive this help and you can see people being referred back 3 or 4 times before they are in the right place to deal with everything. However, at the end of 2019, 73% of Nacro tenants successfully moved on to sustainable accommodation.”
JT: “The direct impact this supported accommodation can have on individual’s lives resonates with an increasing number of investors who are looking to make an impact or social contribution with their money. We offer our investors long term, stable income from property combined with the opportunity to really make a difference and it’s that combination that makes this partnership work.”
How do you work together?
PP: “Assetz Exchange is our first property partner where properties are being funded by retail investors, as opposed to individual landlords or institutional investors. There’s always a bit of nervousness about the unknown, but we spent a bit of time working out the ground rules and ensuring we could work together. We tell James what our requirements are and he searches for properties. We inspect those he suggests and draw up a schedule of works. We both agree to the lease terms, where we’ve usually given James an indicative lease charge we’re prepared to pay for that specific area in advance.”
Although the tenants in these properties normally stay from 6 weeks to 2 years, the authorities using them want to keep them in constant use and there’s a very high renewal rate for leases. That makes them good, stable property investments for the Assetz Exchange investors. Even if we were to lose the supported housing contract at some point down the line, it’s very unusual for properties not to be retained and transferred to the new provider, it’s an industry standard and generally happens.”
JT: “Once a property is found and checked by Paul and his team, I then focus on working with contractors to price the schedule of works provided by Nacro, finalising the lease and purchase the property as quickly as possible. Once the purchase is completed we enter into an agreement for lease with Nacro. There will always be work to be done, with extra fire and safety measures as a standard, and then already identified work to bring the property up to the high quality expected.”
Do you have plans to work together in the future?
PP: “Assetz Exchange is continuing to source properties for us and we’re happy to continue that relationship. We have been very happy with the lease arrangements we have agreed and James’s ability to source, buy and upgrade these properties to fulfil our contracts.”
JT: “We are currently sourcing properties for Nacro in Ipswich, Portsmouth, Outer London boroughs and Bristol to name a few areas. On the investor side we can’t get these properties on the Exchange quickly enough and we’re delighted that, one year on, our first partnership is still delivering results for everyone involved.”
We currently work with charities and other leading supported housing providers to source, lease and fund social housing. We’d love to talk to any organisation that has a need to raise capital for a property purchase in this sector. Contact us at info@assetzexchange.co.uk Tel: +44 (0) 3330 119830
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