Hearthstone Residential Fund
Overview
The Hearthstone Residential Fund is the latest in our line-up of institutional funds. Building on the track record of its two closed-ended predecessors, Hearthstone Residential Funds 1 and 2, it will follow a similar investment strategy. It has an open-ended structure with a perpetual life.
The Fund is designed for institutional investors looking to benefit from a well-diversified portfolio of high quality private rented residential assets in carefully selected markets across the country.
Investment Objective
The Fund’s objective is to provide a strong, stable income return for long-term institutional investors, supplemented by capital growth.
Status
The Fund has been recently approved by the FCA, and is now taking subscriptions towards its initial close.
Fund Structure and Governance
The Fund is structured as an English Limited Partnership, a widely used, tax transparent structure for institutional investors. It provides for liquidity options after an initial lock-in period.
Governance of the Fund is based on industry best practice principles. An independent Investment Committee is mandated to review and approve the Fund’s Investment Plan and all transactions. An investor-led Advisory Committee reviews operational matters and acts as a formal communication forum with the Fund’s management team.
Langham Hall Fund Management LLP operates as the Fund's external AIFM.
Investment Strategy
The Fund will invest in a diversified UK portfolio of energy-efficient private rented homes, in areas with strong market fundamentals, demographics, community infrastructure and local amenities. Homes held in the Fund will be affordable to households on average incomes.
ESG criteria are embedded in the investment process, from site and stock selection to ongoing monitoring and improvement of environmental and social impact. An active asset management strategy aims to protect and enhance the Fund’s income.
Acquisitions will be mainly through bulk purchases of newly built-stock from housebuilders, but good quality standing investment assets will also be considered. Stock selection focuses on efficient-to-manage, readily-lettable flats and houses, typically ranging from one to four bedrooms. The focus is on homes particularly suitable for young professionals, families and key workers in areas of solid rental demand, but where there is a lack of suitable quality rented housing stock.
The appropriate level of diversification is achieved through a combination of the Fund’s scale and its strategy to ensure nationwide exposure.
The investment style is core. The Fund has the option to use moderate gearing, but does not take development risk. Investments are made for the long term to limit turnover costs.
