Hearthstone Residential Fund 1

A ten-year closed-ended private equity vehicle investing into the private rented sector in UK regions.

Overview

Launched in December 2017, Hearthstone Residential Fund 1 (HRF1) has been designed specifically for institutional investors seeking a strategic allocation to high quality private rented residential assets in the UK. It seeks to invest at scale in selected areas where strong rental demand is expected to provide the basis for a reliable, stable income stream offering good inflation protection. Our strategy also seeks to identify under-supplied markets where healthy consumer demand is expected to support modest capital growth over the long term.

HRF1 is the sole focus of Hearthstone Investment Management Limited*, a 50:50 joint venture between the Fund’s senior management team and Hearthstone Investments Plc.

*Hearthstone Investment Management Limited is an appointed representative of Langham Hall Fund Management LLP, an entity which is regulated and authorised by the Financial Conduct Authority of the UK.

Investment Objective

The Fund objective is to provide a strong and stable income return (a net distributable income before fees of at least 4.5% on stabilisation), supplemented by modest capital growth over the life of the Fund.

Income is distributed to investors, after deduction of operating costs and expenses.

Target Fund Size

The Fund size is targeted at £200 million. The Fund is open to new investors for a limited period of 12 months from first close which raised just over £100 million in December 2017.

Fund Structure & Governance

The Fund structure is an English Limited Partnership, a widely used and tax transparent structure. The Fund is closed-ended, with a life of 10 years. Governance 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 external third-party AIFM.

 

 

Investment Strategy

Our strategy is to acquire and actively manage good quality, market rented residential stock in areas of strong rental demand across the UK, including a mix of low-rise apartment blocks and clusters of houses.

Acquisitions include bulk purchases of newly-built stock from housebuilders and standing investment assets. Stock selection will focus on efficient-to-manage, readily lettable flats and houses, typically ranging from one to four bedrooms, particularly suitable for young professionals and families in areas of solid rental demand and good local infrastructure, but where there is a lack of suitable quality rented housing stock.

We will achieve the appropriate level of diversification through a combination of the Fund’s scale and strategy to ensure exposure across the six principal UK regions.

The investment style is core: HRF1 is unleveraged and will not take development risk. Investments will be made for the long term to limit turnover costs. Nevertheless, it will seek to exploit opportunities to add value through active asset management and through strategic rebalancing.

 

Hearthstone Residential Fund 1 media

LGPS funds strive to make an impact with build to rent

Date 11th March 2019
Source FT Pensions Expert
Type News article
A minor revolution is taking place in town halls across the country. Local authority pension funds are changing tack, eschewing traditional equities for alternatives, and looking to make a ...
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Hearthstone Investment Management Announces Final Close Of The Hearthstone Residential Fund 1

Date 25th February 2019
Source Hearthstone Investment Management Ltd
Type Press release
• Fund exceeds its target of £200 million • Two new limited partners join in final investment round
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24 new build homes acquired in deal worth £18m

Date 11th January 2019
Source TheBusinessDesk.com (Yorkshire edition)
Type News article
24 new build homes in Pontefract has been acquired by a private equity fund as part of a deal worth nearly £18m. Hearthstone Investment Management Limited announced its private equity fund...
Read more

This fund is advised by

Hearthstone Investment Management LTD

Our growing team includes seasoned professionals with both institutional investment and property fund management experience.

Our Team

Andrew Smith

Partner - Chief Investment Officer

Richard Otten

Partner - Director, Asset Management

Cristoforo Rocco di Torrepadula

Partner - Director, Investor Relations

For more information about Hearthstone Residential Fund 1 please get in touch
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