In the fifth of a series of real asset investment case studies, Iryna Hanbury, Portfolio Manager at Gravis Capital Management, looks at social housing.
Investing in well-designed, genuinely affordable homes is not only essential for addressing housing insecurity but also for reducing pressure on public services, supporting economic growth, and building stronger, more equitable communities.
GCP Infrastructure Investments Limited has invested in this sector since 2013. Today, 14% of its portfolio supports assets in this sector*.
The investment case
The Salford Social Housing PFI project was formed with the aim of delivering the refurbishment and management of social housing accommodation consisting of 1,270 existing dwellings located in Greater Manchester and owned by Salford City Council.
GCP Infrastructure Investments Limited invested £10.9 million in a junior bond on 17 September 2013. The notes were issued by FHW Dalmore (Salford Pendleton Housing) plc. The senior lender is Pension Insurance Corporation plc. Together Housing provided the initial equity investment.
The refurbishment contract completed on 24 February 2017, ahead of the scheduled contract date of 30 May 2017. From this date, Pendleton Together Operating Limited became operational.
How revenue is derived
The project receives unitary charge payments from Salford City Council, which covers 100% of the leases, regardless of occupancy. The contract for these payments began in 2013, and runs to 2042.
How the investment evolved
Following the tragic events at Grenfell, a comprehensive review of the refurbishment works was undertaken to determine what action needed to be taken on the accommodation. As a result, the cladding used on the twelve tower blocks was tested and nine failed to meet building safety standards.
Gravis has worked closely with the Together Housing Group (the Project Sponsor) and Pension Insurance Corporation plc to develop a committed funding solution that enabled Together Housing to advance £25m to fund the works. As a trade-off, Gravis agreed to reduce its coupon and will have recourse to the compensation proceeds that flow from the contractor if the legal dispute is successful.
The programme is currently being implemented with the involvement of all project stakeholders to ensure the long-term fire safety of the accommodation. The team has made sure it has regular communication with the local council to reassure tenants the work is being carried out quickly and to a high standard.
Refurbishment started with remedial works undertaken across the nine residential buildings. The works cover both internal and external remediation and are progressing well and according to the plan agreed with contractors. The work on three buildings has already been completed, with completion of the other six expected in January 2026.
*Source: Half-yearly annual report and financial statements, 31 March 2025
No information contained in this article should be construed as providing financial, investment or other professional advice and should not be considered as a recommendation, invitation, or inducement to subscribe for, dispose of or purchase any such securities. Professional investors only. Capital at risk. Past performance is not a guide to future performance.
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