Social Housing REIT swings to profit under new manager

SOHO owns 492 homes that have been adapted or purpose-built for people with mental and/or physical care and support needs. It leases these properties to 28 approved providers, often housing associations, which receive payments from central or local government to provide homes for residents. Residents who live in the homes are selected by the local authority.

Atrato took over as investment manager of SOHO in January 2025. The new management has focused on addressing key legacy challenges including lease assignments to stronger counterparties and continuing the implementation of new risk-sharing structures with housing associations.

Adrian D’Enrico, fund manager of SOHO and managing director of Atrato Living, told Inside Housing Living he focused on “collecting the top-line income we should have been collecting”.

He said: “We inherited a couple of approved provider challenges from the former manager that we’ve been progressing. We’re starting now to see some recovery of the rents.”

These include leases SOHO had with Parasol, “who got themselves into a bit of difficulty a few years ago”, which were reassigned to Westmorland, now Portas. Over the next few months, those leases are reverting to typical long-term ones, he said.

SOHO also let 34 properties to My Space Housing Solutions, another provider which faced financial difficulties. From mid-2024 until early 2025, “no rent was being received” on these homes, Mr D’Enrico said.

My Space filed proposals for a company voluntary arrangement (CVA) in February 2025. Atrato negotiated an option agreement with My Space, enabling SOHO to transfer all My Space leases within a 12-month period following the completion of the CVA challenge period.

SOHO will retain most of the properties My Space is surrendering, but is selling a small number at auction once residents have been rehoused safely.

“There’s plenty of stuff still to do. We want to… be collecting 100% of our rent, and that’s the ambition as we go through 2026,” Mr D’Enrico said.

SOHO also signalled it was exploring mergers and acquisitions from private vehicles to scale the business. Moving from a £300m to £500m market capitalisation would mean a much bigger pool of potential investors.

“The market seems to have accepted that mergers are a way of achieving scale, and REIT investors do prefer scale and liquidity, and obviously therefore that is the ambition,” Mr D’Enrico said.

“If the right opportunity comes along, then certainly [a merger] is an avenue. There’s a number of private funds as well, who found themselves perhaps not achieving scale. So there’s a number of avenues there,” he continued.

“We trade at a discount to NAV, so we can’t raise cash in a traditional manner. So we are looking at how we can be creative. How can we help deliver more growth, how can we scale the portfolio? Because we’d like to contribute more of a solution to the problem.”

Portfolio occupancy, “even allowing for the two challenges” of Parasol and My Space, is 87%, Mr D’Enrico said. “These are pretty well-adapted, pretty specific homes. They will be homes for life for most of our residents, so we’ve got a really solid base once we’ve ironed out these couple of challenges.”

The supported housing sector has suffered reputational damage in the recent past due to the financial woes of firms such as Home REIT and Civitas Social Housing.

“We still think that there is opportunity for further narrowing of the discount [to NAV] by actually continuing to establish the narrative, and the differentiation with some of the missteps that happened in the sector,” said Mr D’Enrico.

“I still think [Home REIT] casts a bit of a shadow over what a number of parties are trying to achieve in specialised supported housing,” he added. 

“The longer we can keep evidencing that SOHO has a really robust set of operating properties [and] great lessees, you will see further interest in the space and a narrowing of the discount.”