Stockbroking, Administration Services and Solutions - The … · 2018-09-13 · THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action

you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser

authorised under the Financial Services and Markets Act 2000 (as amended) (“FSMA”) immediately.

This Prospectus comprises a prospectus relating to The Multifamily Housing REIT plc (the “Company”) prepared in accordance with the

Prospectus Rules and approved by the FCA in accordance with section 85 of the FSMA. This prospectus has been filed with the FCA in

accordance with Rule 3.2 of the Prospectus Rules and will be made available to the public in accordance with the Prospectus Rules, at

www.multifamilyhousingreit.com.

Applications will be made to (i) the UK Listing Authority for all of the Ordinary Shares to be admitted to the premium listing segment of the

Official List, and (ii) the London Stock Exchange for all such Ordinary Shares to be admitted to trading on the Main Market (“Admission”).

Assuming the conditions for the Issue to proceed are satisfied, it is expected that Admission will become effective, and that dealings in the

Ordinary Shares will commence, at 8.00 a.m. on 28 September 2018.

The Directors of the Company, whose names appear on page 51 of this Prospectus, and the Company each accept responsibility for the

information contained in this Prospectus. To the best of the knowledge and belief of the Company and Directors (who have taken all reasonable

care to ensure such is the case), the information in this Prospectus is in accordance with the facts and does not omit anything likely to affect

the import of such information.

Prospective investors should read this Prospectus in its entirety and, in particular, the section headed “Risk Factors” when considering

an investment in the Company.

The Multifamily Housing REIT plc(a company incorporated and registered in England and Wales with registered number 11383471 and

registered as an investment company under section 833 of the Companies Act 2006)

Target issue of up to 175 million Ordinary Shares pursuant to a Placing,

Offer for Subscription and Intermediaries Offer at an Issue Price of £1.00 per

Ordinary Share and the issuance of Reinvestment Shares pursuant to

the acquisition of the Seed Portfolio

and

Admission of Ordinary Shares to the premium listing segment of the

Official List and to trading on the London Stock Exchange’s

Main Market for listed securities

Sole Sponsor and Sole Bookrunner

Peel Hunt

AIFM Investment Adviser

G10 Capital Limited Harwood Real Estate Asset Management Limited

Peel Hunt LLP (“Peel Hunt”), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively as Sole Sponsor

and Sole Bookrunner for the Company and no one else in connection with the matters referred to in this Prospectus. Apart from the

responsibilities and liabilities, if any, which may be imposed on Peel Hunt by the FSMA or the regulatory regime established thereunder, Peel

Hunt does not make any representation, express or implied in relation to, nor accepts any responsibility whatsoever for, the contents of this

Prospectus or any other statement made or purported to be made by it or on its behalf in connection with the Company, the Ordinary Shares

or the Issue. Peel Hunt accordingly, to the fullest extent permissible by law, disclaims all and any responsibility or liability whether arising in

tort, contract or otherwise which it might have in respect of this Prospectus or any other statement. Peel Hunt will not regard any other person

(whether or not a recipient of this Prospectus) as its client in relation to any Admission or the Issue and will not be responsible to anyone other

than the Company for providing the protections afforded to the clients of Peel Hunt, or for providing advice in connection with the contents

of this Prospectus or any other matters referred to in this Prospectus.

Peel Hunt or any of its respective affiliates may have engaged in transactions with, and provided various investment banking, financial

advisory and other services for, the Company, G10 Capital Limited, part of the Lawson Conner Group (the “AIFM”) and Harwood Real Estate

Asset Management Limited (the “Investment Adviser”), for which they would have received customary fees. Peel Hunt and any of its

respective affiliates may provide such services to the Company, the AIFM and the Investment Adviser and any of their respective affiliates in

the future.

The Ordinary Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “US Securities Act”).

Subject to limited exceptions, the Ordinary Shares are being offered only outside the United States in reliance on Regulation S under the US

Securities Act.

No person has been authorised by the Company to issue any advertisement or to give any information or to make any representations in

connection with Admission or the Issue other than those contained in this Prospectus and, if issued, given or made, such advertisement,

information or representation must not be relied upon as having been authorised by the Company the AIFM, the Investment Adviser, Peel Hunt

or any of their respective affiliates, officers, directors, employees or agents.

Overseas Persons

The Offering is not being made, directly or indirectly, in or into, or by the use of the mails, or by any means or instrumentality (including,

without limitation, facsimile transmission, telex and telephone) of interstate or foreign commerce, or of any facility of a national securities

exchange, of Canada, Australia, Japan or any other Restricted Jurisdiction. You must not, directly or indirectly, mail or otherwise forward or

distribute or send this Prospectus in, into or from Canada, Australia, the Republic of South Africa, Japan or any other Restricted Jurisdiction

or to, or for the account or benefit of, any resident of Canada, Australia, the Republic of South Africa, Japan or any other Restricted Jurisdiction

and persons receiving this Prospectus (including custodians, nominees and trustees) must not mail or otherwise distribute or send it in, into or

from such jurisdictions. The Ordinary Shares have not been and will not be registered under any of the relevant securities laws of Canada,

Australia, the Republic of South Africa, Japan or any other Restricted Jurisdiction. Accordingly, unless an exemption under such act or laws

is applicable, the Ordinary Shares may not be offered, sold or delivered directly or indirectly in or into Canada, Australia, the Republic of

South Africa, Japan or any other Restricted Jurisdiction. This Prospectus does not constitute, and may not be used for the purposes of, an offer

or solicitation to anyone in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to

make such offer or solicitation. Prospective investors should consider carefully (to the extent relevant to them) the notices to residents of

various countries set out on this page 2 and pages 46 to 47 of this Prospectus.

CERTAIN MATTERS RELATED TO THE UNITED STATES

Neither the Securities and Exchange Commission, nor any State securities commission has approved or disapproved of the Ordinary Shares

or passed upon the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The Ordinary Shares have not been and will not be registered under the US Securities Act or under any applicable securities laws of any state

or other jurisdiction of the United States and may not be offered, sold delivered or otherwise distributed, directly or indirectly, in or into the

United States except pursuant to an exemption from the registration requirements of the US Securities Act and in accordance with any

applicable securities laws of any state or other jurisdiction of the United States. The Ordinary Shares are subject to restrictions on

transferability. Subject to limited exceptions, the Ordinary Shares are being offered only outside the United States in reliance on Regulation

S under the US Securities Act.

NOTICE TO PROSPECTIVE INVESTORS IN GUERNSEY

This Prospectus has not been reviewed by the Guernsey Financial Services Commission (the “Guernsey Commission”) and the Guernsey

Commission takes no responsibility for the financial soundness of the Company or for the correctness of any of the statements made or

opinions expressed with regard to it.

NOTICE TO PROSPECTIVE INVESTORS IN JERSEY

This Prospectus has not been reviewed by the Jersey Financial Services Commission (“JFSC”) and the JFSC takes no responsibility for the

financial soundness of the Company or for the correctness of any of the statements made or opinions expressed with regard to it. This

Prospectus may be circulated in Jersey only by persons who are registered by the JFSC in accordance with the Financial Services (Jersey) Law

1998 (as amended) for the conduct of financial services business and distribution of this Prospectus or are exempt from such registration in

accordance with the Financial Services (Jersey) Law 1998, as amended.

NOTICE TO PROSPECTIVE INVESTORS IN BELGIUM

The public offering of interests in the Company in Belgium within the meaning of the Belgian Act of April 19, 2014 on alternative

undertakings for collective investment, and the Belgian Act of June 16, 2006 on the public offering of investment instruments and the

admission of investment instruments to listing on a regulated market has not been authorised by the Company. The offering may therefore not

be advertised, and interests in the Company may not be offered, sold, transferred or delivered to, or subscribed to by, and no memorandum,

information circular, brochure or similar document may be distributed to, directly or indirectly, any individual or legal entity in Belgium,

except (i) to “qualified investors” as referred to in Article 10, § 1 of the aforementioned Act of June 16, 2006, (ii) subject to the restriction of

a minimum investment of €100,000 per investor or (iii) in any other circumstances in which the present offering does not qualify as a public

offering in accordance with the aforementioned Act of June 16, 2006. This Prospectus has been issued to the intended recipient for personal

use only and exclusively for the purpose of the offering. Therefore, it may not be used for any other purpose, nor passed on to any other person

in Belgium.

NOTICE TO PROSPECTIVE INVESTORS IN THE NETHERLANDS

This Prospectus has not been approved by and will not be submitted for approval to the Netherlands Authority for the Financial Markets

(Stichting Autoriteit Financiële Markten) for the purposes of public offering or sale in the Netherlands. Therefore, in connection with any

public offering, this document may only be distributed to “qualified investors” (gekwalificeerde beleggers) as defined in article 1:1 of the

Dutch Financial Supervision Act (Wet op het financieel toezicht). This Prospectus does not constitute a personal recommendation or an

investment recommendation pursuant to Netherlands law.

NOTICE TO PROSPECTIVE INVESTORS IN THE ISLE OF MAN

This Prospectus has not been, and is not required to be, filed or lodged with any regulatory or other authority in the Isle of Man. The Companyis not subject to any regulatory approval in the Isle of Man. Investors in the Company are not protected by any statutory compensationarrangements in the event of the Company’s failure and the Isle of Man Financial Services Authority does not vouch for the financial soundnessof the Company or for the correctness of any statements made or opinions expressed with regard to it.

This Prospectus is dated 12 September 2018.

2

TABLE OF CONTENTS

Page

SUMMARY 4

RISK FACTORS 28

IMPORTANT INFORMATION 43

EXPECTED TIMETABLE 49

ISSUE STATISTICS 50

DEALING CODES/IDENTIFIERS 50

DIRECTORS, AIFM, INVESTMENT ADVISER AND OTHER ADVISERS 51

PART 1 INVESTMENT HIGHLIGHTS 53

PART 2 INFORMATION ON THE COMPANY 57

PART 3 INVESTMENT PROPOSITION 69

PART 4 SAVILLS UK HOUSING MARKET COMMENTARY 74

PART 5 SEED PORTFOLIO AND IDENTIFIED PIPELINE 85

PART 6 DIRECTORS, MANAGEMENT AND ADMINISTRATION 98

PART 7 THE ISSUE 108

PART 8 VALUATION REPORT ON SEED PORTFOLIO 116

PART 9 TAXATION 130

PART 10 THE REIT REGIME 141

PART 11 ADDITIONAL INFORMATION ON THE COMPANY 146

PART 12 TERMS AND CONDITIONS OF THE PLACING 186

PART 13 TERMS AND CONDITIONS OF THE OFFER FOR SUBSCRIPTION 195

PART 14 DEFINITIONS AND GLOSSARY 204

APPENDIX 1 APPLICATION FORM FOR THE OFFER FOR SUBSCRIPTION 213

APPENDIX 2 TAX RESIDENCY SELF-CERTIFICATION FORM (INDIVIDUALS) 223

3

SUMMARY

Summaries are made up of disclosure requirements known as “Elements”. These elements are numbered in

Sections A–E (A.1–E.7).

This summary contains all the Elements required to be included in a summary for this type of securities and

issuer. Because some Elements are not required to be addressed there may be gaps in the numbering

sequence of the Elements.

Even though an Element may be required to be inserted into the summary because of the type of securities

and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short

description of the Element is included in the summary with the mention of “not applicable”.

Section A – Introduction and Warnings

Element Disclosure requirement Disclosure

A.1 Warning This summary should be read as an introduction to this Prospectus.

Any decision to invest in the Ordinary Shares should be based on

consideration of this Prospectus as a whole by the investor. Where

a claim relating to the information contained in this Prospectus is

brought before a court, the plaintiff investor might, under the

national legislation of the EEA States, have to bear the costs of

translating this Prospectus before the legal proceedings are

initiated. Civil liability attaches only to those persons who are

responsible for this summary, including any translation thereof,

but only if the summary is misleading, inaccurate or inconsistent

when read together with the other parts of this Prospectus or it

does not provide, when read together with other parts of this

Prospectus, key information in order to aid investors when

considering whether to invest in such securities.

A.2 The Company consents to the use of this Prospectus in connection

with the subsequent resale or final placement of Ordinary Shares

by financial intermediaries appointed by the Company to

participate in the Intermediaries Offer and who agree to be bound

by the Intermediaries Terms and Conditions in connection with the

Intermediaries Offer.

The offer period within which any subsequent resale or final

placement of securities by Intermediaries can be made and for

which consent to use this Prospectus is given commences on

12 September 2018 and closes at 10.00 a.m. on 25 September

2018, unless closed prior to that date.

Any financial intermediary that uses this Prospectus must state on

its website that it uses this Prospectus in accordance with the

Company’s consent. Intermediaries are required to provide the

terms and conditions of the Intermediaries Offer to any

prospective investor who has expressed an interest in

participating in the Intermediaries Offer to such

Intermediary. Any applications made by investors to any

Intermediary in the Intermediaries Offer are subject to the

terms and conditions approved by the Intermediary.

Subsequent resale or

final placement of

securities through

financial intermediaries

4

Section B – Issuer


B.1 The Multifamily Housing REIT plc (the “Company”)

B.2 Domicile and legal form The Company was incorporated in England and Wales under the

Companies Act as a public company limited by shares on 25 May

2018 with company number 11383471. The Company is registered

as an investment company under section 833 of the Companies

Act.

The principal legislation under which the Company operates is the

Companies Act.

B.5 Group description The Company was incorporated on 25 May 2018 with one

Ordinary Share (“Subscriber Share”) and 50,000 Redeemable

Preference Shares in issue all of which were and are held by

Harwood Real Estate Limited (“HRE”). On 6 September 2018,

the Company issued 1,674,000 Redeemable Preference Shares

fully paid to HRE. The Redeemable Preference Shares in issue

will be redeemed on or shortly following Admission from the

proceeds of the Issue.

On 26 May 2018, the Company established a wholly-owned

subsidiary, Multifamily Asset 1 Limited (“Holdco”), a private

limited company incorporated in England and Wales.

Acquisition of the Seed Portfolio

Conditional on and shortly following Admission, Holdco will

acquire the entire issued share capital in eight special purpose

vehicles (“SPVs”) which in aggregate own 658 PRS Homes

(including those to be acquired by one of the SPVs at Celtic

House, Derby) across 22 properties (the “Seed Portfolio”)

pursuant to the terms of four share purchase agreements entered

into between Holdco and HRE, Harwood Capital Nominees

Limited (“HCN”), North Atlantic Smaller Companies Investment

Trust Plc (“NASCIT”) and Bass Real Estate Limited (“Share

Purchase Agreements”).

Post-Acquisition it is intended that each of the SPVs will transfer

the PRS Homes held by them to Holdco by way of an intra-group

transfer, following which all of the PRS Homes forming the Seed

Portfolio will be held directly by Holdco.

Each SPV will be liquidated once the PRS Homes held by them

are transferred to Holdco. Once all of the SPVs have been

liquidated the Group will consist of the Company and one wholly-

owned subsidiary, Holdco.

Future subsidiaries

The Company may acquire and/or establish further subsidiary

undertakings in the future as special purpose vehicles to hold

Portfolio Assets.

Legal and commercial

name

5

B.6 Major shareholders As at the date of this Prospectus and pending the allotment of

Ordinary Shares pursuant to the Issue, all of the issued share

capital of the Company, being the Subscriber Share and 1,724,000

Redeemable Preference Shares, are held by HRE.

Following Admission, assuming that the Company issues

175 million Ordinary Shares and pursuant to the terms of the

Reinvestment Subscription Letters, the following persons will be

directly interested in three per cent. or more of the Company’s

issued share capital as set out below:

Percentage of

Number of issued share

Ordinary Shares capital

immediately immediately

following following

Name Admission Admission1

8,804,387 5.03

Harwood Capital LLP2 8,574,252 4.9

Notes

1 Assuming that 175 million Ordinary Shares are issued pursuant to the Issue.

2 HCN has directed that the Reinvestment Shares subscribed for by it will be

registered in the name of Harwood Capital LLP on Admission. Of these,

6,540,211 Ordinary Shares (representing 3.74 per cent. of the issued share

capital of the Company on Admission, assuming 175 million Ordinary

Shares are issued) will be under the discretionary management of Harwood

Capital LLP and the remaining 2,034,041 Ordinary Shares (representing

1.16 per cent. of the issued share capital of the Company on Admission,

assuming 175 million Ordinary Shares are issued) will be under its non-

discretionary management.

Assuming that the Company issues 175 million Ordinary Shares,

the Company and the Directors are not aware of any other person

who will be directly or indirectly interested in three per cent. or

more of the Company’s issued share capital following Admission.

All Shareholders have, and will on Admission have, the same

voting rights in respect of the share capital of the Company.

B.7 Key financial information Not applicable. The Company has not commenced operations

since its incorporation on 25 May 2018 and no financial

statements of the Company have been made as at the date of this

Prospectus.

B.8 Not applicable. No pro forma financial information is included in

this Prospectus.

B.9 Profit forecast Not applicable. No profit forecast or estimate is made in this

Prospectus.

B.10 Not applicable. The Company has been newly incorporated and

has no historical financial information.

North Atlantic Smaller

Companies Investment

Trust Plc

Key pro forma financial

information

Description of the

nature of any

qualifications in the

audit report on the

historical financial

information

6

B.11 Not applicable. The Company is of the opinion, taking into account

the Minimum Net Proceeds, that the working capital available to the

Group is sufficient for its present requirements, that is, for at least

the next 12 months from the date of this Prospectus.

B.34 Investment policy Investment objective

The Company will seek to provide investors with an attractive and

stabilised level of income return together with the prospect of

income and capital growth.

In order to achieve its investment objective, the Company will

invest in and grow a portfolio of existing built residential units for

rent (“PRS Homes”). The PRS Homes will be located largely in

England outside of Greater London and let to private tenants at

mid-market rents.

In the short term the Company will aim to achieve this objective

through the acquisition of the Seed Portfolio as well as the

acquisition of PRS Homes from the Identified Pipeline. Beyond

this, the Company believes there is significant market opportunity

to grow its portfolio further though follow-on investments that

will enhance the diversity of income and efficiency of its business.

Investment policy

Investment criteria

The Company will pursue its investment objective by investing in

private market rented PRS Homes.

The Company will predominantly invest in existing built Blocks

of Apartments and Collections of Houses (in a common location)

where concentration and dynamics allow efficient management.

The PRS Homes will be focused in conurbations and employment

centres largely in England, outside of Greater London.

The Company will target assets with net income streams and an

occupational profile to provide predictable day one income and

scope for sustainable growth in net operating income. Other key

criteria include:

• locations with sustainable residential demand and limited risk

from competing developments;

• suitable demographic profile and proximity to appropriate

local employers, transport links and community facilities;

• properties capable of efficient management from established

and future management Hubs considering both location and

scale;

• appropriate mid-market rental levels which are suitable for a

broad spectrum of the local population;

• focus on one and two bedroom properties (except where local

demand and affordability permits larger properties);

• freehold ownership – long leasehold ownership will be

considered where a suitable level of control can be maintained

over the asset;

Explanation for

working capital

insufficiency

7

• target assets are subject to technical due diligence to ensure

suitable age, construction and configuration profile to mitigate

maintenance exposure and operation risks such as external

cladding panels.

The Company will invest in these assets directly or through

holdings in special purpose vehicles.

The Company may enter into forward funding agreements or

acquire sites for development or material conversion subject to its

investment restrictions and where desirable to maximise rental

income. Where development is undertaken, the Company will

outsource the development to a professional development

specialist.

The Company has a preference to own 100 per cent. of its

Portfolio Assets but it may enter into joint venture arrangements in

the course of development with an outsourced development

specialist with the aim of sole ownership by the Company once the

Portfolio Asset is completed and operational. The underlying

assets that are the subject matter of the joint venture arrangement

will have to meet the Company’s investment criteria and will be

subject to the investment restrictions summarised below.

The Investment Adviser will source investments on behalf of the

Company.

Investment restrictions

The Company’s objective is to deliver a high quality portfolio

through applying the following restrictions at the time of making

an investment:

• the Company will only invest in private market rented homes

in the UK (predominantly in England, but not in Greater

London);

• no investment in any Block of Apartments or Collection of

Houses shall exceed 20 per cent. of Gross Asset Value;

• committed and uncommitted expenditure on all development

activity not exceeding 10 per cent. of the Company’s Gross

Asset Value may be used for forward funding, the acquisition

of sites for development or material conversion or the

development of sites owned by the Group where opportunity

exists; and

• the Company will not invest in other alternative investment

funds or closed-ended investment companies.

The Company shall be permitted to acquire Blocks of Apartments

or a portfolio of assets which contain a non-material or ancillary

proportion of (i) commercial property or (ii) long leasehold

interests granted to third parties provided that the primary function

of such Block or portfolio of assets meets the investment criteria

and investment restrictions.

The investment restrictions detailed above apply only at the time

of acquisition of Portfolio Assets. The Company shall not be

8

required to dispose of any asset or to rebalance its portfolio as a

result of any change in valuation of its assets.

The Company will control the investment policy of each of its

subsidiaries to ensure that the assets acquired and held by them

comply with the Company’s investment policy and the investment

restrictions.

Cash management

Until the proceeds of the Issue are fully invested, and pending

re-investment or distribution of cash receipts, the Company will

invest in cash, cash equivalents, near cash instruments and money

market instruments.

REIT status

The Company will at all times conduct its affairs so as to enable it

to qualify and, once qualified, remain qualified as a REIT for the

purposes of Part 12 of the CTA 2010.

Ground rent

It is possible that upon a future disposal of any of the Portfolio

Assets, it may be value accretive for individual PRS Homes to be

sold on a long leasehold interest (in line with the latest regulation

and best practice guidance at the time of disposal). Once all PRS

Homes are sold in a Block, the freehold interest would then be

disposed of separately. This would only be undertaken in the event

that it is expected to enhance overall returns and subject to the

REIT restrictions on trading.

As Paper Mill Yard contains 146 of the long leasehold units

located in four Blocks of Apartments, the Company may

determine that it is desirable to dispose of the freehold interest in

Blocks where there is a high concentration of long leasehold units.

Any material change to the investment policy will require the prior

approval of Shareholders, by way of an ordinary resolution at a

general meeting.

B.35 Borrowing limits The Company expects to make prudent use of debt to finance (or

refinance) acquisitions. The level of borrowing will be on a

prudent basis for the asset class, whilst maintaining flexibility in

both the underlying security requirements and the structure of both

the Portfolio Assets and the Group. The Company and its group

companies may raise debt from banks, non-bank lenders and/or

the capital markets. The Directors currently intend that the

Company should target a level of aggregate borrowings equal to

approximately 30 to 40 per cent. of the Gross Asset Value of the

Group as a whole from time to time. The aggregate borrowings

will always be subject to an absolute maximum, calculated at the

time of each drawdown, of 45 per cent. of the Gross Asset Value

of the Group as a whole from time to time.

When the Company incurs debt, it is anticipated that it will be

secured at an asset level, whether over particular PRS Homes or

holding entities for PRS Homes, without recourse to the Company,

9

depending on the optimal structure for the Group, and having

consideration to key metrics including cross financing and debt

exposure to any one holding, special purpose vehicle, lender

diversity, cost of debt, debt type and maturity profiles.

Following Admission and the completion of the acquisition of the

Seed Portfolio, the Company will not have incurred any borrowings

and will therefore be ungeared, with any debt secured against the

Seed Portfolio being immediately paid down (and security released)

on completion of the acquisition of the relevant SPV.

Use of derivatives

The Company may utilise derivatives for efficient portfolio

management. In particular, the Company may engage in full or

partial interest rate hedging or otherwise seek to mitigate the risk

of interest rate increases on borrowings incurred in accordance

with the borrowing limits as part of the management of the

Portfolio Assets.

The Company shall ensure that the income profits of the Group’s

Property Rental Business are sufficient to cover its financing costs

by not less than 1.25 times to avoid any adverse tax charge in

accordance with section 543 of the CTA 2010 (please see

paragraph 3.4 of Part 10 of this Prospectus for further

information).

B.36 Regulatory status The Company is not authorised or regulated as a collective

investment scheme by the FCA but will, following Admission, be

subject to the Listing Rules, the Prospectus Rules, the Disclosure

Guidance and Transparency Rules, the Market Abuse Regulation

and the Admission and Disclosure Standards.

The Company will apply to be a UK REIT following Admission

and will need to comply with certain ongoing regulations and

conditions (including minimum distribution requirements).

The Company will operate as an externally managed alternative

investment fund following Admission for the purposes of the

AIFMD. G10 Capital Limited has been appointed as the

Company’s alternative investment fund manager.

It is the Investment Adviser’s intention to become authorised by

the FCA as a full scope alternative investment fund manager

within 12 months following Admission. It is the Company’s

intention, subject to Board approval, to appoint the Investment

Adviser as its full scope alternative investment fund manager once

the FCA has authorised it to act as the same.

As a REIT, the Ordinary Shares will be “excluded securities”

under the FCA’s rules on non-mainstream pooled investments.

Accordingly, the promotion of the Ordinary Shares will not be

subject to the FCA’s restriction on the promotion of non-

mainstream pooled investments.

B.37 Typical investor The Ordinary Shares are designed to be suitable for institutional

investors and professionally-advised private investors. The

Ordinary Shares may also be suitable for investors who are

10

financially sophisticated, non-advised private investors who are

capable of evaluating the risks and merits of such an investment

and who have sufficient resources to bear any loss which may

result from such an investment.

Such investors may wish to consult an independent financial

adviser who specialises in advising on the acquisition of shares

and other securities before investing in Ordinary Shares.

Such investors should also consider (to the extent relevant to

them) the notices to residents of various countries set out on

pages 2 and 46 to 47 of this Prospectus.

B.38 Not applicable. The Company does not at the date of this

Prospectus, and will not at Admission, have any such investments.

B.39 Not applicable. The Company does not at the date of this

Prospectus, and will not at Admission, have any such investments.

B.40 Service providers AIFM

G10 Capital Limited (“AIFM”) has been appointed to act as the

Company’s alternative investment fund manager pursuant to the

AIFM Agreement. It is intended that, the AIFM shall be the

Company’s alternative investment fund manager until such time as

the Investment Adviser becomes authorised by the FCA, subject to

Board approval. The AIFM’s duties under the AIFM Agreement

include, inter alia, managing and investing the Company’s assets,

on a discretionary basis, in accordance with the Company’s

investment policy, undertaking risk management for the Company,

and overseeing the performance of the Investment Adviser.

The AIFM Agreement provides that the Company will pay to the

AIFM a monthly fee of 0.05 per cent. of NAV with a minimum fee

of £8,000.

The AIFM Agreement also provides that the Company shall

deposit 0.02 per cent. of the last quarterly NAV with the AIFM to

enable the AIFM to comply with its regulatory capital adequacy

requirements.

Investment Adviser

The Investment Adviser has been appointed by the AIFM to act as

investment adviser to the AIFM pursuant to the terms of the

Investment Advisory Agreement. The Investment Adviser is

appointed to advise the AIFM and the Company on a day-to-day

basis in accordance with the investment policy and to recommend

and give advice to the AIFM and the Company in relation to the

investments of the Company. The Investment Adviser has been

appointed by AIFM as its appointed representative.

Investment of 20 per

cent. or more in single

underlying asset or

investment company

Investment of 40 per

cent. or more in single

underlying asset or

investment company

11

Pursuant to the terms of the Investment Advisory Agreement, the

Company shall pay to the Investment Adviser the following fees:

Net Rent Fee (based on the most recent NAV of the Company)

(“Net Rent Fee”):

• £0 - £500,000,000 – 6 per cent of net rent;

• £500,000,001 - £750,000,000 – 5 per cent. of net rent;

• £750,000,001 and thereon – 4 per cent. of net rent.

NAV Fee (based on the most recent NAV of the Company) (“NAV

Fee”):

• £0 - £500,000,000 – 0.5 per cent. per annum of the Net Asset

Value;

• £500,000,001 - £750,000,000 – 0.45 per cent. per annum of

the Net Asset Value

• £750,000,001 - £1,000,000,000 – 0.4 per cent. per annum of

the Net Asset Value; and

• £1,000,000,001 and thereon – 0.35 per cent. per annum of the

Net Asset Value.

Both the Net Rent Fee and the NAV Fee (together the

“Management Fee”) shall be paid quarterly in arrears provided

that 75 per cent. of the total annual Management Fee due will be

paid in cash in arrears on a quarterly basis, and 25 per cent. of the

total annual Management Fee (net of any applicable tax) will be

payable in the form of Ordinary Shares rather than cash. The issue

price for such Ordinary Shares will be the prevailing NAV at the

end of the relevant period concerned. If, however, the Ordinary

Shares are trading at a discount to the prevailing NAV at the

relevant time, no new Ordinary Shares will be issued and Ordinary

Shares will be purchased in the secondary market. In addition, any

such Ordinary Shares issued or purchased for the Investment

Adviser will be subject to a minimum lock-in period of 24 months.

Once the Company has reached stabilisation, to the extent the

target earnings per share of at least 5 pence is not met, the

Management Fee will be reduced proportionately (such

deductions being made from the NAV only) and provided that the

minimum NAV Fee payable shall be 0.1 per cent.

No performance fee will be payable to the Investment Adviser.

The Investment Adviser’s appointment will terminate upon the

Company or the Investment Adviser providing no less than

24 months’ written notice, not exercisable in the first 36 months.

Property Manager

Centick Property Sales Limited (the “Property Manager”) has

been appointed by the Company as the Group’s property manager

in respect of the Seed Portfolio pursuant to the terms of the

Property Management Agreement. It is intended that Property

Assets acquired by the Company will also fall within the scope of

the Property Management Agreement as and when they are

12

acquired. The Property Manager’s duties under the Property

Management Agreement with regard to property management

include, inter alia, co-ordinating new lettings and tenancy

renewals, collecting rent, setting budgets and parameters at which

the Property Manager is to perform, making payment of agreed

and approved operational costs from rental receipts, dealing with

tenant management issues, remitting net cash to the Company and

monitoring costs against agreed targets.

Depositary

Ocorian (UK) Limited has been appointed to act as the Company’s

depositary pursuant to the AIFMD on the terms set out in the

Depositary Agreement. The Depositary’s duties under the

Depositary Agreement with regard to acting as the sole depositary

of the Company include, inter alia, ensuring the Company’s cash

flows are monitored, the safekeeping of the Company’s assets, and

the oversight and supervision of both the Company and the AIFM.

The Depositary Agreement further provides that the Company will

pay to the Depositary a periodic annual charge of £27,000 in

aggregate.

The Depositary’s regulatory status is that of a “PE AIF

Depositary”, meaning broadly that it is able to be a depositary of

an AIF which has no redemption rights exercisable during a period

of five years from the date of initial investments and it either does

not generally invest in custodial assets or generally invests to

acquire control over issuers or non-listed companies.

Registrar

Link Market Services Limited, trading as Link Asset Services, has

been appointed as the Company’s registrar pursuant to the terms of

the Registrar’s Agreement. The Registrar provides share registrar

services to the Company. Under the terms of the Registrar’s

Agreement, the Registrar is entitled to a market standard fee for

creation and maintenance of the share register.

Administrator

Link Alternative Fund Administrators Limited has been appointed

as the Company’s Administrator pursuant to the terms of the

Administration Agreement. The Administrator will provide day-

to-day administration to the Company. Either the Company or the

Administrator can terminate the Administration Agreement on not

less than six months’ notice, provided that such notice shall not

expire earlier than 12 months’ from the commencement of the

agreement.

Company Secretary

Link Company Matters Limited has been appointed as the

Company Secretary pursuant to the terms of the Company

Secretary Agreement. The Company Secretary will provide day-

to-day company secretarial services to the Company.

13

Auditor

KPMG LLP will provide audit services to the Company. The

annual report and accounts of the Company will be prepared in

accordance with IFRS and the EPRA.

B.41 The AIFM was incorporated in England and Wales as a private

limited company on 18 September 2014. The AIFM is authorised

and regulated by the FCA (with FCA registration number 648953).

The Investment Adviser is not currently authorised or regulated by

the FCA but is an authorised representative of the AIFM. It is the

Investment Adviser’s intention to become authorised by the FCA

as a full-scope alternative investment fund manager and then be

directly appointed as alternative investment fund manager of the

Company within 12 months of Admission, and the AIFM shall

resign as the alternative investment fund manager of the Company

in such circumstances. There is no guarantee that the Investment

Adviser will become authorised by the FCA as a full-scope

alternative investment fund manager.

The Depositary was incorporated in England and Wales as a

private limited company on 11 August 2005. The Depositary is

authorised and regulated by the FCA (with FCA registration

number 448652).

B.42 Net Asset Value The Company shall appoint an appropriately qualified

independent property valuation expert regulated by the Royal

Institution of Chartered Surveyors (“Valuer”) on an annual basis

to carry out valuations of the Portfolio Assets in accordance with

the methodology set out below. Savills Advisory Services Limited

has been appointed as Valuer for three years commencing on the

date they carry out their first valuation.

PRS Homes identified for acquisition by the Company will be

valued by the Valuer at Market Value prior to their acquisition.

Methodology for valuing the Portfolio Assets

Full Red Book annual valuations together with biannual desk-top

valuations will be prepared in respect of the Portfolio Assets by the

Valuer. Valuations will be published by the Company after the

period to which they relate via a Regulatory Information Service

and the Company’s website.

The most recent valuation of the Portfolio Assets will be the core

information used by the Administrator in its calculation of the Net

Asset Value.

Methodology for calculating Net Asset Value

The Net Asset Value will be calculated by the Administrator in

consultation with the AIFM and any relevant professional advisers

based on information provided by the Valuer and will be presented

to the Board for its approval and adoption. The Net Asset Value

attributable to the Ordinary Shares will be calculated on a

bi-annual basis (as at 31 March and 30 September) based on the

most recent valuation of the Portfolio Assets and in accordance

with IFRS and EPRA. The Net Asset Value will be published

Regulatory status of

investment

managers/custodians

14

through a Regulatory Information Service and made available on

the Company’s website as soon as practicable after the end of the

relevant period. In addition, the calculations will be reported to

Shareholders in the Company’s annual report and interim financial

statements.

The calculation of the Net Asset Value will only be suspended in

circumstances where the underlying data necessary to value the

investments of the Company cannot readily, or without undue

expenditure, be obtained. Details of any suspension in making

such calculations will be announced through a Regulatory

Information Service as soon as practicable after any such

suspension occurs.

B.43 Cross liability Not applicable. The Company is not an umbrella collective

investment undertaking and as such there is no cross liability

between classes or investment in another collective investment

undertaking.

B.44 Financial Statements Not applicable. The Company has not commenced operations

since its incorporation on 25 May 2018 and no financial

statements of the Company have been made as at the date of this

Prospectus.

B.45 Portfolio The Company has not commenced operations and so has no

portfolio as at the date of this Prospectus.

The Company via its wholly-owned subsidiary, Holdco, has entered

into the Share Purchase Agreements pursuant to which they have

agreed to acquire, conditional on Admission, the Seed Portfolio. The

22 properties forming the Seed Portfolio comprise 658 PRS Homes

and five commercial units with an average apportioned purchase

price of approximately £105,000 per PRS Home and an average

tenant stay of 4.8 years. Savills Advisory Services Limited

(“Savills”) has valued the 22 properties in the Seed Portfolio with

an aggregate market value of £69.87 million and has valued the

individual PRS Homes and five commercial units forming the Seed

Portfolio at an aggregate market value of £78.249 million. The Seed

Portfolio will be acquired for an aggregate purchase price (including

the repayment of shareholder and third party debt) of £70.26 million

which represents the market value for each of the properties with the

exception of Paper Mill Yard, Norwich, where a premium of

£390,000 to market value is to be paid to reflect the difference

between market value and break-up value of the property. The

aggregate market rental value of the individual PRS Homes and five

commercial units in the Seed Portfolio is £4.856 million per annum

and the Seed Portfolio delivers a gross yield of 7 per cent. per

annum.

The properties comprising the Seed Portfolio are spread across

12 locations in England with some concentration by market value

in Bristol (18.8 per cent.), Lowestoft (14.4 per cent.) and Derby

(19.8 per cent.).

Most of the properties in the Seed Portfolio are low-rise Blocks of

Apartments with a maximum of four floors. On average, there are

30 PRS Homes per Block, with the largest Block containing

15

78 PRS Homes. The majority of the Blocks contain one and

two bedroom PRS Homes.

Celtic House, Derby

Harwood Squirrel Limited (one of the SPVs that will be acquired

by Holdco) has exchanged contracts to acquire the property

known as Celtic House, Derby (which forms part of the Seed

Portfolio) with its current owner, such contract is conditional

upon: (i) Admission taking place; and (ii) the property producing

income equivalent to 80 per cent. of an agreed target rent. It is

anticipated that the purchase of Celtic House, Derby will complete

in Q4 of 2018.

Commercial Property

The Seed Portfolio also contains five commercial properties

located on the ground floors of two of the freehold Blocks of

Apartments to be acquired by the Company in Church Road,

Bristol and Wensum Court, Great Yarmouth.

The value of the five commercial units are included within the

valuation report set out in this Prospectus.

Long Leasehold

The Seed Portfolio includes six freehold Blocks of Apartments

that together contain 181 apartments which have been let by

previous owners on a long leasehold basis (of more than 50 years)

to third parties. These apartments are not included within the total

number of PRS Homes in the Seed Portfolio.

146 of the long leasehold units are located in four Blocks of

Apartments at Paper Mill Yard, Norwich. The remaining 34 units

at that property, which are not subject to long leases, are PRS

Homes. The market value of Paper Mill Yard, Norwich, is

£5.92 million representing a gross yield of 5.1 per cent. per annum

and a 20 per cent. discount to the aggregate break-up value of

£7.425 million. This value differential is a result of the

proportionately high number of long leasehold units and strength

of the individual unit sales market for this property, and as a result

is not comparable to any other property in the Seed Portfolio. In

recognition of the value differential and the potential for the

Company to realise such value through the sale of the individual

units and ground rent portfolio, the Company has agreed to pay the

sellers of Paper Mill Yard a premium of £390,000 to the market

value of the property.

Where long leasehold units exist, the Company will collect ground

rent, plus contribution to maintenance and service charges in

respect of the properties.

Following the Acquisitions, the Group intends to acquire, manage

and dispose of Portfolio Assets, including some of the Identified

Pipeline, in accordance with its investment policy.

16

B.46 NAV per Ordinary Share Not applicable. The Company has not commenced operations.

On Admission, the Net Asset Value per Ordinary Share post

payment of the Issue Costs is expected to be 98 pence (assuming

Target Gross Proceeds of £175 million are raised).

Section C – Securities


C.1 Under the Issue, the Company is targeting an issue of up to

175 million new Ordinary Shares (including the issue of

19,528,639 Ordinary Shares to certain sellers of the Seed Portfolio

at the Issue Price (“Reinvestment Shares”)) of £0.01 each in the

capital of the Company at an issue price of £1.00 per Ordinary

Share. If there is sufficient demand, the Company may increase

the number of Ordinary Shares available for subscription to 250

million following agreement with Peel Hunt. The actual number of

Ordinary Shares to be issued pursuant to the Issue, and therefore

the Gross Proceeds or the Net Proceeds, are not known as of the

date of this Prospectus but will be notified by the Company via a

Regulatory Information Service announcement prior to

Admission.

Applications will be made to (i) the UK Listing Authority for all

of the Ordinary Shares following the Issue to be admitted to the

premium listing segment of the Official List and (ii) the London

Stock Exchange for the Ordinary Shares to be issued pursuant to

the Issue to be admitted to trading on the Main Market. It is

expected that Admission of such Ordinary Shares issued pursuant

to the Issue will become effective and that dealings in such

Ordinary Shares will commence at 8.00 a.m. on or about

28 September 2018.

The ISIN of the Ordinary Shares is GB00BYWLBM79 and the

SEDOL is BYWLBM7.

The LEI for the Company is 213800KD75TKWFLTWP09.

The ticker for the Company is MHR.

C.2 Currency The Ordinary Shares are denominated in pounds sterling with a

nominal value of £0.01 each.

C.3 Issued shares Set out below is the issued share capital of the Company as at the

date of this Prospectus:

Aggregate

nominal value Number

(£)

Ordinary Shares 0.01 1

Redeemable Preference Shares 1,724,000 1,724,000

The Redeemable Preference Shares are fully paid up as to their

nominal value and will be redeemed immediately following

Admission out of the proceeds of the Issue and cancelled. The

Ordinary Share is fully paid up.

Type and class of

securities

17

C.4 Voting Rights

Subject to the Articles and applicable law, holders of Ordinary

Shares shall have the right to receive notice of and to attend and

vote at general meetings of the Company.

Each holder of Ordinary Shares being present in person or by

proxy or by a duly authorised representative (if a company) at a

general meeting shall upon a show of hands have one vote and

upon a poll all Ordinary Shareholders shall have one vote for

every Ordinary Share held.

Dividend rights

The holders of Ordinary Shares are entitled to receive, and to

participate in, any dividends declared in relation to the Ordinary

Shares.

Return of capital

On a winding-up or a return of capital by the Company, the net

assets of the Company shall be divided pro rata among the holders

of the Ordinary Shares.

The consent of the holders of the Ordinary Shares will be required

for the variation of any rights attached to the Ordinary Shares.

C.5 There are no restrictions on the free transferability of the Ordinary

Shares, subject to compliance with applicable securities

regulations.

C.6 Admission Applications will be made to (i) the UK Listing Authority for the

Ordinary Shares to be admitted to the premium listing segment of

the Official List and (ii) the London Stock Exchange for the

Ordinary Shares to be admitted to trading on the Main Market. It

is expected that Admission will become effective and that dealings

in the Ordinary Shares, fully paid, will commence at 8.00 a.m. on

or around 28 September 2018.

The Ordinary Shares will not be dealt on any other recognised

investment exchange and no applications for Ordinary Shares to

be traded on such other exchanges have been made or are currently

expected.

C.7 Dividend policy The Company intends to pay interim dividends on a quarterly

basis in cash. Subject to market conditions and the level of the

Company’s net income, the Company anticipates paying dividends

equating to approximately 4 per cent. annualised for the period

from Admission to 31 March 2019. The first interim dividend is

expected to be declared in February 2019 for the period from

Admission to 31 December 2018 and then again in May 2019 for

the quarter ending 31 March 2019. For the year ending 31 March

2020, the Company will target equal quarterly dividends

equivalent to a yield of 5 per cent. per annum and thereafter will

adopt a progressive dividend policy in-line with the anticipated

growth in adjusted earnings and will target a dividend yield in

excess of 5 per cent. per annum. All dividend yields are stated by

reference to the Issue Price.

Restrictions on the free

transferability of shares

Description of the

rights attaching to the

securities

18

The Company may offer Shareholders the opportunity to receive

dividends in the form of further Ordinary Shares.

Upon full investment of the Net Proceeds and associated gearing,

the Company is targeting a net total Shareholder return of at least

10 per cent. per annum divided between income (payable by way

of the dividends mentioned above) and growth in NAV.

The dividend and return targets stated above are targets only and

not a profit forecast. There can be no assurance that these targets

will be met and they should not be taken as an indication of the

Company’s expected future results. Accordingly, potential

investors should not place any reliance on these targets in deciding

whether or not to invest in the Company and should decide for

themselves whether or not the target dividend yield and target net

total Shareholder return are reasonable or achievable. Subject to

cash not being required for ongoing operations or organic

investment, the Board will consider returning excess cash to

Shareholders over time, for example by way of special dividends

which would supplement ordinary dividends.

In order to increase the distributable reserves available to facilitate

the payment of future dividends, the Company has resolved that,

conditional upon Admission and the approval of the Court, the

amount standing to the credit of the share premium account of the

Company immediately following completion of the Issue be

cancelled and transferred to a special distributable reserve. The

Company may, at the discretion of the Board, pay all or any part

of any future dividends out of this special distributable reserve,

taking into account the Company’s investment objective.

Section D – Risks


D.2 The key risk factors relating to the Company and the sector in

which the Company invests include the following:

• Following the acquisition of the Seed Portfolio, the Company

intends to operate as a REIT for the purposes of Part 12 of the

CTA 2010. The Company cannot guarantee that it will qualify

or remain qualified as a REIT or that tax legislation in respect

of the same will not change. The basis of taxation of any

Shareholder’s shareholding in the Company may change

fundamentally if the Company fails to obtain, or ceases to

maintain, its REIT status.

• The Company cannot be sure that it will be successful in

obtaining suitable investments in its Portfolio Assets (other

than the Seed Portfolio) on financially attractive terms or at

all. Adverse market conditions in the UK residential property

markets as well as in the UK economy in general, may have a

negative impact on the Company’s ability to generate

acceptable returns by restricting the availability of suitable

assets or otherwise delaying or impairing the Company’s

ability to identify and execute investments in suitable assets.

Key information on the

risks specific to the

issuer or its industry

19

• The Company’s ability to pay dividends will be dependant

principally upon rental income from the Portfolio Assets as

well as the market value of its Portfolio Assets. Rental income

and the market value of properties are generally affected by

overall conditions in the relevant local economy, such as

growth in gross domestic product, employment trends,

inflation and changes in interest rates. If rental revenue from a

property declines while the related costs do not decline, the

Company’s net income and net cash could be materially

adversely affected.

• The Company’s targeted returns are based on estimates and

assumptions that are inherently subject to significant

uncertainties and contingencies, and the actual rate of return

may be materially lower than the targeted returns or may result

in a partial or total loss which could have a material adverse

effect on the Company’s profitability, the Net Asset Value and

the price of Ordinary Shares.

• The Company’s due diligence may fail to identify or

underestimate risks associated with the Portfolio Assets. Any

due diligence exercise which fails to identify risks, liabilities

or defects may have a material adverse effect on the

Company’s profitability, the Net Asset Value and the price of

the Ordinary Shares.

• The Company may face competition to acquire Portfolio

Assets from competitors who have greater financial, technical

and marketing resources and the Company may not be able to

compete successfully for investments. Accordingly, the

existence of such competition may have a material adverse

impact on the Company’s ability to acquire PRS Homes at

satisfactory prices.

• Any borrowings taken out by the Company (or a member of

its Group) in respect of the Portfolio Assets may diminish the

Net Asset Value of its Ordinary Shares which will have an

adverse effect on the Company’s ability to pay dividends. No

certainty can be given that the Company will be able to

refinance such borrowings.

• Income generated by the Portfolio Assets is dependent upon a

number of factors including the ability to attract and retain

tenants, the ability to achieve a desired level of rental income

and tenants complying with their rental obligations. Failure by

tenants to comply with their rental obligations could also

affect the ability of the Company to pay dividends to

Shareholders.

• As the Company does not have any employees it is reliant

upon third party service providers, the AIFM and the

Investment Adviser to successfully manage its investments,

execute its executive functions and identify and, in the case of

the Investment Adviser, select investment opportunities. The

agreements with each of these parties can be terminated

resulting in the Company having to source alternatives.

Furthermore, there is no guarantee that the Investment Adviser

20

will be able to retain key individuals. Failure by any service

provider to carry out its obligations to the Company in

accordance with the terms of its appointment could have a

materially detrimental impact on the operation of the

Company.

• Any change to laws, housing policy or regulations enacted by

national regional and local governments and institutions could

affect the market value of the Portfolio Assets and/or the rental

income achieved from the Portfolio Assets.

• The AIFM, the Investment Adviser and their affiliates are

involved in other activities which may on occasion give rise to

conflicts of interest with the Company. If these conflicts of

interest are managed to the detriment of the Company by the

AIFM, the Investment Adviser or their affiliates, they could

materially and adversely affect the performance of the

Company.

• Investments in property are relatively illiquid. Such illiquidity,

as well as changes in economic, real estate market or other

conditions may affect the Company’s ability to vary the

Portfolio Assets or dispose of or liquidate part of the Portfolio

Assets in a timely fashion or at satisfactory prices. This could

have an adverse effect on the Company’s financial condition

and results of operations.

• The value of property and property related assets is inherently

subjective due to the individual nature of each property. There

is no assurance that the valuations of any of the PRS Homes

will reflect the actual realisable sale price even where such

sales occur shortly after the relevant valuation date.

• The Company (or any member of the Group which incurs

borrowings) may be required to grant security in respect of

any borrowings it incurs. In the event that Company (or a

member of its Group) it is unable to furnish its repayment

obligations, the lender could enforce its security over the

Portfolio Assets or force the Company to dispose of the same.

Accordingly, on a winding-up of the Company, it is possible

that Shareholders may not recover their initial investment.

• It is the Investment Adviser’s intention to become authorised

as a full-scope alternative investment fund manager and

become appointed as the Company’s alternative investment

fund manager within 12 months of Admission. There is a risk

that the FCA may not grant the Investment Adviser such

authorisation. If this were to occur, the Company would either

have to extend the AIFM’s appointment beyond the time

envisaged or, failing such extension, seek to appoint a separate

FCA authorised fund manager.

• Any change in the Company’s tax status or in taxation

legislation in the United Kingdom or any other tax jurisdiction

affecting Shareholders could affect the value of investments

held by the Company, or affect the Company’s ability to

21

achieve its investment objective for the Ordinary Shares or

alter post-tax returns to Shareholders.

D.3 The key risk factors relating to the Ordinary Shares include the

following:

• The market value of, and the income derived from, the

Ordinary Shares can fluctuate in response to many factors

including its Net Asset Value, i.e. the market’s perception of

the prospective Net Asset Value, the dividend yield and the

prevailing interest rates. As such, the market value of an

Ordinary Share at any given time may vary considerably from

its underlying Net Asset Value and investors may not get back

the full value of their investment. In addition, fluctuations

could result from a change in many other external factors such

as global and economic and financial conditions, actions of the

UK government, changes in taxation and the business

development of competitors.

• There is no guarantee that any dividend in respect of any

period will be paid. There is no guarantee that the Company

will achieve the stated target net total Shareholder return

referred to in this Prospectus and therefore achieve its return

objective. The capacity of the Company to distribute

dividends and other capital distributions depends on its

capacity to generate profit and its capacity to transfer such

benefits and cashflows to the Shareholders in an efficient

manner. Furthermore, any dividend growth on the Ordinary

Shares will depend principally on growth in rental yields and

other income returns on the Portfolio Assets.

• No assurance can be given that, at any time, a liquid market

for the Ordinary Shares will develop or, if developed, that any

such market will be sustained. If an active trading market is

not developed or sustained, the liquidity and trading price of

the Ordinary Shares may be adversely affected. Even if an

active trading market develops, the market price of the

Ordinary Shares may not reflect the value of the underlying

Portfolio Assets.

• The Company may issue additional Ordinary Shares in the

future. Where statutory pre-emption rights are disapplied in

respect of any issue of additional Ordinary Shares following

Admission, such financing will be dilutive to existing

Shareholders who cannot, or choose not to, participate in such

financing.

• Sales of Ordinary Shares or interests in the Ordinary Shares by

significant investors could depress the market price of the

Ordinary Shares. A substantial number of Ordinary Shares

being sold, or the perception that sales of this type could

occur, could also depress the market price of the Ordinary

Shares.

Key information on the

risks specific to the

securities

22

Section E – Offer


E.1 The costs and expenses of the Issue include the costs of

incorporation of the Company, the fees payable in relation to

Admission, fees payable to the UK Listing Authority and the

London Stock Exchange, as well as the fees and expenses due

under the Placing and Sponsor’s Agreement, the fees payable to

other professional advisers and other related expenses (“Issue

Costs”). These costs and expenses will be met by the Company

and are capped at 2 per cent. of the Gross Proceeds (assuming that

at least the Target Gross Proceeds of £175 million are raised),

resulting in Net Proceeds of approximately £171.5 million (on the

assumption that 175 million Ordinary Shares are issued pursuant

to the Issue at the Issue Price including the Reinvestment Shares).

If the Issue Costs are such that the Net Asset Value per Ordinary

Share at Admission would be less than 98 pence (assuming Target

Gross Proceeds of £175 million are raised), the Investment

Adviser has agreed to pay such proportion of Issue Costs (which

would ordinarily be payable by the Company) so as to ensure that

the Net Asset Value per Ordinary Share at Admission will be

98 pence (assuming Target Gross Proceeds of £175 million are

raised). If Gross Proceeds are less than the Target Gross Proceeds,the Investment Adviser shall pay an amount equal to, but nogreater than, the sum it would have paid had the Target GrossProceeds been raised. This may result in the Net Asset Value beingless than 98 pence.

The actual number of Ordinary Shares to be issued pursuant to the

Issue, and therefore the Gross Proceeds or the Net Proceeds, are

not known as at the date of this Prospectus but will be notified by

the Company via a Regulatory Information Service announcement

prior to Admission.

E.2 The Issue is being made in order to fund:

• the acquisition of the Seed Portfolio for a total aggregate

purchase price of £70.26 million (subject to adjustment as

stated below), comprising:

– £6,003,208 million in respect of the purchase price for

acquiring the entire issued share capital of each of the

SPVs payable pursuant to the terms of the Share Purchase

Agreements (subject to adjustment in respect of (a) in thecase of the Share Purchase Agreements relating toHarwood Squirrel Limited, Harwood (Bristol) Limited,Harwood Lowestoft Limited and Harwood GopherLimited: (i) a deduction of the tax liabilities of the relevant

SPVs; and (ii) a deduction in an amount equal to the

aggregate net current liabilities of the SPVs or an increase

in an amount equal to the aggregate net current assets of

the relevant SPVs and (b) in the case of the SharePurchase Agreements relating to Bass Real Estate No.2Limited, Bass Real Estate No.4 Limited, Bass Real Estate

Reasons for the Issue

and use of proceeds

Net proceeds and costs

of the Issue

23

No.9 Limited and Bass Real Estate No.18 Limited certainrental apportionments);

– a payment of £55,756,792 in respect of the repayment of

shareholder and third party debt owed by the SPVs;

– £8.5 million in respect of the purchase price of acquiring

Celtic House, Derby, which is due to complete in Q4 of

2018;

• new investment in PRS Homes, including from the Identified

Pipeline, in accordance with the investment objective and

investment policy of the Company; and

• the redemption of the Redeemable Preference Shares for

£1,724,000 which have been issued in order to fund the

deposit paid in respect of the purchase of certain SPVs.

E.3 Ordinary Shares are being made available under the Issue at the

Issue Price. The Issue comprises the Offering and the issue of

Reinvestment Shares.

The Offering

The Offering comprises the Placing, the Offer for Subscription and

the Intermediaries Offer.

Peel Hunt has agreed to use its reasonable endeavours to procure

subscribers pursuant to the Placing for the Ordinary Shares. The

Placing is expected to close at 12.00 noon on 25 September 2018

(or such later date as the Company and Peel Hunt may agree).

The Offer for Subscription is being made in the United Kingdom,

the Channel Islands and the Isle of Man only. Applications under

the Offer for Subscription must be for a minimum subscription of

1,000 Ordinary Shares and then in multiples of 1,000 Ordinary

Shares thereafter. Completed Application Forms and the

accompanying payment in relation to the Offer for Subscription

must be posted to the Receiving Agent so as to be received by no

later than 1.00 p.m. on 24 September 2018.

Under the Intermediaries Offer, the Ordinary Shares are being

offered to Intermediaries in the United Kingdom, the Channel

Islands and the Isle of Man only who will facilitate the

participation of their clients (including certain of their retail

investor clients) located in the United Kingdom, the Channel

Islands and the Isle of Man. A minimum application of 1,000

Ordinary Shares per Underlying Applicant will apply. Completed

Applications from Intermediaries must be received by Peel Hunt

by no later than 10.00 a.m. on 25 September 2018.

Conditions to the Issue

The Issue is conditional upon:

(a) the Placing and Sponsor’s Agreement becoming wholly

unconditional (save as to Admission) and not having been

terminated in accordance with its terms at any time prior to

Admission;

Terms and conditions of

the Issue

24

(b) Admission having occurred by no later than 8.00 a.m. on

28 September 2018 or such later time and/or date as the

Company and Peel Hunt may agree (being not later than

8.00 a.m. on 12 October 2018); and

(c) the Minimum Net Proceeds being raised (or such lesser

amount as the Company and Peel Hunt may determine and

notify to investors via a RIS announcement and a

supplementary prospectus including a working capital

statement based on a revised minimum net proceeds figure).

The Directors also have the discretion not to proceed with the

Issue even if all of the above conditions (including raising the

Minimum Net Proceeds (or such lesser proceeds in accordance

with paragraph (c) above) have been met). If the Issue does not

proceed, all monies received under the Issue will be returned to

applicants without interest within 14 days at the relevant

applicant’s risk.

In the event that the Company, in consultation with the Investment

Adviser and Peel Hunt, wishes to waive condition (c) referred to

above, the Company will be required to publish a supplementary

prospectus (including a working capital statement based on a

revised minimum net proceeds figure).

E.4 Material interests By virtue of their subscriptions for Reinvestment Shares, on

Admission:

• HRE, a company within the HRE Group, will have an interest

in 2,150,000 Ordinary Shares equating to 1.23 per cent. of the

total issued share capital of the Company (assuming that

175 million Ordinary Shares are issued);

• Harwood Capital LLP, a company within the HRE Group, will

have an interest in 8,574,252 Ordinary Shares equating to

4.9 per cent. of the total issued share capital of the Company

(assuming that 175 million Ordinary Shares are issued)1; and

• NASCIT will have an interest in 8,804,387 Ordinary Shares

equating to 5.03 per cent. of the total issued share capital of

the Company (assuming that 175 million Ordinary Shares are

issued).

Nick Jopling, non-executive Chairman of the Company, intends to

subscribe for 100,000 Ordinary Shares at the Offer Price (such

Ordinary Shares to be held in the name of his wife, Serena

Jopling) equating to 0.057 per cent. of the Company’s total issued

share capital on Admission (assuming 175 million Ordinary

Shares are issued).

David Lis, non-executive Director of the Company, intends to

subscribe for 100,000 Ordinary Shares at the Offer Price equating

to 0.057 per cent. of the Company’s total issued share capital on

Admission (assuming 175 million Ordinary Shares are issued).

25

1 HCN has directed that the Ordinary Shares it has subscribed for be registered in the name of Harwood Capital LLP at Admission.

Such direction is contained in the relevant Reinvestment Subscription Letter.

Clive Standish, non-executive Director of the Company, intends to

subscribe for 50,000 Ordinary Shares at the Offer Price equating

to 0.029 per cent. of the Company’s total issued share capital at

Admission (assuming 175 million Ordinary Shares are issued).

E.5 No person or entity is offering to sell Ordinary Shares as part of

the Issue.

Under the terms of the Placing and Sponsor’s Agreement, the

Company has agreed that, subject to certain customary exceptions,

during the period from the date of the Placing and Sponsor’s

Agreement until 365 days after Admission, it will not, without the

prior written consent of Peel Hunt, issue or dispose of any interest

in any Ordinary Shares.

Under the terms of the Placing and Sponsor’s Agreement, for a

period of 730 days after Admission, the Directors have agreed, that

they will not (and in the case of Nick Jopling, has agreed to

procure that his wife will not) without the prior written consent of

Peel Hunt offer, sell, contract to sell, or grant or sell any option or

contract to purchase; or purchase any option or contract to sell; or

transfer, mortgage, assign, charge or pledge; or grant any option,

right or warrant to purchase, or otherwise transfer, lend, or dispose

of, directly or indirectly, any Ordinary Shares (if any) held by

them at Admission.

Under the terms of the Investment Advisory Agreement, the

Investment Adviser has agreed that it will not dispose of any

Ordinary Shares issued, or otherwise acquired by it, in lieu of part

of the fees payable under such agreement, for 24 months after the

date on which such shares have been acquired by it.

Under the terms of the Reinvestment Subscription Letters:

• NASCIT and HCN (and Harwood Capital LLP) have also

agreed, that they will not (subject to a number of carve outs

customary for agreements of this nature), without the prior

written consent of Peel Hunt offer, sell, contract to sell, or

grant or sell any option or contract to purchase; or purchase

any option or contract to sell; or transfer, mortgage, assign,

charge or pledge; or grant any option, right or warrant to

purchase, or otherwise transfer, lend, or dispose of, directly or

indirectly, any Ordinary Shares (or interests therein)

subscribed for pursuant to the relevant Reinvestment

Subscription Letter, for a period of 365 days following the

date of Admission; and

• HRE has also agreed, that it will not (subject to a number of

carve outs customary for agreements of this nature), without

the prior written consent of Peel Hunt offer, sell, contract to

sell, or grant or sell any option or contract to purchase; or

purchase any option or contract to sell; or transfer, mortgage,

assign, charge or pledge; or grant any option, right or warrant

to purchase, or otherwise transfer, lend, or dispose of, directly

or indirectly, any Ordinary Shares (or interests therein)

subscribed for pursuant to the relevant Reinvestment

Subscription Letter, for a period of 365 days following the

date of Admission or for a period of 730 days following the

Name of person selling

securities and lock-up

arrangements

26

date of Admission if the relevant Reinvestment Shares are

transferred by HRE to a Senior Manager.

E.6 Dilution Not applicable.

E.7 Expenses The Company will not charge investors any separate costs and

expenses in connection with the Issue.

The Issue Costs will be met by the Company and are capped at

2 per cent. of the Gross Proceeds provided that at least the Target

Gross Proceeds of £175 million are raised, resulting in Net

Proceeds of approximately £171.5 million (on the assumption that

175 million Ordinary Shares are issued pursuant to the Issue at the

Issue Price including the Reinvestment Shares).

All expenses incurred by any Intermediary are for its own account.

Investors should confirm separately with any Intermediary

whether there are any commissions, fees or expenses that will be

applied by such Intermediaries in connection with any application

made through that Intermediary pursuant to the Intermediaries

Offer. The Intermediary Terms and Conditions entered into by the

Intermediaries restrict the level of commission that Intermediaries

are able to charge investors.

27

RISK FACTORS

The risk factors set out below are those which are considered by the Company and the Directors to be

material as at the date of this Prospectus but are not the only risks relating to the Company or the

Ordinary Shares. The information set out below does not purport to be an exhaustive summary of

the risks affecting the Company. Additional risks and uncertainties relating to the Company or the

Ordinary Shares that are not currently known to it or the Directors, or that the Directors or

the Company do not currently consider to be material may also have a material adverse effect on the

Company. The risks listed are not set out in any particular order of priority.

Prospective investors should note that the risks relating to the Company, its industry and the Ordinary

Shares summarised in the section of this Prospectus headed “Summary” are the risks that the

Directors believe to be the most important to an assessment by a prospective investor of whether to

consider an investment in the Ordinary Shares. However, as the risks which the Company faces relate

to events and depend on circumstances that may or may not occur in the future, prospective investors

should consider not only the information on the key risks summarised in the section of this Prospectus

headed “Summary” but also, among other things, the risks and uncertainties described below.

Investors should consider the following material risk factors in relation to the Company and the

Ordinary Shares, and should consider carefully whether an investment in the Company is suitable for

them in light of the information in this Prospectus (including this section entitled “Risk Factors”) and

their personal circumstances. Potential investors should consult their stockbroker, bank manager,

solicitor, accountant or other financial adviser before investing in the Company.

Although certain of the risk factors set out below may refer only to “the Company”, they should be

considered to apply equally to any and all members of the Group from time to time, and any and all

Portfolio Assets (including but not limited to the Seed Portfolio).

1. RISKS RELATING TO THE COMPANY’S INVESTMENTS, ITS INVESTMENT

STRATEGY AND OPERATIONS

1.1 Investor returns will be dependent on the performance of the Company’s property assets which are

subject to operational risks

The Company cannot be sure that it will be successful in obtaining suitable investments in its

Portfolio Assets (other than the Seed Portfolio) on financially attractive terms or at all. Adverse

market conditions in the UK residential property markets, as well as in the UK economy in general,

may have a negative impact on the Company’s ability to generate acceptable returns by restricting the

availability of suitable assets or otherwise delaying or impairing the Company’s ability to identify and

execute investments in suitable assets. Any such restriction on the Company’s ability to identify

suitable assets that may generate acceptable returns may also result in a negative impact on the

Company’s performance as uninvested Net Proceeds will remain as cash or cash equivalents and will

not produce income for the Company. Adverse market conditions and their consequences may have a

material adverse effect on the Company’s investment portfolio, and, as a result, the Net Asset Value.

To the extent that there is a delay in making investments, the Company’s income may also be reduced

because it will be unable to generate returns during the period of delay.

The Company will not be managed with any direct correlation to any property index and consequently

may have returns that differ from the performance of UK residential property markets as a whole.

The Company’s ability to pay dividends will be dependent principally upon its rental income from the

Portfolio Assets. Rental income and the market value of PRS Homes are generally affected by overall

conditions in the relevant local economy, such as growth in gross domestic product, employment

trends, inflation and changes in interest rates. Both rental income and market values of PRS Homes

may also be affected by other factors specific to the residential property market, such as the

perceptions of prospective tenants of the attractiveness, convenience and safety of properties, as well

as any initial or ongoing maintenance, repair, insurance, capital expenditure or other operating costs.

28

In addition, certain significant expenditures, including some operating expenses, must be met by the

Company even when a particular PRS Home is vacant.

These and other factors could also have a material effect on the Company’s ability to maintain or

increase the occupancy levels of the Portfolio Assets. In particular, a widespread non-renewal of

leases or early termination by tenants in the Portfolio Assets could materially adversely affect the

Company’s net income. If the Company’s net rental income declines, it would have less cash available

and its Net Asset Value could significantly decline, which would in turn have a negative impact on

reported earnings. The Company will also incur certain fixed costs on the acquisition of Portfolio

Assets, including any SDLT which may reduce the Net Asset Value immediately following any such

acquisition. In addition, significant expenditures associated with a property alongside void costs, such

as council tax, such as service charges, are generally not reduced in proportion to any decline in rental

revenue from that property. If rental revenue from a property declines while the related costs do not

decline, the Company’s net income and net cash could be materially adversely affected.

Any change to the laws, policy and regulations relating to the UK residential property market may

have an adverse effect on the market value and/or the rental income of the Portfolio Assets.

1.2 The Company may not meet its investment objective

The investment objective of the Company is to deliver an attractive level of income return together

with the prospect of income and capital growth, by investing in, managing and growing a portfolio of

PRS Homes. Returns from an investment in property depend largely upon the amount of rental

income generated from the property and the expenses incurred in the management of the property, as

well as upon changes in its market value. The Company may not achieve its investment objective.

Meeting the investment objective is a target but there can be no guarantee that the investment

objectives of the Company will be met.

The payment of future dividends and the level of any future dividends paid by the Company is subject

to the discretion of the Directors and will depend upon, amongst other things, the ability to invest

funds, grow rental income and manage operating costs.

There can be no assurance that any dividends will be paid in respect of any financial year or period

and no guarantee as to the level of any future dividends to be paid by the Company. There is no

guarantee that the Company will achieve the stated target net total Shareholder return referred to in

this Prospectus and therefore achieve its return objective.

1.3 The Company is newly incorporated and has no operating history

The Company was incorporated on 25 May 2018 and has not yet commenced operations. It therefore

has no track record of past performance or meaningful operating or financial data on which potential

investors may base an evaluation. In addition, the past performance of HRE, which the Investment

Adviser is able to draw upon as a result of it being a member of the HRE Group and sharing the same

senior management team, is not indicative of the future performance and prospects of the Company.

Apart from the Seed Portfolio, the Company currently neither owns any properties nor has entered

into any negotiations with respect to any investment opportunities and it will not do so until after

Admission. As a result, prospective investors will only have an opportunity to evaluate the terms of

the Seed Portfolio. They will not be able to evaluate any other potential Portfolio Assets, actual

investments or financial data that would assist them in evaluating the prospects of the Company and

the related merits of an investment in the Ordinary Shares. Any investment in the Ordinary Shares is

therefore subject to all of the risks and uncertainties associated with any new business, including the

risk that the business will not achieve its investment objectives or return objective and that the value

of any investment made by the Company and of the Ordinary Shares, could substantially decline.

29

1.4 The Company may not meet its targeted returns

The Company’s targeted returns are based on estimates and assumptions that are inherently subject to

significant uncertainties and contingencies, and the actual rate of return may be materially lower than

the targeted returns.

The Company’s targeted returns set out in this Prospectus are targets only and are based on estimates

and assumptions about a variety of factors including, without limitation, purchase price, yield and

performance of the Portfolio Assets, which are inherently subject to significant business, economic

and market uncertainties and contingencies, all of which are beyond the Company’s control and which

may adversely affect the Company’s ability to achieve its targeted returns. The Company may not be

able to implement its investment objective and investment policy in a manner that generates returns

in line with the targets, and the actual returns achieved by the Company may vary materially from

such targets. Furthermore, the targeted returns are based on the market conditions and the economic

environment at the time of assessing the targeted returns, and are therefore subject to change. In

particular, the targeted returns assume no material changes occur in Government regulations or other

policies, or in law or taxation, and assume that the Company and its Portfolio Assets are not affected

by natural disasters, terrorism, social unrest or civil disturbances or the occurrence of risks described

elsewhere in this Prospectus. There is no guarantee that actual (or any) returns can be achieved at or

near the levels set out in this Prospectus. Accordingly, the actual rate of return achieved may be

materially lower than the targeted returns, or may result in a partial or total loss, which could have a

material adverse effect on the Company’s profitability, the Net Asset Value and the price of the

Ordinary Shares. Investors should decide for themselves whether or not the target returns are

reasonable or achievable and carefully evaluate whether investing in the Ordinary Shares is

appropriate for them, particularly taking into account this and the other risk factors described herein.

1.5 The Company’s due diligence may fail to identify all risks associated with the Portfolio Assets or

the Company may fail to effectively assess, manage and mitigate identified risks

Prior to acquiring Portfolio Assets, due diligence will be carried out on the properties concerned. In

doing so, the Company would typically rely on third parties to conduct a significant portion of this

due diligence (including legal reports on title and property valuations). To the extent that such third

parties underestimate or fail to identify risks associated with the properties in question, or the

Company fails to effectively assess, manage and mitigate identified risks, the Company may be

affected by unexpected liabilities, such as defects in title, or be exposed to structural or operational

defects requiring remediation or giving rise to additional costs or liabilities (which may not be fully

compensated by insurance or at all), or may be unable to obtain necessary permits or permissions. Any

due diligence exercise which fails to identify any such risks, liabilities or defects or the Company’s

failure to assess, manage and mitigate identified risks may have a material adverse effect on the

Company’s profitability, the Net Asset Value and the price of the Ordinary Shares.

The failure to identify, assess, manage and mitigate risks may also result in Portfolio Assets failing to

perform in accordance with projections, particularly as to rent and occupancy, which may have a

material adverse effect on the Company’s profitability, the Net Asset Value and the price of the

Ordinary Shares.

1.6 The Company will have a shortfall of income until the Net Proceeds are invested

The Net Proceeds will be used to acquire the Seed Portfolio and other Portfolio Assets in accordance

with the Company’s investment policy. The generation of profits for distribution by the Group will

depend on the successful management of the Portfolio Assets, the yields on existing and new PRS

Homes, interest costs, taxes and the sale of the PRS Homes. The Board expects the income returns to

the Group will take time to build up to their full potential in line with the time taken to fully invest

the proceeds of the Issue in Portfolio Assets. Moreover, the Board is unable to predict how much time

it will take to make such investments. There is no guarantee that the Investment Adviser will be

successful in sourcing suitable assets and there is no guarantee that the Company will make any

investment in suitable Portfolio Assets in a timely manner or at all.

30

1.7 The Company may face competition to acquire Portfolio Assets

The Company may face competition from UK or other foreign property companies or funds. Some of

the Company’s competitors may have greater financial, technical resources and the Company may not

be able to compete successfully for investments. In addition, potential competitors of the Company

may have higher risk tolerances, different risk assessments or access to different sources of funding,

which could allow them to consider a wider variety of investments on a different cost basis. The

Company may lose investment opportunities in the future if it does not match loan pricing, structures

and terms offered by competitors and even doing so, the Company may experience decreased rates of

return and increased risks of loss.

In addition, competition in the property market, including competing bids by potential purchasers,

may lead to prices for existing properties being driven up. Accordingly, the existence of such

competition may have a material adverse impact on the Company’s ability to acquire PRS Homes at

satisfactory prices.

1.8 Borrowing can enhance as well as diminish the Net Asset Value per Ordinary Shares

Borrowings may be employed at the level of the Company and/or at the level of any investee entity

to pursue the Company’s investment objective (including any member of the Group that may be

established or utilised by the Company in connection with obtaining leverage against any of its

assets). It is not certain that such facilities will be available on acceptable terms or at all. In addition,

the Company may face difficulties refinancing its debt as it matures, and may be forced to face higher

financial costs if interest rates increase when such debt is refinanced. There is no guarantee that any

borrowings of the Company (or any member of the Group that incurs borrowings) will be refinanced

on their maturity either on terms that are acceptable to the Company or at all.

The Company’s investment policy permits the Group to borrow up to a maximum of 45 per cent. of

the Gross Asset Value of the Group as a whole (although the Directors currently intend that the Group

should target borrowings of approximately 30 to 40 per cent. of Gross Asset Value). Prospective

investors should be aware that, whilst the use of borrowings should enhance the Net Asset Value per

Ordinary Share when the value of the Group’s underlying assets is rising, it will, however, have the

inverse effect where the underlying asset value is falling. In addition, in the event that the Group’s

income falls for whatever reason, the use of borrowings will increase the impact of such a fall on the

net revenue of the Group and accordingly will have an adverse effect on the Company’s ability to pay

dividends to Shareholders.

Furthermore, the use of leverage may increase the exposure of the Company to adverse economic

factors such as rising interest rates, downturns in the economy, deteriorations in the condition of the

Company’s investments or in the UK residential property market, which could have a material adverse

effect on the Company’s financial condition, business, prospects and results of operations.

The Company (and/or any member of the Group that incurs borrowings) will pay interest on any

borrowing it incurs. As such, the Company is exposed to interest rate risk due to fluctuations in the

prevailing market rates. Interest rate movements may affect the level of income receivable on cash

deposits and the interest payable on any variable rate cash borrowings. This may adversely affect the

ability of the Group to acquire further Portfolio Assets and/or may increase the cost of the debt to

the Group which could, as a consequence, have a material adverse impact on the financial position of

the Company and the level of returns and dividends paid to Shareholders. Any amounts that are

secured under a bank facility will rank ahead of Shareholder’s entitlements and accordingly, should

returns derived from the Group’s investments not be sufficient to cover the costs and liabilities of such

borrowings on a liquidation of the Company. Shareholders may not recover their initial investment

and in certain circumstances may lose their entire investment.

31

1.9 The Company may be required to grant security over its assets which will rank ahead of

Shareholders’ entitlements

The Company (or any member of the Group which incurs borrowings) may be required to grant

security in respect of any borrowings it incurs. Such security may be over certain PRS Homes

comprised in the Portfolio Assets, or over the Portfolio Assets as a whole and will rank ahead of the

Shareholders’ entitlements. If the Company (or any Group member which incurs borrowings) were

unable to meet its obligations to repay such borrowings, the lender may enforce its rights over the

security and take possession of the Portfolio Assets or require the sale of the same. In the event that

security is enforced over the Portfolio Assets, this could have a material adverse effect on the

Company’s financial condition, business, prospects and results of operations.

Accordingly, on a winding-up of the Company, it is possible that Shareholders may not recover their

initial investment.

1.10 Any costs associated with potential investments that do not proceed to completion will affect the

Company’s performance

The Group expects to incur certain costs associated with sourcing of suitable real estate assets,

including costs derived from third party sourcing, valuations, financing or legal services. Whilst the

Investment Adviser will always seek to minimise any such costs, it can give no assurances as to the

on-going level of these costs or that negotiations to acquire such assets will be successful;

furthermore, the greater number of these deals which do not reach completion, the greater the impact

of such costs on the Company’s performance, financial condition and business prospects.

1.11 The Company’s portfolio could become exposed to concentration risk

Although the Company will seek to build an expansive portfolio of Portfolio Assets, all of the

Company’s assets will, once the Company is fully invested, be invested in PRS Homes in the UK.

Consequently, any downturn in the UK’s economy or regulatory changes in the UK would likely have

a material adverse effect on the Company’s results of operations or financial condition. Whilst the

Company will seek to maintain a prudent spread of risk, properties are typically located around

management Hubs and any concentration of investments may lead to greater volatility in the value of

the Company’s investments and consequently the Company’s Net Asset Value, which may materially

and adversely affect the performance of the Company and returns to Shareholders.

1.12 The Group may be subject to liability following disposal of Portfolio Assets by way of corporate

sales

The Group may be exposed to future liabilities or obligations with respect to the disposal of Portfolio

Assets by way of corporate sales. The Group may be required to set aside money for warranty claims

or contingent liabilities in respect of disposals. The Group may be required to pay damages (including

but not limited to litigation costs) to the extent that any representations or warranties that it has given

to a purchaser prove to be inaccurate or to the extent that it has breached any of its covenants

contained in the disposal documentation. In certain circumstances, it is possible that any incorrect

representations and warranties could give rise to a right by the purchaser to unwind the contract in

addition to the payment of damages. Further, the Group may become involved in disputes or litigation

in connection with such disposed Portfolio Assets which could incur considerable costs.

Certain obligations and liabilities associated with the ownership of investments can also continue to

exist notwithstanding any disposal, such as environmental liabilities. Any such claims, litigation or

obligations, and any steps which the Group is required to take to meet the cost, such as sales of assets

or increased borrowings, could have an adverse effect on the Company’s performance, financial

condition and business prospects.

1.13 The use of derivative instruments may expose the Company to greater risk

The Company may utilise derivative instruments for efficient portfolio management purposes. Where

the Company utilises derivative instruments, it is likely to take a credit risk with regard to the parties

32

with whom it trades and may also bear the risk of settlement default. These risks may differ materially

from those entailed in exchange-traded transactions that generally are backed by clearing organisation

guarantees, daily marking-to-market and settlement, and segregation and minimum capital

requirements applicable to intermediaries. Transactions entered into directly between counterparties

generally do not benefit from such protections and expose the parties to the risk of counterparty

default. Accordingly, the Company’s use of derivative instruments may expose the Company to

greater risk and have a material adverse effect on the Company’s performance.

The Company may seek to mitigate interest rate risk using derivative instruments. However, there can

be no assurance or guarantee that the Company will successfully hedge against such risks or that

adequate hedging arrangements will be available on an economically viable basis. Hedging

arrangements may result in additional costs being incurred or losses being greater than if hedging had

not been used, and may expose the Company to the risk of its counterparts. If the Company were to

enter into financing arrangements where its exposure to floating interest rates was not hedged, or

should a counterparty fail, the Company may be subject to interest rate risk and changes in interest

rates could have a material adverse effect on the Company’s financial condition, business, prospects

and results of operations.

1.14 The impact of the UK’s proposed exit from the European Union on the Company is uncertain

On 23 June 2016, the United Kingdom held a referendum on the United Kingdom’s continued

membership of the European Union. This resulted in a vote for the United Kingdom to exit the

European Union (“Brexit”). Brexit has resulted and will continue to result in significant economic,

political and social instability, not only in the United Kingdom and Europe, but across the globe more

generally. Furthermore, Brexit has adversely affected global markets, including the London Stock

Exchange, on which the Ordinary Shares will be admitted to trading following Admission.

There are significant uncertainties in relation to the terms and timeframe within which Brexit will be

effected, and there are significant uncertainties as to what the impact will be on the economic, fiscal,

monetary, legal, tax and regulatory landscape in the UK some of which may have a direct impact upon

the Company and/or the Portfolio Assets. The extent of the impact on the Company is uncertain and

will depend, in part, on the nature of the arrangements that are put in place between the United

Kingdom and the European Union. The impact of Brexit on the UK real estate sector and, specifically,

the private mid-market is likewise unknown and reliant upon the factors referred to above.

Although it is not possible to predict fully the effects of Brexit, any of these uncertainties and the

method in which they are resolved, taken singularly or in the aggregate, could have a material adverse

effect on the Company and/or the Portfolio Assets. In addition, such effects could potentially make it

more difficult for the Company to raise capital, and could further lead to a deterioration in the value

of securities admitted to trading on the London Stock Exchange, including the Ordinary Shares.

1.15 Market uncertainty, and in particular the restricted availability of credit, may reduce the value of

the Company’s Portfolio Assets

Market uncertainty and, in particular, the restricted availability of credit, may reduce the value of the

Company’s Portfolio Assets, and may reduce liquidity in the real estate market. The performance of

the Company would be adversely affected by a downturn in the property market in terms of market

value or a weakening of rental yields. Any inability of the Company to realise the value of its Portfolio

Assets or to do so at a gain, or losses in income due to lower rental yields, may have a material adverse

effect on the Company’s financial condition, business, prospects and results of operations.

2. REAL ESTATE RISKS

2.1 The Company’s ability to pay dividends is dependent on the income received from the Portfolio

Assets

Dividends payable by the Company will be dependent on the income from the Portfolio Assets it

owns. The income received from the Portfolio Assets will be adversely affected if the Portfolio Assets

33

fail to attract and retain tenants or are unable to achieve a desired level of rental income. Failure by

tenants to comply with their rental obligations could also affect the ability of the Company to pay

dividends to Shareholders.

2.2 The Company’s investments will be illiquid

Investments in property are relatively illiquid. Such illiquidity may affect the Company’s ability to

vary the Portfolio Assets or dispose of or liquidate part of the Portfolio Assets in a timely fashion and

at satisfactory prices in response to changes in economic, real estate market or other conditions. The

return received by the Company would be adversely affected if there were a downturn in the property

market or market conditions were less favourable at the time the Company disposes of the Portfolio

Assets. This could have an adverse effect on the Company’s financial condition and results of

operations.

2.3 The valuation of the Company’s property assets is subjective and uncertain

The value of property and property-related assets is inherently subjective due to the individual nature

of each property. As a result, valuations are subject to substantial uncertainty and may be made on the

basis of assumptions and methodologies which may not prove to be accurate. There is no assurance

that the valuations of any of the PRS Homes will reflect the actual realisable sale price even where

such sales occur shortly after the relevant valuation date.

The Valuer has valued the 22 properties forming the Seed Portfolio with an aggregate market value

of £69.87 million. The Valuer has made certain assumptions when determining the Seed Portfolio’s

Market Value which may prove to be inaccurate.

2.4 The Company’s PRS Homes may suffer damage which is not fully compensated by insurance or at

all

There are certain types of losses, generally of a catastrophic nature, that may be uninsurable or are not

economically insurable. Additionally, inflation, changes in building codes and ordinances,

environmental considerations and other factors might also result in insurance proceeds being

insufficient to repair or replace a particular PRS Home or PRS Homes. Should an uninsured loss or a

loss in excess of insured limits occur, the Company may lose capital invested in the affected property

as well as anticipated future revenue from such properties. The Company might also remain liable for

any debt or other financial obligations related to such properties. In addition, the Company’s

properties could suffer physical damage resulting in losses which may be in excess of insurance

proceeds or may not be fully compensated for by insurance. Any material uninsured losses may have

a material adverse effect on the Company’s business prospects, results of operations and financial

condition.

2.5 The Company may enter into forward funding with associated development risks

The investment policy permits the Company to use a maximum of 10 per cent. of the Gross Asset

Value for forward funding or acquisitions of sites for development in conjunction with an outsourced

development specialist or material conversion. An opportunity exists to add a further 12 units at the

Barnes Court property in Bristol; if brought forward, this development would represent less than one

per cent. of the Gross Asset Value following acquisition of the Seed Portfolio.

The Group, in forward funding, could be exposed to an element of risk where, for example, the vendor

or its developing contractor fails and is unable to complete the development in question and the

Company, in conjunction with the vendor (if appropriate) has to appoint another developing entity.

This could affect the Group’s financial position and, as a result, may adversely affect the Company’s

business, financial condition, results of operations, ability to maintain its dividend policy, Net Asset

Value or the market price of the Ordinary Shares.

34

3. RISKS RELATING TO SERVICE PROVIDERS

3.1 The Company has no employees and is reliant on third party service providers

The Company has no employees and the Directors have all been appointed on a non-executive basis.

Whilst the Company has taken all reasonable steps to establish and maintain adequate procedures,

systems and controls to enable it to comply with its obligations, the Company is reliant upon the

performance of third party service providers for certain of its executive functions. In particular, the

Investment Adviser, the Property Manager, the AIFM, the Administrator and the Registrar will be

performing services which are integral to the operation of the Company. Failure by any service

provider to carry out its obligations to the Company in accordance with the terms of its appointment

could have a materially detrimental impact on the operation of the Company.

Shareholders will only be able to exercise their rights directly against the Company and will not have

any direct contractual rights against the service providers of the Group appointed from time to time.

The past performance of other investments managed or advised by the Investment Adviser or any

other member of the HRE Group and their respective investment professionals cannot be relied upon

as an indicator of the Company’s future performance. Investor returns will be dependent upon the

Investment Adviser successfully pursuing its investment objective and investment policy on behalf of

the Company. The success of the Company will also depend on the Investment Adviser’s ability to

identify and acquire Portfolio Assets in accordance with this investment objective and investment

policy. There can be no assurance that the Investment Adviser will be able to do so or that the

Company will be able to generate any investment returns for Shareholders or indeed avoid investment

losses.

In the event that a Shareholder considers that it may have a claim against a third party service provider

in connection with such Shareholder’s investment in the Company, such Shareholder should consult

its own legal advisers.

The above is without prejudice to any right a Shareholder may have to bring a claim against an FCA

authorised service provider under section 138D of FSMA (which provides that breach of an FCA rule

by such service provider is actionable by a private person who suffers loss as a result), or any tortious

cause of action. Shareholders who believe they may have a claim under section 138D of FSMA, or in

tort, against any service provider in connection with their investment in the Company, should consult

their legal adviser.

3.2 The Company is dependent on the Investment Adviser, and in particular key individuals at the

Investment Adviser, to identify and select investment opportunities in PRS Homes

The Investment Adviser is a newly incorporated company and therefore has no operating history. In

accordance with the Investment Advisory Agreement, the Investment Adviser is responsible for

providing certain management and investment advisory services to the Company, including the

sourcing and execution of investment opportunities in PRS Homes. Accordingly, the Company will

be reliant upon, and the Company’s success will depend on, such key personnel, services, resources,

expertise and the business relationships that are available to them and that they maintain. If the

Investment Advisory Agreement is terminated, it is likely that the Company will cease to have access

to such key personnel, services, resources, expertise and business relationships. The Company would

in such circumstances need to identify replacement sources for such management and investment

advisory services, as well as replacement sources of investment opportunities in PRS Homes.

Consequently, the future ability of the Company to successfully pursue its investment objective and

investment policy may, among other things, depend on the continued operation of the Investment

Advisory Agreement, as well as the ability of the Investment Adviser to harness any benefits afforded

to it by virtue of its position as a wholly-owned subsidiary of HRE, retain its key personnel and recruit

individuals of similar experience and calibre and having similar expertise and business relationships.

The retention of such individuals cannot be guaranteed. Furthermore, in the event of the death or

departure of the Senior Managers, there is no guarantee that the Investment Adviser would be able to

recruit a suitable replacement. In addition, events impacting but not entirely within the Investment

35

Adviser’s control, such as its financial performance, it being acquired or making acquisitions or

changes to its internal policies and structures, could in turn affect its ability to retain key personnel.

Accordingly the ability of the Company to achieve its investment objective depends heavily on the

experience of the Investment Adviser’s key personnel, and more generally on the ability of the

Investment Adviser to attract and retain suitable staff.

Under the terms of the Investment Advisory Agreement, the Investment Adviser is required to devote

such time as may be required to enable the Investment Adviser to carry out its obligations properly

and efficiently. If the Investment Adviser fails to allocate the appropriate time or resources to the

Company’s investments, the Company may be unable to achieve its investment objectives (in whole

or in part). In addition, although the Investment Advisory Agreement requires the Investment Adviser

to dedicate competent personnel to the Company’s business, it may not be able to do so. The

obligations of the Investment Adviser under the Investment Advisory Agreement are not guaranteed

by any other person.

The Company is also subject to the risk that the Investment Advisory Agreement may be terminated

(by the Company or the Investment Adviser) and that no suitable replacement will be found. If the

Investment Advisory Agreement is terminated and a suitable replacement is not secured in a timely

manner (or at all) or key personnel of the Investment Adviser are not available to the Company with

an appropriate time commitment (or at all), the ability of the Company to execute its investment

objective and investment policy, and in turn the Company’s financial performance, may be materially

and adversely affected.

3.3 The AIFM, the Investment Adviser and their affiliates may be involved in activities which conflict

with the interests of the Company

The AIFM, the Investment Adviser and their affiliates are involved in other activities which may on

occasion give rise to conflicts of interest with the Company. In particular, and subject to the right of

first refusal contained in the Investment Advisory Agreement, they currently do, and may in the

future: (i) manage or advise other funds and may provide investment management, investment

advisory or other services in relation to these funds or future funds which may have similar

investment policies to that of the Company; (ii) carry on investment activities for their own accounts

and for other accounts in which the Company has no interest; and (iii) give advice and recommend

investments to other managed accounts or investment funds which may differ from advice given to,

or investments recommended or bought for, the Company, even though their investment policies may

be the same or similar. If these conflicts of interest are managed to the detriment of the Company by

the AIFM, the Investment Adviser or their affiliates, they could materially and adversely affect the

performance of the Company.

3.4 The Company is dependent on the Property Manager to manage the Portfolio Assets on its behalf

The Company is reliant upon the Property Manager to provide property management services and

efficiently run, collect rent and manage the Portfolio Assets on its behalf.

One of the principal roles of the Property Manager is to collect rental receipts from tenants which

form the Company’s income. Failure by the Property Manager to collect rental income from a material

number of tenants may adversely affect the Company’s ability to pay dividends to Shareholders.

As part of the cash collection procedure, the Property Manager holds the collected rental receipts on

the Company’s behalf in a client account for a short period of time before passing these to the

Company. In the event that the Property Manager were to suffer an insolvency event during this

intervening period, the Company would be exposed to a delay in receiving one month’s rental income.

A delay in receiving rental receipts may impact the Company’s ability to pay dividends to the levels

anticipated in this Prospectus.

The Property Manager is also responsible for ensuring that the Portfolio Assets comply with a number

of regulatory requirements including, but not limited to, building control, fire safety and health and

safety. If the Property Manager fails to maintain regulatory compliance, the Company could be

36

exposed to carrying out alterations to the Portfolio Assets, be prohibited from letting the PRS Homes

or be subject to prosecution.

4. RISKS RELATING TO REGULATION AND TAXATION

4.1 If the Company fails to qualify, or remain qualified, as a REIT, its rental income and gains will be

subject to UK corporation tax

Following the acquisition of the Seed Portfolio, the Group intends to operate its business as a REIT

for the purposes of Part 12 of the CTA 2010. As a result, the Company will need to comply with

certain ongoing regulations and conditions. The basis of taxation of any Shareholder’s shareholding

in the Company may change fundamentally if the Company fails to obtain, or ceases to maintain, its

REIT status.

Following the acquisition of the Seed Portfolio, the Company cannot guarantee that it will meet, or

maintain continued compliance with all of the conditions to REIT status set out in the REIT Regime.

There is a risk that the REIT Regime may cease to apply in some circumstances. HMRC may require

the Company to exit the REIT Regime if:

• it regards a breach of the conditions or failure to satisfy the conditions relating to the REIT

Regime, or an attempt to avoid tax, as sufficiently serious;

• the Company has committed a certain number of minor or inadvertent breaches in a specified

period; or

• HMRC has given the Company at least two notices in relation to the avoidance of tax within a

ten year period.

In addition, if the conditions for REIT status relating to the share capital of the Company or the

prohibition on entering into loans with abnormal returns are breached, or the Company ceases to be a

UK tax resident, becomes a dual tax resident or an open-ended investment company, the Company

will automatically lose its REIT status. The Company could therefore lose its status as a REIT as a

result of actions by third parties, for example, in the event of a successful takeover by a company that

is not a REIT or due to a breach of the condition that the Company is not a close company if it is

unable to remedy the breach within a specified timeframe. If the Company were to be required to

leave the REIT Regime within ten years of joining, HMRC has wide powers to direct how it would

be taxed, including in relation to the date on which the Company would be treated as exiting the REIT

Regime. This could have a material impact on the financial condition of the Company and, as a result,

Shareholder returns.

A REIT may become subject to an additional tax charge if it pays a dividend to, or in respect of, a

Substantial Shareholder. This additional tax charge will not be incurred, however, if the REIT has

taken reasonable steps to avoid paying dividends to a Substantial Shareholder. As a result, the Articles

contain provisions designed to avoid the situation where dividends may become payable to a

Substantial Shareholder (which are summarised in paragraph 5 of Part 10 of this Prospectus). These

provisions grant the Directors powers to identify Substantial Shareholders and to prohibit the payment

of dividends on Ordinary Shares that form part of a Substantial Shareholding, unless certain

conditions are met. The Articles also authorise the Board to require the disposal of Ordinary Shares

forming part of a Substantial Shareholding in certain circumstances where the Substantial Shareholder

has failed to comply with the above provisions.

In the event of any purchase by the Company of its own Ordinary Shares (whether for discount control

purposes or otherwise), there is a risk that certain Shareholders may become Substantial Shareholders

in the event that they do not participate in the relevant share buy-back programme. In such

circumstances, the provisions of the Articles relating to Substantial Shareholdings would apply.

The accounting standards and practices that are applicable to the Group may deem that the Group is

in receipt of higher rental income than it is currently contractually entitled to as a result of the fixed

minimum uplifts under the tenant leases. This accounting treatment of future rental income in current

37

year accounts could result in the Company being required to distribute more income to Shareholders

than it actually receives from tenants in order to satisfy the REIT conditions. In such event the

increased dividend, unless it is a scrip dividend, would not be fully covered by cash received through

the Group’s net income and the Group would be required to use its other cash resources to fund the

additional dividend.

4.2 Taxation attributable to the Portfolio Assets may not be taken into account by the Investment

Adviser

The Investment Adviser may or may not take tax considerations into account in determining when the

Company’s properties within the Company’s portfolio should be sold or otherwise disposed of and

may or may not assume certain market risk and incur certain expenses in this regard to achieve

favourable tax treatment of a transaction.

4.3 Any change in taxation legislation may impact the value of Company’s investments

The levels of, and reliefs from, taxation may change. The tax reliefs referred to in this Prospectus are

those currently available and their value depends on the individual circumstances of investors. Any

change in the Company’s tax status or in taxation legislation in the United Kingdom or any other tax

jurisdiction affecting Shareholders could affect the value of the investments held by the Company, or

affect the Company’s ability to achieve its investment objective for the Ordinary Shares or alter the

post-tax returns to Shareholders. If you are in any doubt as to your tax position, you should consult

your own professional adviser without delay.

Any change (including a change in interpretation) in tax legislation, in the United Kingdom, could

have a material adverse effect on the Company’s business, financial condition, results of operations,

future prospects or the price of the Ordinary Shares. Changes to tax legislation could include the

imposition of new taxes or increases in tax rates in the United Kingdom. In particular, an increase in

the rates of SDLT could have a material impact on the price at which UK land and property can be

sold, and therefore on asset values.

4.4 The Investment Adviser may be refused FCA authorisation

As at the date of this Prospectus, the Investment Adviser is not an authorised FCA entity. However, it

is the Investment Adviser’s intention to become authorised by the FCA as a full-scope alternative

investment fund manager and become appointed as the Company’s alternative investment fund

manager within 12 months of Admission. Whilst the Company and the Investment Adviser are not

aware of any issue that may cause the FCA to reject its application for authorisation, there is a risk

that the FCA may not grant the Investment Adviser such authorisation. If this were to occur, the

Company would either have to extend the AIFM’s appointment beyond the time envisaged or, failing

such extension, seek to appoint a separate FCA authorised fund manager. Because the Company is

dependent on the Investment Adviser, if the Investment Advisory Agreement is terminated, the ability

of the Company to execute its investment objectives and policy may be impaired, which could have

a material adverse effect on the Company’s financial performance and results of operations.

4.5 The AIFM or the Company may revoke its appointment of the Investment Adviser

There is a risk that the AIFM or the Company may revoke its appointment of the Investment Adviser

as its representative for regulated activities, which will result in the Investment Adviser having to seek

appointment as a representative of another FCA authorised or regulated organisation, or restrict

certain regulated activities that it would otherwise perform on behalf of the Company. As the

Company is dependent on the Investment Adviser, this could have an adverse effect on the Company’s

financial performance and result of operations.

4.6 Changes in law and regulation may adversely affect the Company

The Company, the AIFM and the Investment Adviser are all subject to laws and regulations enacted

by national, regional and local governments and institutions, as well as by supra-national laws and

regulations at the EU level. In particular, the Company will be required to comply with certain

38

statutory requirements under English law applicable to a company incorporated in England and

Wales. Compliance with and the monitoring of applicable regulations may be difficult, time

consuming and costly. Any changes to such laws and regulation could affect the market value of the

Portfolio Assets or the rental income of the Portfolio Assets. In such event, the investment returns of

the Company may be materially adversely affected.

The UK’s approach to housing policy has been the subject of increased interest with some political

parties debating the introduction of new laws regulating matters such as longer tenancies and

increased health and safety regulation. Some local authorities may introduce (or are considering the

introduction of) measures relating to the licensing of landlords (which may include the Company).

Any changes to housing policy in the UK could affect the market value of the Portfolio Assets or the

rental income of the Portfolio Assets or could have an adverse effect on the market price of the

Ordinary Shares as a whole.

The Company, the Property Manager and Portfolio Assets must comply with laws and regulations

which relate to, among other things, property, land use, health and safety requirements and fire safety

compliance. These laws and regulations often provide broad discretion to administering authorities.

Additionally, all of these laws and regulations are subject to change, which may be retrospective, and

changes in regulations could adversely affect the costs of property ownership, the capital expenditure

of the Company’s assets and the Group’s income arising from the Portfolio Assets. Such changes may

also adversely affect the Group’s ability to use a property as intended and could cause the Group to

incur increased capital expenditure or running costs to ensure compliance with the new applicable

laws or regulation which may not be recoverable from tenants. Similarly, changes in laws and

governmental regulations governing leases could restrict the Group’s ability to increase the rent

payable by tenants, terminate leases or determine the terms on which a lease may be renewed. The

occurrence of any of these events may have a material adverse effect on the Company’s financial

condition, business, prospects and results of operations.

AIFMD came into force on 22 July 2013 and regulates alternative investment fund managers and

prohibits such alternative investment fund managers from managing any AIF or marketing shares in

such AIFs to investors in the EU unless, in respect of alternative investment fund managers based in

the EU, authorisation under the AIFMD is granted to the alternative investment fund manager. The

alternative investment fund manager of the Company will need to comply with various obligations in

relation to itself and the Company. In the event that any future regulatory changes arise from the

implementation of the AIFMD that impair the ability of the alternative investment fund manager to

manage the investments of the Company, or limit the ability of the Company to market future issues

of its Shares, the ability of the Company to carry out its investment policy and strategy and achieve

its investment objective could be adversely affected.

4.7 We expect to be a passive foreign investment company (a “PFIC”) for U.S. federal income tax

purposes, which will generally result in adverse U.S. federal income tax consequences to U.S.

investors

In general, a foreign corporation will be a PFIC for U.S. federal income tax purposes for any taxableyear in which (i) at least 75 per cent. of its gross income for the taxable year is passive income or (ii)at least 50 per cent. of the value, determined on the basis of a quarterly average, of its gross assets isattributable to assets that produce, or are held for the production of, passive income. Passive incomegenerally includes interest, rents, dividends, royalties, annuities and gains from the disposition ofassets that produce passive income. For purposes of the above calculations, a foreign corporation thatowns at least 25 per cent. by value of the stock of another corporation is treated as owning itsproportionate share of the assets of the other corporation and as receiving directly its proportionateshare of the income of the other corporation.

Based on the manner in which we operate our business, we expect to be a PFIC for the current taxableyear and in the foreseeable future. A U.S. investor that owns our Ordinary Shares during any year inwhich we are a PFIC will generally be subject to adverse U.S. federal income tax consequences,including an increased U.S. federal income tax liability on the sale of Ordinary Shares or receipt of

39

certain excess distributions and additional tax reporting obligations. See “Part 9. Taxation — 4. U.S.Federal Income Tax Considerations — 4.2 (a) Passive Foreign Investment Company Considerations”in this Prospectus. Prospective U.S. investors should consult their tax advisors concerning our PFICstatus for any taxable year and the tax considerations relevant to an investment in a PFIC.

4.8 The purchase of the SPVs may give rise to a tax liability

As part of the Acquisition, Holdco will acquire certain SPVs which have recently appropriated anumber of properties from trading stock to fixed assets giving rise to taxable profits. Tax relief againstthese profits will be sought by each relevant SPV from other companies in the relevant seller’s group.In the event that such relief proves to be unavailable, the SPVs, and consequently the Company, willincur a tax liability of approximately £474,800 plus interest and possible penalties. Incurring suchliability would reduce the Net Asset Value of the Company as well as reduce the level of fundsavailable to the Company to purchase further Portfolio Assets.

5. RISKS RELATING TO THE ORDINARY SHARES

5.1 The price of the Ordinary Shares may fluctuate

The market value of, and the income derived from, the Ordinary Shares can fluctuate. The market

value of an Ordinary Share, as well as being affected by its Net Asset Value and the market’s

perception of its prospective Net Asset Value, also takes into account its dividend yield and prevailing

interest rates. As such, the market value of an Ordinary Share at any given time may vary considerably

from its underlying Net Asset Value and investors may not get back the full value of their investment.

Fluctuations could also result from a change in many other external factors that affect the Company’s

value, including: national or global economic and financial conditions, the actions of the UK

government in relation to changes in the national and global financial climate, taxation, rental yields

and business developments of the Company’s competitors. Stock markets have experienced

significant price and volume fluctuations in the past that have affected market prices for securities.

The price of an Ordinary Share may also be affected by speculation in the press or investment

community regarding the business or investments of the Company or factors or events that may

directly or indirectly affect its investments.

5.2 There can be no guarantee that a dividend will be paid by the Company in respect of any period

There is no guarantee that any dividend in respect of any period will be paid. There is no guarantee

that the Company will achieve the stated target net total Shareholder return referred to in this

Prospectus and therefore achieve its return objective.

The Net Proceeds of the Issue will be used by the Company to make investments in Portfolio Assets,

including the Seed Portfolio, in accordance with the Company’s investment policy. The Company will

have committed a significant part of the proceeds of Issue to the acquisition of the Seed Portfolio.

However, until the proceeds of the Issue are invested in the Seed Portfolio, a significant amount of

income is not expected to be generated.

In any event, the capacity of the Company to distribute dividends and other capital distributions

depends on its capacity to generate profit and its capacity to transfer such benefits and cashflows to

the Shareholders in an efficient manner. Furthermore, any dividend growth on the Ordinary Shares

will depend principally on growth in rents and capital values and other income returns on the Portfolio

Assets.

If the Company obtains REIT status, it will not be able to pursue asset growth through acquisitions

solely from cash provided from its operating activities because of its obligation to distribute at least

90 per cent. of its property income as calculated for tax purposes arising from the Property Rental

Business each year (either in cash or by way of stock dividend) to Shareholders in order to continue

to enjoy the full exemption from tax on rental income afforded by the REIT Regime.

40

As a REIT the Company would be required to pay tax at regular corporate rates on any shortfall to

the extent that it distributes as a PID less than the amount required to meet the 90 per cent. distribution

condition each year. Consequently, the Company may be forced to rely on the availability of debt or

additional equity capital to fund future acquisitions. In addition, differences in timing between the

receipt of cash and the recognition of income for the purposes of the REIT Regime and the effect of

any potential debt amortisation payments could require the Company to borrow funds to meet the

distribution requirements that are necessary to achieve the full tax benefits associated with qualifying

as a REIT, even if the then-prevailing market conditions are not favourable for these borrowings. As

a result of these factors, the constraints of maintaining REIT status could limit the Company’s

flexibility to make certain investments.

5.3 There may be no active trading market for the Ordinary Shares

No assurance can be given that, at any time, a liquid market for the Ordinary Shares will develop or,

if developed, that any such market will be sustained. A prospective investor should be aware of the

risks of investing in the Company and should make the decision to invest only after careful

consideration and, if appropriate, consultation with an independent financial adviser authorised under

FSMA who specialises in advising on the acquisition of shares and other securities. The value of

Ordinary Shares may go down as well as up. Shareholders may therefore realise less than the original

amount of their investment and could lose their entire investment. The market value of the Ordinary

Shares may not necessarily reflect the underlying Net Asset Value.

If an active trading market is not developed or maintained, the liquidity and trading price of the

Ordinary Shares may be adversely affected. Even if an active trading market develops, the market

price of the Ordinary Shares may not reflect the value of the underlying Portfolio Assets.

5.4 The Articles contain certain provisions that may cause the Board to refuse to register, or require

the transfer of, Ordinary Shares

Although the Ordinary Shares are freely transferable, there are certain circumstances in which the

Board may, under the Articles and subject to certain conditions, compulsorily require the transfer of

the Ordinary Shares. These circumstances include, without limitation, circumstances where a

Non-Qualified Holder acquires or becomes otherwise interested in Ordinary Shares, shares in respect

of which dividends have not been cashed nor communications received in a twelve year period and

shareholders who fail to respond to a notice under Section 793 of the Companies Act in respect of

Specified Shares.

5.5 An investment in Ordinary Shares by an investor whose principal currency is not sterling may be

affected by exchange rate fluctuations

The Ordinary Shares will be quoted in pounds sterling. An investment in Ordinary Shares by an

investor in a jurisdiction whose principal currency is not pounds sterling exposes the investor to

foreign currency rate risk. Any depreciation of pounds sterling in relation to such foreign currency

will reduce the value of the investment in the Ordinary Shares in foreign currency terms.

5.6 Future issues of Ordinary Shares may dilute the holdings of Shareholders

Following the Issue, the Company may issue additional Ordinary Shares in the future. While the

Companies Act contains statutory pre-emption rights for Shareholders in relation to issues of Ordinary

Shares in consideration for cash, where statutory pre-emption rights are disapplied in respect of any

issue of additional Ordinary Shares following Admission, such financing will be dilutive to existing

Shareholders who cannot, or choose not to, participate in such financing, or could have an adverse

effect on the market price of the Ordinary Shares as a whole.

5.7 Future sales of a significant number of Ordinary Shares may depress the market price of the

Ordinary Shares

Sales of Ordinary Shares or interests in the Ordinary Shares by significant investors could depress the

market price of the Ordinary Shares. A substantial number of Ordinary Shares being sold, or the

41

perception that sales of this type could occur, could also depress the market price of the Ordinary

Shares. Both scenarios, occurring either individually or collectively, may make it more difficult for

Shareholders to sell the Ordinary Shares at a time and price that they deem appropriate.

If potential investors are in any doubt as to the consequences of their acquiring, holding or disposing

of Ordinary Shares, they should consult their stockbroker, bank manager, solicitor, accountant or

other independent financial adviser.

42

IMPORTANT INFORMATION

General

This Prospectus should be read in its entirety before making any application for Ordinary Shares.

Prospective Shareholders should rely only on the information contained in this Prospectus. No person has

been authorised by the Company to issue any advertisement or to give any information or to make any

representations in connection with Admission or the Issue other than those contained in this Prospectus and,

if issued, given or made, such advertisement, information or representation must not be relied upon as having

been authorised by the Company the AIFM, the Investment Adviser, Peel Hunt or any of their respective

affiliates, officers, directors, employees or agents. Without prejudice to the Company’s obligations under the

Listing Rules, the Prospectus Rules, the Disclosure Guidance and Transparency Rules, the Market Abuse

Regulation and the Admission and Disclosure Standards neither the delivery of this Prospectus nor any

subscription made under this Prospectus shall, under any circumstances, create any implication that there has

been no change in the affairs of the Company since the date of this Prospectus or that the information

contained herein is correct as at any time subsequent to its date.

Prospective Shareholders must not treat the contents of the document or any subsequent communications

from the Company, the AIFM, the Investment Adviser, Peel Hunt or any of their respective affiliates,

officers, directors, employees or agents as advice relating to legal, taxation, accounting, regulatory,

investment or any other matters.

Apart from the liabilities and responsibilities (if any) which may be imposed on Peel Hunt by FSMA or the

regulatory regime established thereunder, Peel Hunt does not make any representations, express or implied,

or accept any responsibility whatsoever for the contents of this Prospectus nor for any other statement made

or purported to be made by it or on its behalf in connection with the Company, the Ordinary Shares or the

Issue. Peel Hunt (and its affiliates) accordingly disclaim all and any liability (save for any statutory liability)

whether arising in tort or contract or otherwise which it might otherwise have in respect of this Prospectus

or any such statement.

If you are in doubt about the contents of this Prospectus you should consult your stockbroker, bank manager,

solicitor, accountant, legal or professional adviser or other financial adviser.

Intermediaries

Under the Intermediaries Offer, the Ordinary Shares are being offered to Intermediaries who will facilitate

the participation of their investor clients (including retail investor clients and members of the public who

wish to become a client of that Intermediary) located in the United Kingdom, the Channel Islands and the

Isle of Man. The Company consents to the use of this Prospectus in connection with any subsequent resale

or final placement of securities by financial intermediaries in the United Kingdom, in respect of

Intermediaries who are appointed after the date of this Prospectus (a list of which appears on the Company’s

website) from the date on which they are appointed to participate in connection with any subsequent resale

or final placement of securities and, in each case, until the closing of the period for the subsequent resale or

final placement of securities by Intermediaries at 10.00 a.m. on 25 September 2018, unless closed prior to

that date.

The offer period within which any subsequent resale or final placement of securities by Intermediaries can be

made and for which consent to use this Prospectus is given commences on 12 September 2018 and closes at

10.00 a.m. on 25 September 2018, unless closed prior to that date (any such prior closure to be announced

via a Regulatory Information Service).

Any Intermediary that uses this Prospectus must state on its website that it uses this Prospectus in

accordance with the Company’s consent and the conditions attached thereto. Intermediaries are

required to provide the terms and conditions of the Intermediaries Offer to any prospective investor

who has expressed to such Intermediary an interest in participating in the Intermediaries Offer.

Information on the terms and conditions of any subsequent resale or final placement of securities by

any Intermediary is to be provided at the time of the offer by the Intermediary.

43

The Company consents to the use of this Prospectus and accepts responsibility for the information contained

in this Prospectus with respect to subsequent resale or final placement of securities by any Intermediary who

has been given consent to use this Prospectus.

Any new information with respect to Intermediaries unknown at the time of approval of this Prospectus will

be available on the Company’s website.

Website

The contents of the Company’s website at www.multifamilyhousingreit.com, or the content of any website

accessible from hyperlinks on such website, are not incorporated into, and do not form part of, this

Prospectus. Investors should base their decision on whether or not to invest in the Ordinary Shares on the

contents of this Prospectus alone.

Profit forecast

No statement in this Prospectus is intended as a profit forecast.

Data protection

The information that a prospective Shareholder in the Company provides in documents in relation to a

subscription for Ordinary Shares or subsequently by whatever means which relates to the prospective

Shareholder (if it is an individual) or a third party individual (“personal data”) will be held and processed

by the Company (and any third party in the United Kingdom to whom it may delegate certain administrative

functions in relation to the Company) and/or the Registrar in compliance with the relevant data protection

legislation and regulatory requirements of the United Kingdom. Each prospective Shareholder acknowledges

and consents that such information will be held and processed by the Company (or any third party,

functionary, or agent appointed by the Company) and/or the Registrar for the following purposes:

• verifying the identity of the prospective Shareholder to comply with statutory and regulatory

requirements in relation to anti-money laundering procedures;

• contacting the prospective Shareholder with information about other products and services provided

by the AIFM, the Investment Adviser, or their respective affiliates, which may be of interest to the

prospective Shareholder;

• carrying out the business of the Company and the administering of interests in the Company;

• meeting the legal, regulatory, reporting and/or financial obligations of the Company in the UK or

elsewhere; and

• disclosing personal data to other functionaries of, or advisers to, the Company to operate and/or

administer the Company.

Each prospective Shareholder acknowledges and consents that where appropriate it may be necessary for the

Company (or any third party, functionary, or agent appointed by the Company) and/or the Registrar to:

• disclose personal data to third party service providers, agents or functionaries appointed by the

Company or its agents to provide services to prospective Shareholders; and

• transfer personal data outside of the EEA to countries or territories which do not offer the same level

of protection for the rights and freedoms of prospective Shareholders as the United Kingdom (as

applicable).

If the Company (or any third party, functionary or agent appointed by the Company) and/or the Registrar

discloses personal data to such a third party, agent or functionary and/or makes such a transfer of personal

data it will use reasonable endeavours to ensure that any third party, agent or functionary to whom the

relevant personal data is disclosed or transferred is contractually bound to provide an adequate level of

protection in respect of such personal data.

44

Prospective Shareholders are responsible for informing any third party individual to whom the personal data

relates to the disclosure and use of such data in accordance with these provisions.

Regulatory information

This Prospectus does not constitute an offer to sell, or the solicitation of an offer to subscribe for or buy,

Ordinary Shares in any jurisdiction in which such offer or solicitation is unlawful. The issue or circulation

of this Prospectus may be prohibited in some jurisdictions.

Prospective Shareholders should consider (to the extent relevant to them) the section headed “Overseas

Persons” as set out in Part 7 of this Prospectus as well as the sections below providing notice to prospective

Shareholders in particular jurisdictions.

As a REIT pursuant to Part 12 of the CTA 2010, the FCA rules in relation to non-mainstream pooled

investments will not apply to the Company.

The AIFM and the Depositary are authorised and regulated by the FCA.

Presentation of information

Certain information contained in this Prospectus has been sourced from third parties. Such information has

been accurately reproduced, the source of such information has been identified and, so far as the Company

is aware and is able to ascertain from information published by such third parties, no facts have been omitted

which would render the reproduced information inaccurate or misleading.

Rounding

Certain figures contained in this Prospectus, including financial information, have been subject to rounding

adjustments. Accordingly, in certain instances, the sum or percentage change of the numbers contained in

this Prospectus may not conform exactly to the total figure given.

Certain statistical information regarding the Seed Portfolio

Unless stated otherwise, where included in this Prospectus the sum or percentage relating to occupation,

average rent and passing rent of PRS Homes forming part of the Seed Portfolio are as at 30 April 2018.

Gross Yield

For the purpose of this Prospectus, gross yield referenced in respect of the Seed Portfolio is calculated by

dividing the aggregate annual rental income for the individual PRS Homes and five commercial units by the

aggregate market value of the 22 properties forming the Seed Portfolio (as at 30 June 2018).

Valuations

The valuations of the Seed Portfolio contained in this Prospectus are as at 30 June 2018.

Investment considerations

The contents of this Prospectus are not to be construed as advice relating to legal, financial, taxation,

accounting, regulatory, investment decisions or any other matter. Prospective Shareholders must inform

themselves as to:

• the legal requirements within their own countries for the purchase, holding, transfer, redemption or

other disposal of the Ordinary Shares;

• any foreign exchange restrictions applicable to the purchase, holding, transfer, redemption or other

disposal of the Ordinary Shares which they might encounter; and

• the income and other tax consequences which may apply to them as a result of the purchase, holding,

transfer, redemption or other disposal of the Ordinary Shares.

45

Prospective Shareholders must rely upon their own representatives, including their own legal advisers and

accountants, as to legal, tax, accounting, regulatory, investment or any other related matters concerning the

Company and an investment therein.

An investment in the Company should be regarded as a long-term investment. There can be no assurance

that the Company’s investment objectives will be achieved.

It should be remembered that the price of the Ordinary Shares, and the income from such Ordinary Shares

(if any), can go down as well as up.

This Prospectus should be read in its entirety before making any investment in the Ordinary Shares. All

Shareholders are entitled to the benefit of, are bound by, and are deemed to have notice of, the provisions of

the Articles which prospective Shareholders should review. A summary of the Articles is contained in

paragraph 4 of Part 11 of this Prospectus under the section headed “Articles”.

Notice to prospective Shareholders in the member states of the European Economic Area other than

the United Kingdom

In relation to each Relevant Member State, an offer to the public of the Ordinary Shares may only be made

once a prospectus has been passported in accordance with the Prospectus Directive as implemented by that

Relevant Member State. This Prospectus has not been passported into any Relevant Member State and,

therefore, an offer of the Ordinary Shares to the public in any Relevant Member State may only be made

pursuant to the following exemptions under the Prospectus Directive:

(a) to any legal entity which is a qualified Shareholder as defined in the Prospectus Directive;

(b) to fewer than 150, natural or legal persons (other than qualified investors (as defined in the Prospectus

Directive)) in such Relevant Member State, subject to obtaining the prior consent of Peel Hunt for any

such offer; or

(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of Ordinary Shares shall result in a requirement for the publication by the

Company of a prospectus pursuant to Article 3 of the Prospectus Directive. Each person who initially

acquires Ordinary Shares pursuant to the Issue or to whom any offer of Ordinary Shares is made pursuant to

the Issue in any Relevant Member State other than the United Kingdom will be deemed to have represented,

warranted and agreed with the Company and Peel Hunt that: (a) it is a qualified investor (within the meaning

of the law of the Relevant Member State implementing Article 2(1)(e) of the Prospectus Directive) and (b)

if that relevant Member State has implemented the AIFMD, that it is a person to whom Ordinary Shares may

lawfully be marketed under the AIFMD or under the applicable implementing legislation (if any) of that

Member State.

For the purposes of this section headed “Notice to prospective Shareholders in member states of the

European Economic Area other than the United Kingdom”, the expression an “offer to the public” in relation

to any offer of Ordinary Shares in any Relevant Member State means the communication in any form and

by any means of sufficient information on the terms of the offer and any Ordinary Shares to be offered so as

to enable an investor to decide to purchase or subscribe for the Ordinary Shares, as the same may be varied

in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant

Member State.

In the case of any Ordinary Shares acquired by a financial intermediary (as that term is used in Article 3(2)

of the Prospectus Directive) pursuant to the Issue in any Relevant Member State other than the United

Kingdom, such financial intermediary will be deemed to have represented, warranted and agreed with the

Company and Peel Hunt that such Ordinary Shares acquired by it have not been acquired on a non-

discretionary basis on behalf of, and have not been acquired with a view to their offer or resale to, persons

in circumstances which may give rise to an offer of any Ordinary Shares to the public other than their offer

or resale in any Relevant Member State other than the United Kingdom to qualified investors (as defined in

the Prospectus Directive) or in circumstances in which the prior consent of Peel Hunt has been obtained to

46

each such proposed offer or resale. The Company, Peel Hunt, their respective affiliates and others will rely

on the truth and accuracy of such deemed representation, warranty and agreement. Notwithstanding the

above, a person who is not a qualified investor and who has notified Peel Hunt of such fact in writing may,

with the consent of Peel Hunt, be permitted to subscribe for or purchase Ordinary Shares pursuant to the

Issue.

Forward-looking statements

This Prospectus contains forward-looking statements, including, without limitation, statements containing

the words “believes”, “estimates”, “anticipates”, “expects”, “intends”, “may”, “will”, or “should” or in each

case, their negative or other variations or similar expressions. Such forward-looking statements involve

unknown risk, uncertainties and other factors, which may cause the actual results of operations, performance

or achievement of the Company, or industry results, to be materially different from any future results,

performance or achievements expressed or implied by such forward-looking statements.

Given these uncertainties, prospective Shareholders are cautioned not to place any undue reliance on such

forward-looking statements. These forward-looking statements speak only as at the date of this Prospectus.

Subject to its compliance with its legal and regulatory obligations (including under the Listing Rules, the

Disclosure Guidance and Transparency Rules, the Market Abuse Regulation and the Prospectus Rules), the

Company undertakes no obligation to update or revise any forward-looking statement contained herein to

reflect any change in expectations with regard thereto or any change in events, conditions or circumstances

on which any statement is based.

The actual number of Ordinary Shares to be issued will be determined by the Directors, the Investment

Adviser and Peel Hunt. Accordingly, the information in this Prospectus should be read in light of the actual

number of Ordinary Shares to be issued in the Placing, Offer for Subscription and Intermediaries Offer.

Nothing in this section seeks to limit or qualify, in any way, the working capital statement in paragraph 11

of Part 11 of this Prospectus.

AIFMD disclosures

AIFMD imposes detailed and prescriptive obligations on fund managers established in the EEA (the

“Operative Provisions”). These Operative Provisions include prescriptive rules and conditions on

measuring and capping leverage in line with known European standards, the treatment of investors, liquidity

management, the use of “depositaries”, cover for professional liability risks. AIFMD imposes conditions on

the marketing of entities such as the Company to investors in the EEA. The AIFMD requires that an

“alternative investment fund manager” be identified to meet such conditions where such marketing is sought.

For these purposes, G10 Capital Limited, as the legal person responsible for performing portfolio and risk

management of the Company, shall be the Company’s alternative investment fund manager.

PRIIPs Regulation

In accordance with the PRIIPs Regulation, a key information document in respect of an investment in the

Company has been prepared by the AIFM and is available to investors at the Company’s website at

www.multifamilyhousingreit.com. The key information document, or any other content of such website, and

the content of any websites accessible from hyperlinks on such website, are not incorporated into, and do

not form part of, this Prospectus.

A paper copy of the key information document is available on written request to the AIFM at

136 Buckingham Palace Road, London SW1W 9SA.

Information to Distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive

2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of

Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing

measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any

47

liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the

MiFID II Product Governance Requirements) may otherwise have with respect thereto, the Ordinary Shares

have been subject to a product approval process, which has determined that the Ordinary Shares are: (i)

compatible with an end target market of retail investors and investors who meet the criteria of professional

clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all

distribution channels as are permitted by MiFID II (the “Target Market Assessment”).

Notwithstanding the Target Market Assessment, Distributors should note that: the price of the Ordinary

Shares may decline and investors could lose all or part of their investment; Ordinary Shares offer no

guaranteed income and no capital protection; and an investment in Ordinary Shares is compatible only with

investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction

with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an

investment and who have sufficient resources to be able to bear any losses that may result therefrom. The

Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory

selling restrictions in relation to the Issue. Furthermore, it is noted that, notwithstanding the Target Market

Assessment, Peel Hunt will only procure investors who meet the criteria of professional clients and eligible

counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of

suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or

Company of investors to invest in, or purchase, or take any other action whatsoever with respect to Ordinary

Shares.

Each distributor is responsible for undertaking its own target market assessment in respect of the Ordinary

Shares and determining appropriate distribution channels.

Definitions

A glossary of certain words and expressions and a list of defined terms used in this Prospectus is set out in

Part 14 of this Prospectus.

Performance Data

The Company has no investment history. Without limitation, results can be positively or negatively affected

by market conditions beyond the control of the Company and the Investment Adviser, which market

conditions may be different in many respects from those that prevail at present or in the future, including

(without limitation) with the result that the performance of portfolios originated now may be significantly

different from those originated in the past.

48

EXPECTED TIMETABLE

2018

Publication of this Prospectus 12 September

Issue opens 12 September

Latest time and date for receipt of completed Application Forms in respect

of the Offer for Subscription 1.00 p.m. on 24 September

Latest time and date for receipt of completed applications from the

Intermediaries in respect of the Intermediaries Offer 10.00 a.m. on 25 September

Latest time and date for commitments under the Placing 12.00 noon on 25 September

Publication of results of the Issue 26 September

Admission and unconditional dealings in Ordinary Shares commence 8.00 a.m. on 28 September

CREST accounts credited with uncertificated Ordinary Shares 28 September

Where applicable, definitive share certificates despatched by post Week commencing 8 October

All dates and times specified in this Prospectus are subject to change without further notice. All references

to times in this Prospectus are to the time in London, United Kingdom unless otherwise stated.

Any changes to the expected timetable for the Issue will be notified by the Company through a Regulatory

Information Service.

49

ISSUE STATISTICS

Issue Price £1.00 per Ordinary Share

Target number of Ordinary Shares to be issued pursuant to the Issue1 175 million

Target Gross Proceeds2 £175 million

Target Net Proceeds2,3 £171.5 million

Minimum Gross Proceeds2 £125 million

Minimum Net Proceeds2 £122.25 million

Maximum Gross Proceeds £250 million

Maximum Net Proceeds £245 million

Unaudited Net Asset Value per Ordinary Share at Admission3 98 pence

Notes:

1 Includes the Reinvestment Shares.

2 Includes the aggregate value of the Reinvestment Shares at the Issue Price.

3 After payment of the Issue Costs assuming Target Gross Proceeds are achieved. The number of Ordinary Shares to be issued

pursuant to the Issue, and therefore the Gross Proceeds, is not known as at the date of this Prospectus but will be notified by the

Company via a Regulatory Information Service prior to Admission.

DEALING CODES/IDENTIFIERS

ISIN GB00BYWLBM79

SEDOL BYWLBM7

LEI 213800KD75TKWFLTWP09

50

DIRECTORS, AIFM, INVESTMENT ADVISER AND

OTHER ADVISERS

Directors Nick Jopling (Non-Executive Chairman)

Clive Standish (Non-Executive Director)

David Lis (Non-Executive Director)

Jonathan Whittingham (Non-Executive Director)

all of Beaufort House

51 New North Road

Exeter EX4 4EP

AIFM G10 Capital Limited

136 Buckingham Palace Road

London SW1W 9SA

Investment Adviser Harwood Real Estate Asset Management Limited

6 Stratton Street

London WIJ 8LD

Property Manager Centrick Property Sales Limited

38 Great Charles Street

Birmingham B3 3JY

Sole Sponsor and Sole Bookrunner Peel Hunt LLP

Moor House

120 London Wall

London EC2Y 5ET

Addleshaw Goddard LLP

Milton Gate

60 Chiswell Street

London EC1Y 4AG

and

Exchange Tower

19 Canning St

Edinburgh EH3 8EH

Proskauer Rose LLP

110 Bishopsgate

London EC2N 4AY

Tax adviser to the Company BDO LLP

55 Baker Street

London W1U 7EU

Davis Polk & Wardwell London LLP

5 Aldermanbury Square

London EC2V 7HR

Registrar Link Market Services Limited trading as Link Asset Services

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Legal adviser to the Company as to

English law

Legal adviser to the Company as to

US law

Legal adviser to the Sole Sponsor

and Sole Bookrunner as to English

and US law

51

Company Secretary Link Company Matters Limited

Beaufort House

51 New North Road

Exeter EX4 4EP

Depositary Ocorian (UK) Limited

11 Old Jewry

London EC2R 8DU

Administrator Link Alternative Fund Administrators Limited

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Link Asset Services

The Registry

34 Beckenham Road

Beckenham

Kent BR3 4TU

Valuer Savills Advisory Services Limited

22 Margaret Street

London W1G 0JD

KPMG LLP

15 Canada Square

London E14 5GL

Receiving Agent in respect of the

Offer for Subscription

Auditors and Reporting

Accountants

52

PART 1

INVESTMENT HIGHLIGHTS

1. ATTRACTIVE INVESTMENT FUNDAMENTALS

The Company intends to pay interim dividends on a quarterly basis in cash. Subject to market conditions and

the level of the Company’s net income, the Company anticipates paying dividends equating to approximately

4 per cent. annualised for the period from Admission to 31 March 2019. The first interim dividend is

expected to be declared in February 2019 for the period from Admission to 31 December 2018 and then

again in May 2019 for the quarter ending 31 March 2019. For the year ending 31 March 2020, the Company

will target equal quarterly dividends equivalent to a yield of 5 per cent. per annum and thereafter will adopt

a progressive dividend policy in-line with the anticipated growth in adjusted earnings and will target a

dividend yield in excess of 5 per cent. per annum. All dividend yields are stated by reference to the Issue

Price.

The Company may offer Shareholders the opportunity to receive dividends in the form of further Ordinary

Shares.

Upon full investment of the Net Proceeds and associated gearing, the Company is targeting a net total

Shareholder return of at least 10 per cent. per annum divided between income (payable by way of the

dividends mentioned above) and growth in NAV.

These returns are underpinned by the Investment Adviser’s ability to draw upon the HRE Group’s experience

in managing more than 2,450 PRS Homes. The Investment Adviser believes there is an opportunity for rental

growth which can be capitalised upon as the sector continues to become more institutionally accessible.

The dividend and return targets stated above are targets only and are not a profit forecast. There can be no

assurance that these targets will be met and they should not be taken as an indication of the Company’s

expected future results. Accordingly, potential investors should not place any reliance on these targets in

deciding whether or not to invest in the Company and should decide for themselves whether or not the target

dividend yield and target net total Shareholder return are reasonable or achievable.

2. SEED PORTFOLIO

The Seed Portfolio comprises 22 properties containing an aggregate of 658 PRS Homes and five commercial

properties. The Seed Portfolio is located across regional England with properties in Bristol, the West

Midlands, East Anglia, Manchester and Leeds amongst others. These locations form the basis of a bespoke

management model with concentrations of properties located in close geographical proximity permitting

operational efficiencies (“Hubs”). The Hubs are in the Midlands, the South West, the East and the North and

North West of England. Locations have been chosen based on economic fundamentals providing tenant

demand and opportunity for rental growth.

The PRS Homes are affordable in their local markets and, as at the date of this Prospectus, perform at around

95 per cent. occupancy. The HRE Group, of which the Investment Adviser is a member, is presently the asset

manager of these properties and has extensive knowledge of their performance.

Conditional on Admission, Holdco will acquire the Seed Portfolio pursuant to the terms of the Share

Purchase Agreements for the aggregate purchase price of £70.26 million (including the repayment of

shareholder and third party debt) which will be borne out of the Net Proceeds. Further details of the Seed

Portfolio, including a breakdown of the purchase price for each property, are provided in Part A of Part 5 of

this Prospectus.

53

Overview of the Hubs

Midlands Hub

South West Hub

Four properties (77 PRS Homes, 97 per cent. occupancy and 3 commercial

units) located in Bristol with an aggregate market value of £13,100,000 and a

5.8 per cent. gross yield per annum.

Eastern Hub

Eight properties (177 PRS Homes, 94 per cent occupancy and 2 commercial

units) located in Norwich, Lowestoft and Great Yarmouth with an aggregate

market value of £16,850,000 and a 7 per cent. gross yield per annum.

North & North West Hub

Three properties (93 PRS Homes, 90 per cent. occupancy) located in

Manchester, Leeds and Preston with an aggregate market value of

£10,450,000 and a 6.9 per cent. gross yield per annum.

A detailed summary of the properties forming the Seed Portfolio and each of the Hubs is set out in Part A of


3. ACCESS TO A PIPELINE WITH A COMPETITIVE EDGE IN SOURCING ASSETS IN A

FRAGMENTED MARKET

The Investment Adviser has identified a pipeline of PRS Homes available to acquire with an aggregate value

of approximately £422 million (“Identified Pipeline”).

The Investment Adviser believes that it has differentiated access to suitable investment opportunities through

the HRE Group’s and Senior Managers’ experience in sourcing on and off-market transactions from a

network of key contacts, including owner/principals, specialist real estate brokers and financial/insolvency

practitioners. Although the Investment Adviser is a newly incorporated company with no operational history,

it is a member of the HRE Group, whose extensive experience it will be able to benefit from.

The Senior Managers have specialised in executing large off-market deals since 2012 and have transacted

on approximately £490 million of residential assets in the last three and a half years. The Senior Managers

have analysed approximately £1.295 billion of potential transactions in the last 18 months, of which

£920 million met the Company’s investment criteria. The Investment Adviser believes the networks that its

Senior Managers have built up over a number of years, the regional and built stock focus, with the ability to

look at smaller block sizes (too small for institutional operators) puts it at a competitive advantage.

4. THE HRE GROUP’S STRONG TRACK RECORD OF PERFORMANCE

The Investment Adviser was incorporated on 16 August 2018 as a private limited company incorporated in

England and Wales with registered number 11521260 and has not yet commenced operations. It therefore

has no track record of past performance. However, the Investment Adviser is a member of the HRE Group

and shares senior management with HRE, the asset manager of the Seed Portfolio since the date that each

property was acquired by the relevant SPV the earliest of which took place in October 2015. Furthermore,

Seven properties (311 PRS Homes, 98 per cent. occupancy) located in

Birmingham, Walsall, Derby, Cannock and Leek with an aggregate market

value of £29,470,000 and a 7.5 per cent. gross yield per annum.

54

the Investment Adviser will be able to draw upon and benefit from the Senior Managers’ extensive

experience.

Operating almost exclusively outside of London since 2012, HRE has managed investments of over 2,450

regional private rented homes since 2014. Over this time HRE has worked with a number of property

managers and this experience has enabled it to establish and embed standard parameters and processes for

managing residential assets across multiple properties and a range of locations. It also enables the Investment

Adviser to select its preferred operating partners from a position of experience. This has led to a

well-established relationship between HRE and the Property Manager and an established operating platform

with employees on the ground in four key regional locations.

The Investment Adviser believes its Senior Managers’ operational experience, and their ability to execute

acquisitions that are consistent with the Company’s investment criteria, is a key strength which it is able to

benefit from together with the extensive experience and expertise of HRE.

5. SELLERS IN THE CURRENT MARKET

The Investment Adviser tracks transactions within the PRS market and believes that there has been more

than a 50 per cent. increase in the market transaction flows in the year to date compared to the same period

in 2017.

Sellers in the current market are diverse and include, but are not limited to, residential property companies,

commercial property companies who have acquired residential portfolios through wider transactions, family

trusts (including those looking to retire), housing associations seeking to divest of market rented properties,

developers, high net worth individuals, banks and building societies, insolvency practitioners and value

funds.

6. AN ALTERNATIVE TO BUILD-TO-RENT FOR THE MID-MARKET RENTER

Depending on local demographics, the Investment Adviser considers that rent is affordable if it is around

30 per cent. of local median salaries. It also believes that schemes being brought forwards as part of the BTR

sector are focused on a significantly less affordable proposition with average one bedroom BTR rents

requiring around 46 per cent. of the average local regional salary and targeting the top 30 per cent. of the

local regional population by salary.

By contrast, the Company intends to offer immediate access to built PRS Homes with rents of approximately

£500 to £700 per month which meets the 30 per cent. of median salary for approximately 70 per cent. of the

local regional population.

With 3.65 million households renting regionally and only 10,000 units brought forwards by BTR initiatives,

the Investment Adviser believes that the Company’s focus on the mid-market part of the PRS market

encompasses is the largest part of the PRS sector and one that to date has lacked an institutionally managed

approach on a regional or national basis.

7. COMPELLING SUPPLY/DEMAND METRICS CONTINUE

The number of households renting in England has more than doubled in the last decade and is projected to

continue to increase at pace as the number of new households created annually continues to be almost twice

the number of new dwellings being built. Over the same period, the regional PRS market has grown by

108 per cent. compared to 89 per cent for the Greater London market.

In response to the Government White Paper, Fixing our broken Housing Market, it has been argued that

addressing housing affordability is a work in progress in the BTR sector and a fix requires a significant

development pipeline. The current regional pipeline of BTR projects under construction delivers around

22,500 homes when the shortfall is more than 300,000 homes per year outside of Greater London. Therefore,

pressure will continue to remain on existing housing stock to supply the local markets.

55

8. INSTITUTIONALISING A PROVEN MARKET OPPORTUNITY WITHIN AN EMERGING

ASSET CLASS

PRS is the fastest growing UK residential tenure and an emerging asset class. Knight Frank2 estimated the

investment market in 2016 and 2017 to be £5 billion per annum: 2.38 times the ten year average investment

per annum of £2.1 billion demonstrating the speed at which the market is growing. The Investment Adviser

believes this underestimates the Company’s addressable market as it is unlikely to capture smaller and

off-market transactions.

Since 1991, the rental market has been dominated by private individual landlords. Over the last two years,

a number of government initiatives have impacted the sector, including changes to Stamp Duty Land Tax

and loan interest deductibility. Investment in buy-to-let properties has dropped by 80 per cent. over the same

period.

Institutional investment to date has been focussed on the BTR sector. At present, the BTR sector makes up

0.24 per cent. of the PRS sector and it is not forecast to exceed 1.6 per cent. of the sector based on all visible

pipeline.

Taking this into account, the majority of the sector is made up of existing built Blocks of Apartments or

Collections of Houses that have a rental track record. A high proportion of PRS Homes are held by small

private individual landlords. The Company offers an opportunity to access the existing market on an

institutional scale.

As the market for the asset class emerges and becomes more institutionalised, there may be opportunity for

capital growth from yield compression.

9. IMMEDIATE ACCESS TO BUILT STOCK BENEFITTING FROM EXISTING INCOME

The Company will acquire existing built PRS Homes which have the benefit of a track record of key

operating metrics such as rental income, arrears and maintenance spend. The track record of the properties

vary in length but often cover a minimum period of 12 months of operating history, and can reach as far back

as three years. Coupled with the Senior Managers’ experience and knowledge, enabling good predictability

of the likely operating performance of the asset, this helps to identify any issues with tenants and/or

maintenance.

The Investment Adviser believes that this model offers a lower risk proposition compared to business models

that are based on newly built vacant stock. Properties will be in established locations with established market

rental levels with a history of lettings. In addition, as properties are already built, there is no development

risk involved and limited ability of new supply and competition to be developed around the properties.

Furthermore, as a significant majority of the properties are already let to tenants at the time of completion

of their acquisition the Company will benefit from an immediate income stream.

56

2 Knight Frank Specialist Sector Report 2017

PART 2

INFORMATION ON THE COMPANY

1. INTRODUCTION

The Company is a newly established investment company incorporated in England and Wales on 25 May

2018 and therefore does not have an operating history. The Company intends to carry on business as a REIT,

subject to meeting the necessary qualifying conditions of the REIT Regime.

The Company was incorporated with the Subscriber Share in issue and 50,000 Redeemable Preference

Shares all of which are held by HRE. On 6 September 2018, a further 1,674,000 Redeemable Preference

Shares were issued to HRE fully paid in order to fund the deposit referred to in paragraph 11 of this Part 2.

Following the redemption of the Redeemable Preference Shares in issue on or around Admission out of the

proceeds of the Issue, the Company will have a single class of Ordinary Shares in issue, which will be

admitted to trading on the Main Market.

Conditional on Admission, Holdco will acquire the shares in eight special purpose vehicles (“SPVs”)

pursuant to the terms of the Share Purchase Agreements. The PRS Homes owned by the SPVs, with the

exception of Celtic House, Derby which is not yet owned by an SPV but is subject to contract, comprise the

Seed Portfolio. Paragraph 11 of this Part 2 contains further details of the Acquisition and group structure.

The Company will invest in private market rented regional PRS Homes, focused on mid-market rents to

achieve its objective of providing Shareholders with an attractive and stabilised level of income return

together with the potential for capital and income growth.

The Directors and Investment Adviser believe that there are a number of structural drivers behind the

increase in size of the PRS Homes in the mid-market part of the PRS sector in the UK. Whilst much of the

focus in the PRS market is on the BTR sector, the Directors and the Investment Adviser believe there is a

significant opportunity for the institutionalisation of existing built PRS assets. As an asset class, residential

assets have demonstrated less volatility since the 2007/2008 financial crisis compared to commercial real

estate assets, and whilst at £900 billion capital value it is a large market, it is highly fragmented, with a high

proportion of PRS Homes held by small private individual landlords.

In order to achieve its investment objective, the Company will invest in and grow a portfolio of PRS Homes

focussed on existing built properties, located in England excluding Greater London, and let to private tenants

at mid-market rents. The Directors and the Investment Adviser believe that the focus on existing built

properties and rental levels that are affordable for the majority of the local population offer a low risk and

stabilised income profile.

In the short-term the Company will achieve its investment objective through the acquisition of the Seed

Portfolio as well as through acquiring PRS Homes from the Identified Pipeline. Beyond this, the Company

believes there is a significant market opportunity to grow the portfolio further through additional investments

that will further enhance the diversity of income and efficiency of the business. The Directors and

Investment Adviser believe that the Company’s investment criteria and the track record of the HRE Group

in sourcing, underwriting and managing residential real estate places it in strong competitive position to

aggregate a portfolio of significant size and achieve the investment objective.

The Company is not regulated by the FCA, or any other regulatory authority, but will, following Admission,

be subject to the Listing Rules, the Prospectus Rules, the Disclosure Guidance and Transparency Rules, the

Market Abuse Regulation and the Admission and Disclosure Standards.

2. INVESTMENT ADVISER

2.1 Track Record

The Investment Adviser is a newly incorporated private limited company and therefore does not have

an operating history. The Investment Adviser forms part of the HRE Group. The HRE Group has an

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established track record which places it in a compelling position as a leading purchaser of UK private

market rented PRS Homes over the last three and a half years. The Investment Adviser will benefit

from the support, experience and expertise of the HRE Group as well as that of its Senior Managers.

The HRE Group was formed in 2009 as the real estate management platform of Harwood Capital

Management Limited (“HCM”) led by Jonathan Whittingham. It has developed a strong track record

in deal sourcing, due diligence and asset management working with a variety of high profile private

investors and funding institutions.

The Senior Managers have successfully sourced, transacted and executed transactions of

approximately £490 million of residential assets and managed over 2,450 PRS Homes over the last

three and a half years in a variety of private fund structures.

The transactions have included Blocks of Apartments and Collections of Houses all across the United

Kingdom and the Senior Managers have experience of underwriting and managing residential

property in a large number of regional towns and cities. This provides the Senior Management with

extensive regional knowledge as well as the experience of co-ordinating the management of a

geographically dispersed portfolio. These deals have been sourced largely off-market through a

network of key contacts built up over this time including owner/principals, specialist real estate

brokers and financial/insolvency practitioners. The Company’s investment strategy is focussed on

acquiring income producing built stock in regions predominantly in England but excluding Greater

London. The Company will predominantly invest in existing built Blocks of Apartments, and

Collections of Houses (in a common location) where concentration and dynamics allow efficient

management.

In addition to managing residential properties for rent, in a number of instances, the Senior Managers

have experience of successfully breaking up portfolios for sale. To the end of December 2017, the

Senior Managers had traded more than 1,700 units over a period of 24 months at an average of

19 per cent. premium to purchase price.

Since 2014, the HRE Group has worked with a number of property managers and this experience has

enabled it to establish and embed standard parameters and processes for managing residential assets

in scale and across a range of locations as well as choose its preferred operating partners from a

position of experience. This has led to a well-established relationship between the HRE Group and

the Property Manager. The Property Manager has 133 staff and is based in Birmingham, but with

satellite offices in London, Solihull and Nottingham, as well as staff focused exclusively on Seed

Portfolio assets in Bristol and East Anglia. The Investment Adviser believes the HRE Group’s

operational experience is a key strength in its ability to underwrite acquisitions in a manner that is

consistent with the Company’s investment objective.

2.2 Strategy

(a) Focus on mid-market PRS

The Investment Adviser will target assets with mid-market rents, which are typically in the

range of £500 to £700 per calendar month, which focuses on the working population. The

Investment Adviser believes this focus gives the Company access to a large tenant base and

significant competitive advantage over the emerging and largely unproven BTR sector in

delivering rental homes to a broad portion of the regional population.

(b) Targeting existing stock

Through focussing on existing stock, rather than BTR, the Investment Adviser has ready access

to a fragmented market. It believes that the addressable market is over £900 billion of capital

value per annum.

The focus on existing built stock has the benefit of a track record of key operating metrics such

as rental income, arrears and maintenance spend. The records vary between assets and vendors

but often cover a minimum of 12 months of operating history, and can reach as far back as three

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years. Coupled with the Senior Managers’ experience and knowledge, enabling good

predictability of the likely operating performance of the asset, this helps to identify any issues

with tenants or maintenance.

The Investment Adviser believes that this model offers a lower risk proposition compared to

business models that are based on newly built stock. Properties will be in established locations

with proven demand and where market rental levels are already established. In addition, as

properties are already built, there is no development risk involved and limited ability for new

supply and competition to be developed around the properties. Furthermore, as a significant

majority of the properties are already let to tenants at the time of completion of their

acquisition, the Company will benefit from an immediate income stream.

3. AIFM

G10 Capital Limited, part of the Lawson Conner Group, has been appointed as an alternative investment

fund manager pursuant to the AIFM Agreement under which it is responsible for overall portfolio

management and compliance with the Company’s investment policy, providing alternative investment fund

manager services, ensuring compliance with the requirements of the AIFMD that apply to the Company and

undertaking all risk management. The AIFM has delegated the provision of day-to-day advice regarding

Portfolio Assets and the acquisition of PRS Homes in accordance with the Company’s investment policy to

the Investment Adviser.

The AIFM has, and shall maintain, necessary expertise and resource to supervise the tasks and services the

Investment Adviser has been appointed to effectively perform and provide as set out in the Investment

Advisory Agreement.

The Investment Adviser is not currently authorised or regulated by the FCA. It is the Investment Adviser’s

intention to become authorised by the FCA as a full-scope alternative investment fund manager within

12 months following Admission. If approved, it is intended that the Investment Adviser will be appointed by

the Company as its alternative investment fund manager and that the AIFM’s appointment will be

terminated. There is no guarantee that the Investment Adviser will become authorised by the FCA as a

full-scope alternative investment fund manager. Prior to obtaining its own authorisation, the Investment

Adviser has been appointed to act as an appointed representative of the AIFM pursuant to the Services

Appointed Representative Agreement to conduct certain regulated activities.

4. INVESTMENT OBJECTIVE AND POLICY

4.1 Investment objective

The Company aims to provide investors with an attractive and stabilised level of income return

together with the prospect of income and capital growth.

In order to achieve its investment objective, the Company will invest in a portfolio of PRS Homes

focussed on existing built properties, located largely in England excluding Greater London (where

yields are materially lower) and let to private tenants at mid-market rents.

In the short term, the Company will achieve the objective through the acquisition of the Seed Portfolio

as well as PRS Homes from the Identified Pipeline. Beyond this, the Company believes there is a

significant market opportunity to grow the portfolio further through additional investments that will

further enhance the diversity of income and efficiency of the business.

The Company will control the investment policy of each of its subsidiaries to ensure that the assets

acquired and held by them comply with the Company’s investment policy and the investment

restrictions.

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4.2 Investment criteria

The Company will pursue its investment objective by investing in private market rented PRS Homes.

The Company will predominantly invest in existing built Blocks of Apartments and Collections of

Houses (in a common location) where concentration and dynamics allow efficient management. The

PRS Homes will be focused in conurbations and employment centres largely in England, outside of

Greater London.

The Company will target assets with sustainable net income streams and an occupational profile to

provide predictable day one income and scope for sustainable growth in net operating income. Other

key criteria include:

(a) locations with sustainable residential demand and limited risk from competing developments;

(b) suitable demographic profile and proximity to appropriate local employers, transport links and

community facilities;

(c) capable of efficient management from established and future management Hubs considering

both location and scale;

(d) appropriate mid-market rental levels which are suitable for a broad spectrum of the local

population;

(e) focus on one and two bedroom properties (except where local demand and affordability permits

larger properties);

(f) freehold ownership – long leasehold ownership will be considered where a suitable level of

control can be maintained over the asset; and

(g) target assets are subject to technical due diligence to ensure suitable age, construction and

configuration profile to mitigate maintenance exposure and operation risks such as external

cladding panels.

The Company will invest in these assets directly or through holdings in special purpose vehicles.

The Company may enter into forward funding agreements or acquire sites for development or

material conversion subject to its investment restrictions and where desirable to maximise rental

income. Where development is undertaken, the Company will outsource the development to a

professional development specialist.

The Company has a preference to own 100 per cent. of its Portfolio Assets but it may enter into joint

venture arrangements in the course of development with an outsourced development specialist with

the aim of sole ownership by the Company once the Portfolio Asset is completed and operational. The

underlying assets that are the subject matter of the joint venture arrangement would have to meet the

Company’s investment criteria and be subject to the investment restrictions summarised below.

The Investment Adviser will source investments on behalf of the Company.

4.3 Investment restrictions

The Company’s objective is to deliver a high quality portfolio through applying the following

restrictions at the time of making an investment:

(a) the Company will only invest in private market rented homes in the UK (predominantly in

England, but not in Greater London);

(b) no investment in any Block of Apartments or Collection of Houses shall exceed 20 per cent. of

Gross Asset Value;

(c) committed and uncommitted expenditure on all development activity not exceeding

10 per cent. of the Company’s Gross Asset Value may be used for forward funding, the

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acquisition of sites for development or material conversion or the development of sites owned

by the Group where opportunity exists; and

(d) the Company will not invest in other alternative investment funds or closed-ended investment

companies.

The Company shall be permitted to acquire Blocks of Apartments or a portfolio of assets which

contain a non-material or ancillary proportion of (i) commercial property or (ii) long leasehold

interests granted to third parties provided that the primary function of such Block or portfolio of assets

meets the investment criteria and investment restrictions.

The investment restrictions detailed above apply only at the time of acquisition of Portfolio Assets.

The Company shall not be required to dispose of any asset or to rebalance its portfolio as a result of

any change in valuation of its assets.

The Company will control the investment policy of each of its subsidiaries to ensure that the assets

acquired and held by them comply with the Company’s investment policy and the investment

restrictions.

4.4 Cash management

Until the proceeds of the Issue are fully invested, and pending re-investment or distribution of cash

receipts, the Company will invest in cash, cash equivalents, near cash instruments and money market

instruments.

4.5 REIT status

The Company will at all times conduct its affairs so as to enable it to qualify and, once qualified,

remain qualified as a REIT for the purposes of Part 12 of the CTA 2010.

4.6 Ground rent

It is possible that upon a future disposal of any of the Portfolio Assets, it may be value accretive for

individual PRS Homes to be sold on a long leasehold interest (in line with the latest regulation and

best practice guidance at the time of disposal). Once all PRS Homes are sold in a Block, the freehold

interest would then be disposed of separately. This would only be undertaken in the event that it is

expected to enhance overall returns and subject to the REIT restrictions on trading.

As Paper Mill Yard contains 146 of the long leasehold units located in four Blocks of Apartments, the

Company may determine that it is desirable to dispose of the freehold interest in Blocks where there

is a high concentration of long leasehold units.

Any material change to the investment policy will require the prior approval of Shareholders, by way

of an ordinary resolution at a general meeting.

5. ANTICIPATED BORROWING

5.1 Borrowing Limit

The Company expects to make prudent use of debt to finance (or refinance) acquisitions. The level of

borrowing will be on a prudent basis for the asset class, whilst maintaining flexibility in both the

underlying security requirements and the structure of both the Portfolio Assets and the Group. The

Company and its group companies may raise debt from banks, non-bank lenders and/or the capital

markets. The Directors currently intend that the Company should target a level of aggregate

borrowings equal to approximately 30 to 40 per cent. of the Gross Asset Value of the Group as a whole

from time to time. The aggregate borrowings will always be subject to an absolute maximum,

calculated at the time of each drawdown, of 45 per cent. of the Gross Asset Value of the Group as a

whole from time to time.

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When the Company incurs debt, it is anticipated that it will be secured at an asset level, whether over

particular PRS Homes or holding entities for PRS Homes, without recourse to the Company,

depending on the optimal structure for the Group, and having consideration to key metrics including

cross financing and debt exposure to any one holding, special purpose vehicle, lender diversity, cost

of debt, debt type and maturity profiles.

Following Admission and the completion of the acquisition of the Seed Portfolio, the Company will

not have incurred any borrowings and will therefore be ungeared, with any debt secured against the

Seed Portfolio being immediately paid down (and security released) on completion of the acquisition

of the relevant SPV.

5.2 Use of derivatives

The Group may utilise derivatives for efficient portfolio management. In particular, the Company may

engage in full or partial interest rate hedging or otherwise seek to mitigate the risk of interest rate

increases on borrowings incurred in accordance with the borrowing limits as part of the management

of the Portfolio Assets.

The Company shall ensure that the income profits of the Group’s Property Rental Business are

sufficient to cover its financing costs by not less than 1.25 times to avoid any adverse tax charge in

accordance with section 543 of the CTA 2010 (please see paragraph 3.4 of Part 10 of this Prospectus

for further information).

6. REGULATORY STATUS OF THE ORDINARY SHARES

As a REIT, the Ordinary Shares will be “excluded securities” under the FCA’s rules on non-mainstream

pooled investments. Accordingly, the promotion of the Ordinary Shares will not be subject to the FCA’s

restriction on the promotion of non-mainstream pooled investments.

7. REIT OPPORTUNITY

It is intended that the Company will qualify as a REIT shortly following Admission. Unless and until REIT

status is obtained, the Company will be subject to UK corporation tax on its profits and gains.

Following its intended qualification as a REIT, the Company will have a tax efficient corporate structure for

UK tax purposes on the basis that a REIT does not suffer UK corporation tax on the profits (income and

capital gains) derived from its Property Rental Business, provided that certain conditions are satisfied.

Additionally the Company may, once it has become a REIT, be able to offer vendors of property in corporate

structures with unrealised capital gains a higher price than other potential purchasers may be prepared to pay

for the corporate entity which owns the underlying property. This is because those unrealised gains will be

extinguished following the acquisition of the relevant corporate entity by the Company.

8. DIVIDEND POLICY

The Company intends to pay interim dividends on a quarterly basis in cash. Subject to market conditions and

the level of the Company’s net income, the Company anticipates paying dividends equating to approximately

4 per cent. annualised for the period from Admission to 31 March 2019. The first interim dividend is

expected to be declared in February 2019 for the period from Admission to 31 December 2018 and then

again in May 2019 for the quarter ending 31 March 2019. For the year ending 31 March 2020, the Company

will target equal quarterly dividends equivalent to a yield of 5 per cent. per annum and thereafter will adopt

a progressive dividend policy in-line with the anticipated growth in adjusted earnings and will target a

dividend yield in excess of 5 per cent. per annum. All dividend yields are stated by reference to the Issue

Price.

The Company may offer Shareholders the opportunity to receive dividends in the form of further Ordinary

Shares.

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Upon full investment of the Net Proceeds and associated gearing, the Company is targeting a total return of

10 per cent. per annum divided between income (payable by way of the dividends mentioned above) and

growth in NAV.

The dividend and return targets stated above are targets only and are not a profit forecast. There can be no

assurance that these targets will be met and they should not be taken as an indication of the Company’s

expected future results. Accordingly, potential investors should not place any reliance on these targets in

deciding whether or not to invest in the Company and should decide for themselves whether or not the target

dividend yield and target net total Shareholder return are reasonable or achievable. Subject to cash not being

required for ongoing operations or organic investment, the Board will consider returning excess cash to

Shareholders over time, for example by way of special dividends which would supplement ordinary

dividends.

As a REIT, the Company is required to meet a minimum distribution test for each accounting period that it

is a REIT. This minimum distribution test requires the Company to distribute 100 per cent. of the income

profits of the Group which are derived from distributions of profits or gains of the Property Rental Business

of another UK REIT and a minimum of 90 per cent. of the income profits of the Group’s Property Rental

Business derived from other sources in each accounting period as PIDs. In the medium to long-term it is

expected that a significant proportion of dividends will be paid in the form of PIDs. The actual split of

dividends declared will vary between PIDs and non-PID dividends over time. Further details of the tax

treatment of an investment in the Company are set out in Part 9 of this Prospectus.

In order to increase the distributable reserves available to facilitate the payment of future dividends, the

Company has resolved that, conditional upon Admission and subject to the subsequent approval of the Court,

the amount standing to the credit of the share premium account of the Company immediately following

completion of the Issue be cancelled and transferred to a special distributable reserve. The Company may, at

the discretion of the Board, pay all or any part of any future dividends out of this special distributable

reserve, taking into account the Company’s investment objective.

9. CAPITAL STRUCTURE

9.1 Share capital

On incorporation, the Subscriber Share was issued (fully paid) for the purposes of incorporation to

HRE as subscriber to the Company’s memorandum of association. 50,000 Redeemable Preference

Shares were also issued to HRE (fully paid) at incorporation. On 6 September 2018, the Company

issued a further 1,674,000 Redeemable Preference Shares to HRE fully paid. The Redeemable

Preference Shares in issue will be redeemed on or shortly following Admission from the proceeds of

the Issue.

At any general meeting of the Company, each Shareholder has on a show of hands one vote and on a

poll one vote in respect of each Ordinary Share held.

9.2 Duration

As the Company is a long-term investment vehicle it does not have a fixed life.

9.3 The Issue

The Company is seeking to issue up to 175 million Ordinary Shares (including the issue of the

Reinvestment Shares) with Target Gross Proceeds of £175 million (including £19,528,639 being the

aggregate value of the Reinvestment Shares at the Issue Price).

The actual number of Ordinary Shares to be issued pursuant to the Issue, and therefore the Gross

Proceeds or the Net Proceeds, are not known as at the date of this Prospectus but will be notified by

the Company via a Regulatory Information Service announcement prior to the Admission.

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If there is sufficient demand, the Company may increase the number of Ordinary Shares available for

subscription to 250 million following agreement with Peel Hunt. Any such increase will be announced

through a Regulatory Information Service and on the Company’s website.

Peel Hunt has agreed to use its reasonable endeavours to procure subscribers pursuant to the Placing

for Ordinary Shares on the terms and subject to the conditions set out in the Placing and Sponsor’s

Agreement.

The Company has agreed to make an offer of Ordinary Shares pursuant to the Offer for Subscription

at the Issue Price, subject to the terms and conditions of application. The terms and conditions of

application should be read carefully before an application is made.

Investors may also subscribe for Ordinary Shares pursuant to the Intermediaries Offer.

Investors should consult their independent financial adviser if they are in any doubt about the contents

of this Prospectus or the acquisition of Ordinary Shares.

9.4 Issue of the Reinvestment Shares

Pursuant to the terms of the Reinvestment Subscription Letters, the Reinvestment Subscribers have

agreed to subscribe and the Company has agreed to issue and allot at the Issue Price such number of

Ordinary Shares as set out against each of their names below:

Number of Equivalent

Reinvestment Subscriber Ordinary Shares Proceeds (£)

Harwood Real Estate Limited 2,150,000 2,150,000

Harwood Capital Nominees Limited (to be registered in the

name of Harwood Capital LLP) 8,574,232 8,574,252

North Atlantic Smaller Companies Investment Trust Plc 8,804,387 8,804,387

The issue of the Reinvestment Shares would represent 11.16 per cent. of the total number Ordinary

Shares in issue (assuming 175 million Ordinary Shares are issued pursuant to the Issue).

Senior Managers

Jonathan Whittingham, a Director of the Company and a Senior Manager, and Peter McCluskey, a

Senior Manager, are both shareholders of HRE and are therefore indirectly interested in the

Reinvestment Shares subscribed for by HRE.

Rights of the Reinvestment Shares

The Reinvestment Shares carry the same rights and rank pari passu in all respects with all other

Ordinary Shares in issue.

Lock-up

Under the terms of the Reinvestment Subscription Letters:

• NASCIT and HCN (and Harwood Capital LLP) have also agreed, that they will not (subject to

a number of carve outs customary for agreements of this nature), without the prior written

consent of Peel Hunt offer, sell, contract to sell, or grant or sell any option or contract to

purchase; or purchase any option or contract to sell; or transfer, mortgage, assign, charge or

pledge; or grant any option, right or warrant to purchase, or otherwise transfer, lend, or dispose

of, directly or indirectly, any Ordinary Shares (or interests therein) subscribed for pursuant to

the relevant Reinvestment Subscription Letter, for a period of 365 days following the date of

Admission; and

• HRE has also agreed, that it will not (subject to a number of carve outs customary for

agreements of this nature), without the prior written consent of Peel Hunt offer, sell, contract

to sell, or grant or sell any option or contract to purchase; or purchase any option or contract

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to sell; or transfer, mortgage, assign, charge or pledge; or grant any option, right or warrant to

purchase, or otherwise transfer, lend, or dispose of, directly or indirectly, any Ordinary Shares

(or interests therein) subscribed for pursuant to the relevant Reinvestment Subscription Letter,

for a period of 365 days following the date of Admission or for a period of 730 days following

the date of Admission if the relevant Reinvestment Shares are transferred by HRE to a Senior

Manager.

9.5 Further issues of Ordinary Shares

It is the Board’s current intention that, once the proceeds of the Issue are largely committed to new

investments, it will explore opportunities to increase the size of the Company through further equity

issues.

The Board may consider issuing further Ordinary Shares to fund any such further acquisitions of PRS

Homes, or when the Directors consider it to be in the best interests of the Shareholders to do so. The

Directors shall (save in limited circumstances, including with the prior approval of Shareholders

and/or where such issuances are first made pro-rata to existing Shareholders, in each case in

compliance with the Listing Rules) only allot and issue Ordinary Shares at a price which is not less

than the Net Asset Value per Ordinary Share.

9.6 Pre-emption rights

The Companies Act confers rights of pre-emption in respect of the allotment and issue of the Ordinary

Shares. Pursuant to a special resolution passed at a general meeting of the Company on 17 August

2018, it was resolved to grant the Directors authority to dis-apply Shareholders’ pre-emption rights in

respect of the issue of up to 20 per cent. of the entire issued share capital of the Company at

Admission. Such authority will expire on the earlier of the first annual general meeting of the

Company or 17 November 2019.

It should be noted that the issuance of new Ordinary Shares is entirely at the discretion of the Board

and no expectation or reliance should be placed on such discretion being exercised on any one or more

occasions.

10. SHARE BUYBACKS

During the initial investment phase of the Company, it is highly unlikely that the Directors will buy back any

Ordinary Shares. Thereafter, any buyback of Ordinary Shares will be made subject to the Companies Act and

within guidelines established from time to time by the Board (which will take into account the income and

cash flow requirements of the Company) and the making and timing of any buybacks will be at the absolute

discretion of the Board.

The Directors have authority, conditional upon Admission, to buy back up to 14.99 per cent. of the number

of Ordinary Shares in issue following Admission. The Directors intend to seek annual renewal of this

authority from Shareholders.

The minimum price which may be paid for an Ordinary Share is £0.01.

The maximum price (exclusive of expenses) which may be paid for an Ordinary Share must not be more than

the higher of: (i) 5 per cent. above the average of the mid-market value of the Ordinary Shares for the five

Business Days before the purchase is made; or (ii) that stipulated by the regulatory technical standards

adopted by the EU pursuant to the Market Abuse Regulation from time to time. Ordinary Shares will be

repurchased only at prices below the prevailing Net Asset Value per Ordinary Share, which should have the

effect of increasing the Net Asset Value per Ordinary Share for remaining Shareholders.

The Company may retain Ordinary Shares which have been bought back as treasury shares for future sale

and may cancel any such Ordinary Shares. It is the intention of the Board that any Ordinary Shares that might

be held in treasury from time to time would only be sold at a price equal to or above the Net Asset Value per

Ordinary Share (as determined by the Directors at or shortly before such sale). During the period when the

Company holds Ordinary Shares as treasury shares, the rights and obligations in respect of those Ordinary

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Shares may not be exercised or enforced by or against the Company. The Company may not vote any

Ordinary Shares whilst they are held as treasury shares. No dividends (excluding the allotment of any bonus

shares) can be declared and no other distribution of the Company’s assets (including on a winding-up) can

be made on Ordinary Shares whilst they are held as treasury shares.

11. ACQUISITION OF THE SEED PORTFOLIO AND GROUP STRUCTURE

The Company was incorporated on 25 May 2018 with one Subscriber Share and 50,000 Redeemable

Preference Shares in issue all of which were and are held by HRE. On 6 September 2018, the Company

issued a further 1,674,000 Redeemable Preference Shares to HRE fully paid. The Redeemable Preference

Shares in issue will be redeemed on or shortly following Admission out of the proceeds of the Issue.

On 26 May 2018, the Company established a wholly-owned subsidiary, Holdco.

Conditional on, Admission, Holdco will acquire the entire issued share capital in the SPVs, which in

aggregate own 658 PRS Homes (including those to be acquired by one of the SPVs at Celtic House, Derby)

and five commercial units, pursuant to the terms of the Share Purchase Agreements entered into between

Holdco and HRE, HCN, NASCIT and Bass Real Estate Limited for an aggregate purchase price of

£70.26 million (including the repayment of shareholder and third party debt). On entering into the relevant

Share Purchase Agreement, Holdco paid Bass Real Estate Limited a deposit of £1.724 million for the SPVs

to be acquired from it, this deposit was funded by way of an intra-group loan between Holdco and Company

from the proceeds of the issue of the Redeemable Preference Shares to HRE. The Group will incur costs of

approximately £1.1 million (including VAT) comprising professional advisers fees, SDLT and SDRT in

relation to the acquisition of the Seed Portfolio (“Acquisition Costs”). Summaries of the Share Purchase

Agreements are set out in paragraph 7.1 of Part 11 of this Prospectus.

Post-Acquisition it is intended that each of the SPVs will transfer the PRS Homes held by them to Holdco

by way of an intra-group transfer, following which all of the PRS Homes forming the Seed Portfolio will be

held directly by Holdco.

Each SPV will be liquidated once the PRS Homes held by them are transferred to Holdco. Once all of the

SPVs have been liquidated, the Group will consist of the Company and one wholly-owned subsidiary,

Holdco.

The Company will control the investment policy of each of its subsidiaries to ensure that the assets acquired

and held by them comply with the Company’s investment policy and the investment restrictions.

Celtic House, Derby

Harwood Squirrel Limited has exchanged contracts to acquire the property known as Celtic House, Derby

(which forms part of the Seed Portfolio) with its current owner, such contract is conditional upon: (i)

Admission taking place; and (ii) the property producing income equivalent to 80 per cent. of an agreed target

rent. It is anticipated that the purchase of Celtic House, Derby will complete in Q4 of 2018.

Subsidiaries and investment structures

The structure used for any future acquisition of Portfolio Assets will be reviewed at the time of the relevant

acquisition and the Group may invest in Portfolio Assets by means of any structure which is considered to

be appropriate in the circumstances of the proposed acquisition. Accordingly, the Group may, without limit,

incorporate subsidiaries to hold Portfolio Assets or may acquire the share capital of companies, partnership

interests in partnerships or units in unit trusts (or similar vehicles) which own one or more Portfolio Assets,

all of which would be wholly owned by the Group (save where a joint venture arrangement may result in the

Group owning less than the whole of such share capital, partnership interests or units).

The Company’s investment criteria and investment restrictions will apply to the underlying Portfolio Assets

themselves, assessed on the basis of each individual Block of Apartments or Collection of Houses, regardless

of the structure used to acquire or hold them. Likewise, the Portfolio Assets will be managed by the

Investment Adviser and the Property Manager at an asset level.

66

When disposing of Portfolio Assets, the Company shall do so by means of any structure which is considered

to be appropriate in the circumstances. Accordingly, the Group may, without limit, dispose of the share

capital of companies, partnership interests, units in unit trusts (or similar vehicles) which own one or more

Portfolio Assets or direct transfers of the Portfolio Assets by way of an asset sale.

12. NAV PUBLICATION AND CALCULATION

The Company shall appoint an appropriately qualified independent property valuation expert regulated by

the Royal Institution of Chartered Surveyors on an annual basis (“Valuer”) to carry out valuations of the

Portfolio Assets in accordance with the methodology set out below. Savills Advisory Services Limited has

been appointed as the Company’s Valuer for three years commencing on the date they carry out their first

valuation.

PRS Homes identified for acquisition by the Company will be valued by the Valuer at Market Value prior to

their acquisition.

Methodology for valuing the Portfolio Assets

Full Red Book annual valuations together with biannual desk-top valuations will be prepared in respect of

the Portfolio Assets by the Valuer. Valuations will be published by the Company after the period to which

they relate via a Regulatory Information Service and the Company’s website.

The most recent valuation of the Portfolio Assets will be the core information used by the Administrator in

its calculation of the Net Asset Value.

Methodology for calculating Net Asset Value

The Net Asset Value will be calculated by the Administrator in consultation with the AIFM and any relevant

professional advisers based on information provided by the Valuer and will be presented to the Board for its

approval and adoption. The Net Asset Value attributable to the Ordinary Shares will be calculated on a

bi-annual basis (as at 31 March and 30 September) based on the most recent valuation of the Portfolio Assets

and in accordance with IFRS and EPRA. The Net Asset Value will be published through a Regulatory

Information Service and made available on the Company’s website as soon as practicable after the end of

the relevant period. In addition, the calculations will be reported to Shareholders in the Company’s annual

report and interim financial statements.

The calculation of the Net Asset Value will only be suspended in circumstances where the underlying data

necessary to value the investments of the Company cannot readily, or without undue expenditure, be

obtained. Details of any suspension in making such calculations will be announced through a Regulatory

Information Service as soon as practicable after any such suspension occurs.

13. SHAREHOLDER MEETINGS AND INFORMATION

The Company will hold an annual general meeting each year with the first annual general meeting to be held

in 2019 and no more than 18 months after the date of incorporation of the Company.

The Company’s annual report and accounts will be prepared up to 31 March each year, commencing in 2019,

and it is expected that copies will be sent to Shareholders by the following July. Shareholders will also have

access to an unaudited half yearly report covering the six months to 30 September each year, expected to be

published in the following December. The first half yearly report will be prepared to 30 September 2018.

14. DIRECTORS

The Board comprises four Directors, all of whom are non-executive and independent of the AIFM and the

Investment Adviser, with the exception of Jonathan Whittingham who is one of the Senior Managers and a

director of the Investment Adviser. The Directors are responsible for ensuring compliance with the

Company’s investment policy and the overall supervision of the Company. The Directors will meet at least

four times per year.

67

Further information on the Directors, including their biographies can be found in paragraph 1 of Part 6 of

this Prospectus.

15. TYPICAL INVESTORS

The Ordinary Shares are designed to be suitable for institutional investors and professionally-advised private

investors. The Ordinary Shares may also be suitable for investors who are financially sophisticated,

non-advised private investors who are capable of evaluating the risks and merits of such an investment and

who have sufficient resources to bear any loss which may result from such an investment.

Such investors may wish to consult an independent financial adviser who specialising in advising on the

acquisition of shares and other securities before investing in Ordinary Shares.

Such investors should also consider (to the extent relevant to them) the notices to residents of various

countries set out on pages 2 and 46 to 47 of this Prospectus.

16. TAXATION

Your attention is drawn to Parts 9 (Taxation) and 10 (The REIT Regime) of this Prospectus.

17. ACCOUNTING INFORMATION

The audited accounts of the Company will be prepared under IFRS, as adopted in the EU, which the

Directors believe is an acceptable body of generally accepted accounting practice. Financial statements

prepared by the Company in accordance with IFRS will include a statement of comprehensive income, a

balance sheet, a statement of changes in equity and cash flow statement.

Within the statement of comprehensive income there is no requirement to differentiate between revenue and

capital items. Gains/losses on investments within the statement of comprehensive income will show the

movement in fair value of the investment properties and any gains/losses on disposals of investment

properties.

The Company’s management and administration fees, finance costs and all other expenses will be charged

through the statement of comprehensive income. Costs directly relating to the issue of new Ordinary Shares

will be charged to the Company’s special reserve.

68

PART 3

INVESTMENT PROPOSITION

1. INVESTMENT PROCESS

1.1 Deal Sourcing

The Investment Adviser will identify existing built, developed and income producing residential

assets deemed to meet the Company’s objective and investment policy, and the target investment

criteria below. The Investment Adviser will utilise a database of contacts and market activity to

monitor relevant opportunities. Opportunities will be sourced both through agents marketing

transactions to key contacts, of which the Investment Adviser is one by virtue of it being a member

of the HRE Group, and directly through the Investment Adviser, having the benefit of its Senior

Managers’ proprietorial relationships in the residential sector. These include a variety of owner,

principals, specialist real estate brokers and financial practitioners.

The Investment Adviser believes it has differentiated access to suitable investment opportunities

through the HRE Group’s and Senior Managers’ experience in sourcing on and off market transactions

from a network of key contacts, including owner, principals, specialist real estate brokers and

financial practitioners. Its Senior Managers have specialised in executing large off market deals since

2012 and has transacted on approximately £490 million of residential assets in the last three and a half

years. Its Senior Managers have analysed approximately £1.295 billion of potential transactions in the

last 18 months, of which £920 million met the Company’s investment criteria. The Investment

Adviser believes the networks its Senior Managers have built up, in addition to targeting the part of

the market that is typically too large for private buyers (but at the lower end of institutional appetite)

puts it at a competitive advantage.

1.2 Target Investment Criteria:

The Company will invest in assets with the following characteristics.

Real Estate

• locations with sustainable residential demand and limited risk from competing developments;

• suitable demographic profile and proximity to appropriate local employers, transport links and


• capable of efficient management from established and future management Hubs considering

both location and scale;

• appropriate mid-market rental levels which are suitable for a broad spectrum of the local

population;

• focus on one and two bedroom properties (except where local demand and affordability permits

larger properties);

• freehold ownership – long leasehold ownership will be considered where a suitable level of

control can be maintained over the asset;

• target assets are subject to technical due diligence to ensure suitable age, construction and

configuration profile to mitigate maintenance exposure and operation risks such as external

cladding panels.

Converted properties may include income producing completed permitted developments, subject to

due diligence being completed to focus on structural components, unit sizes and specifications. The

Investment Adviser believes that permitted development provides an alternative viable route to

continue to address the housing shortfall in some areas.

69

Income

• Affordability of rents relative to the local population

• Evidence of arrears, stable rent history, maintenance budget

• Strong historic occupancy

• Working population

• Target tenants are across all age groups and often employed locally

• Economic rental offering for the local population

Local Market

• Conurbations and employment centres largely in England, outside of Greater London

• Rent and capital growth potential

• Local employment focus

• No evidence of oversupply in pipeline

• Sites protected from new local development

1.3 Asset Identification and Screening

Available pipeline will be reviewed on a rolling basis by the Investment Adviser. Identified

opportunities will be assessed against the above investment criteria (as well as the Company’s

investment objective and investment policy) for initial suitability. This will be done on the basis of

both technical and financial suitability but also on the quality of available data and the nature of the

relationship with vendor/agent.

Deals passing the initial screening of the Investment Adviser will be subject to a pre-bid diligence

process to verify the data provided. This process will include a site inspection and a data room review,

including light touch legal and financial due diligence as deemed appropriate. Key considerations

include:

• site location relative to transport, education and employers;

• availability of competing housing stock and evident development pipeline;

• dynamics of the local area – employment and population;

• age, quality and condition of assets;

• net income profile and history;

• possible value add asset management opportunities – extension, reconfiguration, targeted

capital expenditure; and

• harvested data will be reflected in pre-bid financial modelling to verify sensitised return

profiles and pricing parameters.

1.4 Due Diligence and Deal Execution

Formal due diligence, following agreement on price, will commence and exclusivity with the relevant

vendor will be sought. Key elements will include:

• full legal review of title, planning, construction and operational data;

• desktop environmental and flooding review;

70

• review of financial data and tax position as required;

• building survey where deemed appropriate;

• verification of provided operational income data;

• independent valuation; and

• investment committee approvals process.

The Investment Adviser will execute and manage all key appointments using known and tested

advisers, including the Property Manager. The Property Manager will assist in the formal due

diligence process and will work with the Investment Adviser to agree bespoke operational budgets for

each acquisition.

The Investment Adviser and Property Manager will agree an asset migration plan with the

vendor/existing managing agent to ensure efficient transfer of process on completion of acquisitions.

2. OPERATIONAL PROCESS

2.1 Asset Management

The Investment Adviser will perform key asset management services for the Company. This includes

responsibility for:

• origination and acquisitions;

• control of key operational matters;

• performance monitoring and investor reporting;

• identifying and executing value-add asset management opportunities; and

• initial financial preparation and review.

Key tenant experience and occupancy drivers include:

• focus on tenant retention and security;

• offering more flexible lease terms;

• offering zero letting fee and deposit options;

• connecting tenants through technology including tenant feedback provision; and

• progressive reinvestment in assets to maintain high standards of product.

Key efficiency targets to drive net operating income:

• more direct control of tenancy management and maintenance;

• bulk purchasing opportunities;

• closer monitoring of local markets;

• utilisation of emerging smart technology; and

• data harvest and trend analysis.

71

2.2 Operational Hub Model

The Investment Adviser has developed a bespoke operational and property management model

focussed around four key Hubs, namely: the Midlands, the South West, the East and the North and

North West of England. Employees of the Property Manager are located at each of the Hubs in close

proximity to the Seed Portfolio assets to ensure that they can provide tenant support. The Investment

Adviser has started to implement on-site maintenance staff in areas with specific concentrations. This

structure has been created to drive efficiency in operations while improving tenant experience and

retention.

The Seed Portfolio is spread across 12 locations with some concentration by market value in Bristol

(18.8 per cent.), Lowestoft (14.4 per cent.) and Derby (19.8 per cent.). The locations are reflective of

the proprietary Hub management model that the Investment Adviser operates and are concentrated

around the core geographical concentrations of the PRS Homes.

The Investment Adviser intends to develop and expand its Hub management model as new

concentrations of PRS Homes are formed from the assets acquired by the Company, the locations of

the new Hubs will be based on these new concentrations but will benefit from the existing

infrastructure in place.

The Investment Adviser has selected its existing Hub locations based on an assessment of

underpinning economic drivers and opportunity for rental and capital growth.

2.3 Property Management

The Company has appointed the Property Manager to perform key cash collection and tenancy

management functions. The Property Manager is directly appointed by the Company but its

performance will be overseen and monitored by the Investment Adviser. The Property Management

Agreement provides that the Property Manager acknowledges that any instruction direction or

communication may be given on behalf of the Company by the Investment Adviser, and any service

or information to be provided by the Property Manager shall be performed or provided to the

Investment Adviser. The Investment Adviser has been working with the Property Manager as partner

managing agent since 2015. The Property Manager is responsible for rent collection and treasury

management, tenancy management, legal compliance and management of maintenance requests. In

addition, the Property Manager provides property management expertise and support throughout the

acquisition process to ensure a smooth handover.

The North and North West Hub

The Midlands Hub

The South West Hub

The East Hub

72

2.4 Rent Collection

The Property Manager will have sole responsibility for cash collection. This will be monitored by the

Investment Adviser against agreed targets through monthly operational reporting and management

meetings.

2.5 Operational Costs

The Investment Adviser and the Property Manager will agree operational budgets prior to the

completion of the acquisition of new Portfolio Assets (other than the Seed Portfolio) and the Property

Manager will work within defined parameters. Budgets and performance will be reviewed at monthly

meetings between the parties. Any expenditure outwith agreed budgets and thresholds will require

express approval of the Investment Adviser. The Investment Adviser is required to approve any

expenditure above £250 save in the case of emergency when the Property Manager may incur such

expenditure as is reasonable, appropriate and proportionate to the nature of the emergency.

The Property Manager will make payments of agreed and approved operational costs from rent funds

collected. Net cash will be remitted to the Company and accounted accordingly. Costs will be

monitored against agreed targets through regular reporting and management meetings. In addition, the

Property Manager will maintain an emergency fund of £10,000.

2.6 Tenancy Management

The Property Manager will co-ordinate new lettings and tenancy renewals with local property agents

where required. Sole or joint letting agents will be appointed bespoke to each location as agreed and

approved by the Investment Adviser.

The Investment Adviser will agree market rental values with the Property Manager at acquisition of

the relevant Portfolio Assets. These will be reviewed through monthly management meetings to

ensure stabilised rent growth profiling while maintaining appropriate tenant retention.

The Company will target a minimum 6 month term for new lettings. Any new lease contracts will be

based on standard forms, with any deviation from this standard requiring approval from the

Investment Adviser.

According to the Property Management Agreement, the Property Manager will act as managing and

lettings agent for the properties. Fees are payable in respect of both the tenancy and block

management services to be provided by the Property Manager. A management fee of £150 per

residential unit is payable for the provision of all ongoing block management services to be provided

by the Property Manager. Tenancy management fees are based on a fee of 8 per cent. of rental income

collected for the Seed Portfolio (with the potential to reduce the fee as the pipeline is invested and the

Company’s portfolio gains greater scale) with additional letting fees where appropriate.

3. ADDITIONAL INFORMATION

3.1 Value Add Asset Management

In addition to securing the core objective of secure, stabilised and affordable income, the Investment

Adviser will explore opportunities to enhance asset value and performance where possible. This may

include reconfiguration, refurbishment or extension of Portfolio Assets. Where such opportunity is

identified at the time of acquisition, the Investment Adviser will include suitable additional analysis

during diligence to verify the business case and make suitable provisions in financial analysis.

3.2 Risk Management

Identification and mitigation of risk is fundamental to the Investment Adviser’s function from deal

inception. Monitoring the performance of existing residential seed assets under management, together

with analysis of the transactional markets will allow the Investment Adviser to review relative

performance and identify suitable target Portfolio Assets and locations for new acquisitions.

The purchase of targeted proven stock will mitigate transitional and long term performance risk to

ensure target returns are met. Operational risk is managed through setting correct process, budgets and

performance targets at acquisition and closely monitoring these through management processes.

73

PART 4

SAVILLS UK HOUSING MARKET COMMENTARY

The�Directors Jacqui�Daly

The�Multifamily�Housing�REIT�Plc E:�[email protected]

Beaufort�House DL:�+44�(0)�20�7016�3779

51�New�North�Road

Exeter�EX4�4EP

33�Margaret�Street

London�W1G�0JD

T:�+44�(0)�20�7499�8644

savills.com

For�the�attention�of:�The�Directors

Dear�Sirs,

UK HOUSING MARKET COMMENTARY

RESEARCH AS AT 12 SEPTEMBER 2018

The�Directors�of�The�Multifamily�Housing�REIT�Plc� (the�“Company”) have� instructed�Savills�Advisory

Services�Limited�to�provide�market�commentary�in�relation�to�the�UK�Housing�Market�for�inclusion�in�the

Prospectus�to�be�issued�in�connection�with�the�admission�of�the�Company’s�Ordinary�Shares�to�the�premium

listing� segment� of� the� Official� List� and� to� trading� on� the�Main�Market� of� the� London� Stock� Exchange

(the “Savills Report”).� In� accordance� with� this� instruction,� we� have� provided� independent� market

commentary�on� the�supply�and�demand�dynamics� impacting�on� the�UK�housing�market,� focusing�on� the

private�rented�sector.

We�confirm�that�we�are�not�aware�of�any�conflict�of�interest�that�may�prevent�us�from�providing�you�with

this�information.

Introduction

This� commentary� provides� analysis� of� the�UK�housing�market� and� specifically� the� private� rented� sector

(“PRS”).� The� PRS� comprises� dwellings� owned� by� landlords� and� let� to� tenants� on� the� open� market,

predominantly�using�Assured�Shorthold�Tenancy�(“AST”)�contracts.�This�makes�it�distinct�from�the�social

rented� sector,� where� local� authorities� or� registered� providers� let� properties� at� subsidised� rents.� For� the

purpose�of�our�analysis�this�sector�has�been�excluded.

74

Private Rented Households as a % of All Households

Source: Census 2011

According�to�the�1991�Census�just�9�per�cent.�of�households�were�renting�privately;�by�2011�this�has�more

than�doubled�to�19�per�cent.

Many�urban�markets�have�seen�the�size�of�the�PRS�double�in�size�including�Manchester,�Liverpool,�Bristol,

and�Birmingham.

However,� this� is�not� solely�an�urban�phenomenon.�The�2011�Census� shows� that� the� size�of� the�PRS�has

increased�across�all�local�authorities�in�England�and�Wales.

2017�population�statistics�show�that�many�markets�have�witnessed�continued�population�growth�since�the

2011�Census.

Manchester,�Birmingham,�and�Coventry�have�seen�their�populations�grow�significantly�since�2011.�There�are

now�an�additional�38,000�people�living�in�Manchester,�50,000�in�Birmingham,�and�36,000�in�Coventry.

Given� affordability� pressures� across� the� country� much� of� this� population� growth� will� be� new� forming

households�in�the�private�rented�sector.

This� is� supported�by� the�English�Housing�Survey3 which�shows� that�over� the� last�5�years� the�number�of

households�in�the�PRS�outside�of�London�has�increased�by�20�per�cent.�to�3.65�million�households.�

75

3 ONS:�English�Housing�Survey�2016/17

UK Housing Market Context

Supply and Demand

Housing�delivery� across�England�has� consistently� failed� to� keep�up�with� demand,� resulting� in� a� long-term

structural� undersupply.� Savills� research� estimates� the� annual� housing� need� is� 300,000� dwellings;� based� on

assessment� of� a� range� of� government� and� professional� bodies’� analysis� including� the� Town� and� Country

Planning�Association�(“TCPA”).�However,�actual�housing�delivery�remains�significantly�lower.�Over�the�five

years�to�2016/17,�annual�delivery�averaged�168,000�dwellings,�indicating�an�annual�shortfall�of�132,000�homes.

As�a�result�of�this�shortfall,�affordability�of�housing�has�become�an�increasing�issue�across�the�country,�which

has� resulted� in� housing� rising� up� the� political� agenda.� In� February� 2017,� the�Government� published� the

Housing�White�Paper,�Fixing�Our�Broken�Housing�Market.�The�purpose�of�the�document�was�to�set�out�ways

to�accelerate�delivery�of�housing.�One�such�way�is�the�encouragement�of�institutional�investment�into�the

PRS�to�accelerate�housing�delivery.�The�document�also�highlighted�the�need�to�professionalise�the�rented

sector�for�both�new�and�existing�rental�accommodation.

Housing Supply and Need, England

Source: Savills, TCPA, MHCLG

The�United�Kingdom’s�population�reached�65.7�million�in�2016�according�to�the�data�from�the�Office�for

National�Statistics�(“ONS”).�Over� the�next�10�years� this� is�forecast� to�grow�by�5.2�per�cent..� In� terms�of

households,�the�ONS�estimates�there�were�27.8�million�households�across�the�country,�which�is�projected�to

increase� by� 8.2� per� cent.� over� the� same� period.� This� equates� to� an� additional� 3.4� million� people� and

2.3 million�households�(OE,�DCLG,�ONS).�The�rate�of�household�growth�is�higher�than�population�because

the�average�household�size�has�been�decreasing,�a�function�of�both�increased�rates�of�divorce�and�couples

delaying�starting�a�family.

We�expect�the�majority�of�the�new�forming�households�to�enter�the�private�rented�sector.�Data�from�the�most

recent� English� Housing� Survey� shows� that� in� 2016/17,� 164,000� new� households� formed� in� the� sector.

This makes�it�the�fastest�growing�sector�and�highlights�that�the�population�and�household�growth�are�directly

impacting�demand�for�rental�property.

Net additional dwellings

Num

ber o

f dw

ellin

gs

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

2007

-08

2008

-09

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

2011/12-2015/16 average Need350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

76

Private Rented Sector Trends

Historically,�private�renting�was� the�majority� tenure�across� the�country,�with�most�of� the�stock�owned�by

institutions� and� corporates.�However,� the� sector�went� into� decline� during� the� early� to�mid-1900s,� as� the

introduction�of�strict�rent�controls�and�security�of�tenure�made�it�increasingly�difficult�for�landlords�to�repair

and�maintain�their�investments.�As�the�quality�of�stock�declined,�there�was�a�mass�exodus�from�the�market.

While�the�large�scale�investment�in�PRS�was�being�scaled�back,� the�Government�increased�its�support�of

home�ownership�through�mortgage�interest�tax�relief�(“MIRAS”)�in�the�private�sector�and�Right�to�Buy�in

the�social�sector.�These�led�to�very�strong�and�rapid�growth�in�the�level�of�owner�occupation.

The�1988�Housing�Act�eased�rent�regulation�and�reduced�occupational�rights�of�tenants,�which�improved�the

attractiveness�of� the�private�rental�sector� to� investors�and� landlords.�The� introduction�of�buy� to� let�mortgage

lending�in�the�1990s�supported�further�growth�of�the�market,�opening�up�access�to�a�wide�range�of�investors�who

typically�invested�in�small�scale,�sub�10�unit�portfolios.�During�the�market�downturn�post-2008�the�rental�market

also� saw�growth� in� the�accidental� landlord�market�whereby�property�owners� that� could�not� sell� their�homes

became�landlords�supported�by�bank�lenders�that�permitted�mortgage�homeowners�to�become�landlords.�Many

of�these�accidental�landlords�have�now�exited�the�market�as�the�economy�and�the�housing�market�recovered.

According�to�the�1991�Census�just�9�per�cent.�of�households�were�renting�privately;�by�2011�this�has�more

than�doubled� to� 19�per� cent..�We� expect� this� growth� to� continue,� as� shown�by� the� following� chart,�with

28 per cent.�of�households�renting�privately�by�2025.

Long Term Tenure Trends, England

Source: MHCLG, Savills

Affordability of Home Ownership

The�structural�undersupply�of�housing�is�one�of�the�key�reasons�for�the�continued�growth�of�the�PRS�market.

This�has�resulted�in�upward�pressure�on�pricing,�with�the�house�price�to�earnings�ratio�reaching�7.8�in�2017�–

the�highest�it�has�ever�been�and�more�than�double�the�level�in�1997.�The�decrease�in�affordability�is�directly

increasing�the�demand�for�privately�rented�housing.

Prior�to�the�Global�Financial�Crisis�(“GFC”)�in�2007/08,�households�were�able�to�buy�homes�despite�rapid

price�growth�because�of�widely�available�mortgage� finance.� In�particular� the�availability�of� interest�only

mortgages�and�self-certification�made�it�easier�for�buyers�to�get�onto�the�ladder.

In�the�wake�of�the�crisis,�mortgage�availability�has�reduced�with�interest�only�mortgages,�in�particular,�all�but

disappearing.�The�Mortgage�Market�Review�(“MMR”)�was� introduced�by� the�Financial�Conduct�Authority

(“FCA”)� in� early� 2014,� to� ensure� that� any� future� lending� is� affordable.�To� do� this� banks�must� ensure� that

borrowers�can�afford�to�service�and�repay�the�loans�and�are�required�to�use�a�series�of�stress�tests—including

interest� rates� increasing�by�3�per�cent.� from� the�prevailing� rate�when� the� loan�was� taken�out.�Furthermore,

lenders�are�only�able� to� lend�15�per�cent.�of�mortgages�at� loan� to� income�ratios�over�4.5.�This� restricts� the

number�of�households�able�to�secure�mortgage�finance�given�the�record�high�price�to�earnings�ratio.

Prop

ortio

n of

hou

sing

in E

ngla

nd

1931

1936

1941

1946

1951

1956

1961

1966

1971

1976

1981

1986

1991

1996

2001

2006

2011

2016

2021

2026

Social Rented Private Rented Owner Occupied80%

70%

60%

50%

40%

30%

20%

10%

0%

Post war - large rentedsector tied to housingworkers. Growth of homeownership

Growth of homeownership through Rightto Buy (RTB) and MIRASfrom 1970s

Credit crisis and changein market perception.Restricted mortgages and deposit affordability

77

Ratio of Median House Prices to Median Earnings, England (including London)

Source: MHCLG

An�additional�barrier�to�home�ownership�is�raising�the�required�deposit.�During�the�1990s�first�time�buyers

needed�a�deposit�of�around�5�per�cent.�of�the�property�value,�which�represented�around�12�per�cent.�of�their

annual�households�income.�However,�in�2017�this�has�increased�to�a�deposit�of�19�per�cent.,�or�63 per�cent.

of�their�annual�income.�This�large�up-front�payment�is�a�significant�hurdle�to�ownership,�which�creates�even

greater�demand�for�PRS�housing.

First Time Buyer Deposit Trends, UK (including London)

Source: UK Finance

Profile of Rental Demand

As�highlighted�earlier,�it�is�estimated�that�over�the�next�10�years�an�additional�2.3�million�households�will

be� created� across� the� country.�We� expect� that� the�majority� of� these� new�households�will� enter� the� PRS.

According�to�the�latest�data�from�the�English�Housing�Survey,�164,000�new�households�formed�within�the

sector�during�2016/17.�Clearly�demonstrating�that�household�growth�is�directly�impacting�on�the�demand�for

rental�property.

Private�renting�has�become�the�most�common�tenure�for�those�aged�between�25�and�34�years�old.�According

to�the�2016/17�English�Housing�Survey,�46�per�cent.�of�25�to�34�year�old�households�lived�in�private�rented

accommodation,�compared�with�27�per�cent.�ten�years�earlier.�Due�to�the�barriers�to�home�ownership�and

continued�affordability�pressures�we�expect�this�trend�to�continue�among�this�age�group.

Rat

io o

f med

ian

hous

e pr

ice

to m

edia

n ea

rnin

gs

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.019

9719

9619

9519

9419

9319

9219

9119

90

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

120%

100%

80%

60%

40%

20%

0%

Deposit as % house price Deposit as % income

78

Proportion of 25 to 34 year old households by tenure

Source: ONS: English Housing Survey 2016/17

While�much�of�the�focus�within�the�PRS�has�been�on�these�younger�households,�the�challenges�and�changing

trends�of�ownership�are�visible�across�all�generations.�There�is�a�growing�proportion�of�families�living�in

private� rented�accommodation.�The� latest�English�Housing�Survey�showed� that� families�now�account� for

37 per�cent.�of�private�rented�households.�This�has�increased�from�30�per�cent.�ten�years�ago�and�equates�to

an�additional�1�million�households.

There�has�been�a�similar�increase�in�the�number�of�elderly�households�renting.�The�latest�English�Housing

Survey� indicates� that� 9� per� cent.� of� private� renting� households� are� aged� over� 65� years� old� in� England

compared�to�6�per�cent.�in�London.�This�equates�to�414,000�and�55,000�households�respectively�an�increase

of�63�per�cent.�compared�with�2006/07.

Furthermore,�changes�in�household�composition,�in�particular�marital�breakdown,�are�also�driving�demand

for� rental� housing.� During� 2016,� there� were� a� total� of� 107,000� divorces� across� England� and�Wales,� an

increase�of�5.8�per�cent.�compared�with�20154.�While�some�will�have�enough�housing�equity�in�their�marital

home�to�support�the�purchase�of�two�new�properties,�this�will�not�be�the�case�across�the�board.�In�these�cases

at�least�one�of�the�couple�is�likely�to�move�into�the�PRS.

Distribution of PRS households by age group

Source: ONS: English Housing Survey 2016/17

Pro

porti

on o

f 25-

34 y

ear o

ld h

ouse

hold

s, %

2005

-6

2006

-7

2007

-8

2008

-9

2009

-10

2010

-11

2011

-12

2012

-13

2013

-14

2014

-15

2015

-16

Social RentedPrivate RentedOwner Occupied60

50

40

30

20

10

0

40%

35%

30%

25%

20%

15%

10%

5%

0%

Pro

porti

on o

f Priv

ate

Ren

ted

Hou

seho

lds

16-24 25-34 35-44 45-54 55-64 65-74 75 or over

79

4 ONS�Divorces�in�England�and�Wales:�2016

Opportunities beyond core regional city centre markets

Outside�of�London�and�the�South�East,�house�prices�are�lower�than�the�national�average.�However,�due�to

lower�median�incomes,�affordability�pressures�continue�to�act�as�a�barrier�to�home�ownership.�Even�in�the

North�East,� the�most� affordable� region� of� the� country,� the� average� first� time� buyer� needs� £17,600� for� a

deposit—equivalent�to�53�per�cent.�of�their�annual�income.

The�PRS�accounts� for�around�19�per�cent.�of�households�outside�of�London5.�Over� the�past�10�years� the

number�of�PRS�households�in�the�regions�has�increased�by�102�per�cent.,�compared�with�83�per�cent.�growth

in�London.�This�equates�to�an�additional�2�million�households�in�the�PRS�across�the�regions;�highlighting

the�impact�of�affordability�pressures�on�increasing�rental�households�across�the�regions.

Despite�the�strong�growth�of�rental�households�outside�of�London,�to�date,�the�majority�of�the�new�PRS�stock

had�been�delivered�in�the�capital�(58�per�cent.).�In�terms�of�the�stock�delivered�across�the�regions,�most�has

been�done�so�in�city�centre�locations�in�the�key�regional�cities,�including�Manchester,�Leeds,�Liverpool,�and

Birmingham.�There�has�been�very�limited�delivery�in�more�suburban�parts�of�these�cities,�or�other�regional

towns� and� cities.� This� pattern� is� repeated� across� stock� currently� under� construction� and� in� the� planning

pipeline.�This�presents�an�opportunity�to�enter�these�secondary�markets�outside�of�the�regional�city�centres,

where�competition�is�lower�and�there�is�less�likelihood�of�oversupply.

Annual rental growth for London and England excluding London

Source: ONS Index of Private Housing Rental Prices (March 2018)

The�increase�in�demand�for�rental�housing,�combined�with�limited�supply�has�resulted�in�steady�rental�growth

across�England.�According�to�the�ONS�it�has�averaged�2.3�per�cent.�per�annum�since�2011.�London�has�had

the�strongest�growth,�averaging�3.3�per�cent.�a�year�over�this�period.�However,�as�shown�in�the�graph�above

the�growth�rate�has�been�volatile�and�over�the�past�12�months�the�rate�of�growth�has�slowed�significantly.�In

contrast,� the� rate� of� growth� across� the� rest� of� the� country� has� been� slightly� lower� but� more� stable.

Furthermore,�rental�growth�across�the�regions�has�outperformed�that�of�the�capital�during�2017,�averaging

2.2 per�cent.�compared�with�1.2�per�cent.� in�London.�Long� term�rents�have�grown� in-line�with� inflation.

Looking� forward,� Savills� forecasts� rental� growth� of� 15� per� cent.� across� the� UK� excluding� London� and

17 per cent.�for�London�over�the�next�five�years6.

Strong� rental� growth� in� the� capital� means� that� households� in� the� PRS� are� now� spending� a� significant

proportion�of�their�household�income�on�rent.�However,�renting�is�more�affordable�outside�of�London.�Data

from�the�English�Housing�Survey�shows�that�private�rental�households�are�on�average�spending�30 per�cent.

of�their�income�on�rent�across�the�country7;�however,�this�masks�differences�across�the�regions.�On�a�regional

level,�just�under�70�per�cent.�of�households�in�the�PRS�in�London�are�spending�over�30 per�cent.�of�their

12 M

onth

Per

cent

age

Cha

nge

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

England excluding LondonLondon

6

5

4

3

2

1

0

-1

-2

80


6 Savills:�Spotlight�Residential�Property�Forecasts�Autumn�2017


gross�household�income�on�rent,�whereas�the�same�is�true�for�only�33�per�cent.�of�households�in�Yorkshire

and�the�Humber.�Shelter�estimate�that�spending�30�per�cent.�of�household�income�on�rent�is�an�affordable

level,�above�which�households�are�likely�to�encounter�or�experience�affordability�difficulties8.

Proportion of PRS households spending more than 30 per cent. of their gross household income on

housing

Source: Savills using English Housing Survey 2015/16

New�build� rental� schemes� are� typically� achieving� rental� levels� at� a� premium� to� the� local�market,�which

reflects�a�range�of�factors�including�service�provision,�higher�quality�finishes�and�that�they�are�new.�Analysis

of�operational�build�to�rent�schemes�indicates�that�on�average�single�earners�would�be�spending�43�per�cent.

of� their� income�on�rent.�However,� there�are�unprecedented� levels�of�demand�for�affordable�market� rents,

which�will�generally�be�existing�stock�as�opposed�to�new�build.�This�creates�an�opportunity�to�combine�high

quality�professional�management�with�stock�that�offers�affordable�market�rents.

The�already�high�proportion�of�salary�being�spent�on�rent�in�London�is�likely�to�limit�further�rental�growth

over�the�short�term.�However,�the�relative�affordability�of�rents�across�the�rest�of�the�country�indicates�greater

potential�for�growth.

The� return�potential� is�also�higher�outside�of�London.�According� to� the�most� recent� IPD�UK�Residential

Index9,� the�South�West,�Midlands�and�Wales�and�Northern�England�and�Scotland�had�the�highest� income

returns�for�2017,�3.7�per�cent.�and�4.1�per�cent.�respectively,�compared�with�2.7�per�cent.�in�Inner�London

and�across�the�UK.�There�is�a�similar�pattern�in�terms�of�gross�yields.�According�to�our�analysis�of�estimated

gross�yields�on�flats,�London�has�the�lowest�average�yield,�of�4.5�per�cent.,�which�rises�to�6.1�per�cent.�in�the

North�East�and�East�Midlands.

80%

70%

60%

50%

40%

30%

20%

10%

0%Pro

porti

on o

f hou

seho

ld in

the

PR

S p

ayin

g ov

er 3

0% o

fgr

oss

hous

ehol

d in

com

e on

hou

sing

cos

t

London South East East of England

SouthWest

WestMidlands

NorthEast

NorthWest

EastMidlands

Y&H

81

8 Shelter:�Shut�out:�The�barriers�low-income�households�face�in�private�renting,�June�2017

9 IPD�UK�Residential�Index�2017

Regional Gross Yields – Flats

Source: Savills using Land Registry and Rightmove

Residential Investment Market Trends

The�introduction�of�Buy�to�Let�mortgages�and�the�1988�Housing�Act,�paved�the�way�for�small�investors�to

amass�vast�amounts�of�residential�stock;�the�Investment�Property�Forum�(“IPF”)�estimate�that�97�per�cent.

of� private� rented� stock� is� owned� by� individuals� and� small� investors10.� However,� a� number� of� recent

legislative�and�regulatory�changes�have�been�introduced�to�penalise�buy�to�let�investors�in�favour�of�first�time

buyers.�Investors�now�face�an�additional�3�per�cent.�Stamp�Duty�Land�Tax�surcharge,�reduced�tax�relief�on

their�mortgage�interest�payments,�and�tighter�restrictions�on�mortgage�lending.�As�a�result�of�these�changes,

the�volume�of�Buy�to�Let�mortgages�for�new�purchases�fell�by�27�per�cent.�in�2017�compared�with�201611.

Furthermore,�the�growth�of�the�number�of�outstanding�Buy�to�Let�mortgages�was�49,000�lower�than�new

mortgages� advanced� in� 2017.�This� is� evidence� of� buy� to� let� investors� rationalising� their� portfolios.�This

creates�an�opportunity�to�acquire�and�aggregate�income�producing�assets�from�existing�buy�to�let�landlords

looking�to�exit�the�sector.�At�the�same�time�it�indicates�that�moving�forward�there�could�be�a�reduction�in�the

number�of�investors�trying�to�access�new�stock�coming�onto�the�market.

6.0%

5.0%

4.0%

3.0%

2.0%

1.0%

0.0%

Gro

ss Y

ield

(%)

London SouthEast

East of England

SouthWest

WestMidlands

NorthEast

NorthWest

EastMidlands

Yorkshireand TheHumber

82

10 IPF�–�Size�&�Structure�of�the�UK�Property�Market:�End-2016

11 UK�Finance

Volume of Buy to Let mortgages for house purchase and growth in outstanding Buy to Let mortgages

Source: UK Finance

Over� recent�years� there�has�been� increased�governmental� support� for� large� scale�Build� to�Rent� (“BTR”)

investors�to�enter�the�market.�This�has�resulted�in�an�increase�in�the�number�of�PRS�units�in�the�development

pipeline.�Outside�of�London�there�are�a�total�of�c.57,000�new�PRS�units�completed,�under�construction,�or

with� planning� permission.� Over� the� past� 12� months,� the� PRS� pipeline� in� the� regions� has� increased� by

43 per cent.� from� c.40,000� units;� highlighting� the� growing� engagement� with� the� rental� sector� from

institutions�and�large�scale�investors.�However,�despite�the�strong�growth�in�the�regional�pipeline,�BTR�units

only�account�for�1.6�per�cent.�of�the�total�private�rented�stock�and�0.3�per�cent.�of�the�total�stock�outside�of

London.� Furthermore,� the� BTR� pipeline� falls� far� below� the� estimated� additional� 1.1� million� additional

households�that�will�enter�the�rental�market�over�the�next�five�years.

Market Prospects

This� market� commentary� demonstrates� the� strong� supply� and� demand� fundamentals� underpinning� PRS

investment.�A�dearth�of�new�housing� supply�has�combined�with�population�growth�and� rising�household

formation�to�put�upward�pressure�on�house�prices�beyond�the�reach�of�many�working�people.

Savills�estimate�that�there�is�a�potential�requirement�to�accommodate�future�growth�in�the�rented�sector�of

1.1m�households�across�the�UK�over�the�next�5�years,�equating�to�investment�of�c£300bn.�The�very�large

gap�between�supply�and�demand�is�a�key�reason�why�investors�are�seeking�to�invest�in�residential.

Tighter�mortgage�regulation�further�restricts�the�number�of�people�that�are�able�to�take�their�first�step�onto

the�housing�ladder.�Limits�on�loan�to�value�ratios�and�high�housing�deposit�requirements�mean�that�many

more�people�cannot�afford�the�costs�of�home�ownership.�These�affordability�constraints�directly�contribute

to�the�rising�demand�for�PRS�housing,�a�sector�that�has�doubled�in�size�over�the�past�20 years.

The� expansion� of� the� rental�market� has� been� enabled� by� the� buy� to� let� lending�market.�These�mortgage

products� allowed� individuals� and� small� property� companies� to� invest� directly� into� residential� property,

creating�a�new�class�of� investor.�This�market�has�been� instrumental� in�housing� the�2.4�million�additional

households�that�have�entered�the�PRS�in�the�last�20�years.�However,�recently�this�market�has�faced�increased

mortgage�regulation�and�changes�to�government�policy�and�tax�regime�in�a�bid�to�level�the�playing�field�with

first�time�buyers.

An�additional�3�per�cent.�stamp�duty�land�tax�(SDLT)�surcharge�for�investor�buyers�was�introduced�in�2016,

which�is�over�and�above�what�a�first�time�buyer�would�pay.�Furthermore,�the�government�has�reduced�the

tax�relief�on�mortgage�interest�for�buy�to�let�investors,�which�has�reduced�overall�attractiveness�of�the�sector.

200,000

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0Year to September 2007

Buy to Let Mortgages for House Purchase Growth in Outstanding Mortgage BTL Mortgages

Year to December 2010 Year to March 2016 Year to August 2017

83

This�is�evident�from�the�slump�in�the�number�of�buy�to�let�mortgages�advanced�for�new�purchases�since�the

changes�were�introduced.

There�are�currently�limited�opportunities�to�invest�in�income�producing�portfolios�in�the�UK�rented�sector.

The�private�rented�sector�(PRS)�in�the�UK�is�estimated�to�be�worth�over�a�£1.1�trillion (IPF,�2017) with�a

high�proportion�tied�up�in�the�hands�of�small�private�individual�landlords�(CLG,�2010).�As�a�result,�there�is

a� significant� lack�of�aggregated� investment� stock�available� for� institutional� investors� to�acquire.�There� is

clear�appetite�from�investors�to�invest�in�residential�real�estate�through�investment�structures�that�provide

access�to�aggregate�income�producing�rental�stock.

According�to�recent�research�by�the�Investment�Property�Forum�(“IPF”),�institutional�investors�hold�c£23bn

of�market�rented�assets�(excluding�student),�a�third�more�than�2015�and�over�double�the�value�of�assets�held

in�2013.�Given�the�rising�number�of�investors�seeking�exposure�to�the�market�we�expect�this�rate�of�growth

to� continue� and� the� total� value� of� institutionally� held� stock� to� increase� substantially� over� the� next� 10� to

15 years.

Due�to�the�weight�of�capital�targeting�the�sector,�aggregators�of�stock�that�can�offer�investors�an�entry�route

into� the�market� are� highly� attractive.�The�vast�majority� of� pipeline�of� stock� coming� forward� is� targeting

London�and�UK�major�cities,�which�creates�an�opportunity�for�investors�offering�high�quality�rental�product

targeting�demand�in�other�regional�and�provincial�markets�that�have�thus�far�been�largely�overlooked.

Important Note

In� accordance�with�our� normal� practice,�we�would� state� that� this� commentary� is� for� general� informative

purposes�only�and�does�not�constitute�a� formal�valuation,�appraisal�or� recommendation.�Our�findings�are

based�on�the�assumptions�given.�As�is�customary�with�market�studies,�our�findings�should�be�regarded�as

valid�for�a�limited�period�of�time�and�should�be�subject�to�examination�at�regular�intervals.

Whilst�every�effort�has�been�made�to�ensure�that�the�data�contained�in�it�is�correct,�no�responsibility�can�be

taken�for�omissions�or�erroneous�data�provided�by�a�third�party�or�due�to�information�being�unavailable�or

inaccessible�during�the�research�period.�The�estimates�and�conclusions�contained�in�this�report�have�been

conscientiously�prepared�in�the�light�of�our�experience�in�the�property�market�and�information�that�we�were

able�to�collect,�but�their�accuracy�is�in�no�way�guaranteed.

Save�for�any�responsibility�which�we�may�have�to�those�persons�to�whom�this�report�is�expressly�addressed

and�save�for�any�responsibility�arising�under�item�5.5.3R(2)(f)�of�the�Prospectus�Rules�as�and�to�the�extent

therein�provided,�to�the�fullest�extent�permitted�by�law,�we�do�not�assume�any�responsibility,�and�will�not

accept�any�liability,�to�any�other�person�for�any�loss�suffered�by�any�such�other�person�as�a�result�of,�arising

out�of,�or�in�connection�with,�this�report,�required�by�and�given�solely�for�the�purposes�of�complying�with

item 23.1�of�Annex�1�to�the�Commission�Regulations�(EC)�No.�89/2004,�consenting�to�its�inclusion�in�the

Prospectus.

For�the�purpose�of�Prospectus�Rule�5.5.3R(2)(f),�we�are�responsible�for�this�report�as�part�of�the�Prospectus

and�declare�that�we�have�taken�all�reasonable�care�to�ensure�that�the�information�contained�in�this�report�is,�to

the�best�of�our�knowledge,�in�accordance�with�the�facts�and�contains�no�omissions�likely�to�affect�its�import.

This�declaration�is�included�in�the�Prospectus�in�compliance�with�item�1.2�of�Annex 1�of�the�PD�Regulation.

Yours�faithfully,

Dr Jacqui Daly

Director

Residential�Investment�Research�and�Strategy

84

PART 5

SEED PORTFOLIO AND IDENTIFIED PIPELINE

PART A: SEED PORTFOLIO

1. OVERVIEW OF THE SEED PORTFOLIO

Acquisition of the Seed Portfolio

The Seed Portfolio falls within the scope of the Company’s investment policy.

The Company via its wholly-owned subsidiary, Holdco, has entered into the Share Purchase Agreements

pursuant to which they have agreed to acquire, conditional on Admission, the Seed Portfolio. The

22 properties forming the Seed Portfolio comprise 658 PRS Homes and five commercial units with an

average apportioned purchase price of approximately £105,000 per PRS Home and an average tenant stay

of 4.8 years. Savills has valued the 22 properties in the Seed Portfolio with an aggregate market value of

£69.87 million, Savills has also provided an aggregate market value of the individual PRS Homes and five

commercial units forming the Seed Portfolio at £78.249 million. The Seed Portfolio will be acquired for an

aggregate purchase price (including the repayment of shareholder and third party debt) of £70.26 million

which represents the market value of each of the properties with the exception of Paper Mill Yard, Norwich,

where a premium of £390,000 to market value is to be paid to reflect the difference between market value

and break-up value of the property. The aggregate market rental value of the individual PRS Homes and five

commercial units in the Seed Portfolio is £4.856 million per annum and the Seed Portfolio delivers a gross

yield of 7 per cent. per annum.

The Seed Portfolio, with the exception of Celtic House in Derby (where contracts have been exchanged but

completion is conditional on the property achieving 80 per cent. occupancy at the target rent), is currently

under the management of the HRE Group and so the Investment Adviser has extensive knowledge of its

performance.

Following a series of intra-group transfers, detailed in paragraph 11 of Part 2 of this Prospectus, Holdco will

hold all of the Portfolio Assets directly and the SPVs will be liquidated.

Seed Portfolio Locations and Hub Management Model

Location of the 22 Properties forming the Seed Portfolio by market value

Source: Multifamily Housing REIT Plc

The Seed Portfolio is spread across 12 locations with some concentration by market value in Bristol

(18.8 per cent.), Lowestoft (14.4 per cent.) and Derby (19.8 per cent.). The locations are reflective of the

proprietary Hub management model that the Investment Adviser operates and are concentrated around the

key locations of these Hubs. Dedicated management representatives are on site in these Hubs with the

North

14%

South West

12%

East

27%

Midlands

47%

85

property management driven from the tenant contact upwards. The Seed Portfolio is located in and around

these Hubs ensuring an efficient management offering. As new properties are added through pipeline

acquisitions, they will continue to build on these and new concentrations, benefitting from the existing

infrastructure in place.

The Investment Adviser has selected these Hub locations based on an assessment of underpinning economic

drivers and opportunity for rental and capital growth and following experience of managing properties

within these locations.

The Properties in the Seed Portfolio

Most of the properties in the Seed Portfolio are low-rise Blocks of Apartments with a maximum of four

floors. The properties include purpose built residential properties, such as the properties in Walsall, and

converted buildings an example of which is the converted school in Leeds. The properties are of traditional

construction, often of brick. Building structures are carefully diligenced prior to acquisition.

On average, there are 30 PRS Homes per property, with the largest property containing 78 PRS Homes. The

majority of the properties are Blocks of Apartments containing one and two bedroom PRS Homes. In

addition, within the Seed Portfolio are eleven three bedroom Houses that form the Whitley Mead property,

located next to the Barnes Court property in Bristol.

The Seed Portfolio also contains five commercial properties located on the ground floors of two of the

freehold Blocks of Apartments to be acquired by the Company in Church Road, Bristol and Wensum Court,

Great Yarmouth. As at the date of this Prospectus, the commercial properties have an aggregate rental income

of approximately £61,000 per annum. The value of the five commercial units are included within the

valuation report in Part 8 of this Prospectus.

Six of the freehold Blocks comprising of the Seed Portfolio contain 181 apartments in aggregate which have

been let by previous owners on a long leasehold basis (for more than 50 years) to third parties. These

properties are not included within the total number of PRS Homes comprising of the Seed Portfolio.

146 of the long leasehold units are located in four Blocks of Apartments at Paper Mill Yard, Norwich. The

remaining 34 units at that property, which are not subject to long leases, are PRS Homes. The market value

of Paper Mill Yard, Norwich, is £5.92 million representing a gross yield of 5.1 per cent. per annum and a

20 per cent. discount to the aggregate break-up value of £7.425 million. This value differential is a result of

the proportionately high number of long leasehold units and strength of the individual unit sales market for

this property, and as a result is not comparable to any other property in the Seed Portfolio. In recognition of

the value differential and the potential for the Company to realise such value through the sale of the

individual units and ground rent portfolio, the Company has agreed to pay the sellers of Paper Mill Yard a

premium of £390,000 to the market value of the property.

Where long leasehold units exist, the Company will collect ground rent, plus contribution to maintenance

and service charges in respect of the properties.

Tenants and Rents in the Seed Portfolio

Tenants in the PRS Homes are private tenants. The properties in Lowestoft (Eastern Hub) provide market

rented accommodation for the over-55 years’ part of the market (no social or specialist support).

The average rent per PRS Home across the Seed Portfolio is £603 per calendar month. This makes the gross

rents within 30 per cent. of median salaries for 70 per cent. of the regional population.

The table overleaf gives some more information on the properties in the Seed Portfolio:

86

SU

MM

AR

Y O

F T

HE

PR

OP

ER

TIE

S C

OM

PR

ISIN

G T

HE

SE

ED

PO

RT

FO

LIO

M

ark

et

N

o o

f N

o o

f

re

nta

l A

vera

ge

Pass

ing

P

RS

c

om

mer

cial

A

cquis

itio

n v

alu

eG

ross

te

nancy

Ave

rage

Ren

t (p

er

Pro

per

ty D

escr

ipti

on

H

om

es unit

s pri

ce(£

) (

£)

(pa)

Yie

ld (

yrs)

*re

nt

(pcm

)*Ten

ure

annum

)(£

)Vaca

nt*

SP

V

Mid

lan

ds

Hu

b

5

2 0

4

,080,0

00

3

29,9

40

8.1

2

.73

Fre

ehold

300,7

47

3

4

8 0

4

,250,0

00

3

28,0

00

7.7

2

.94

316,7

40

1

12

0

1

,490,0

00

8

7,4

80

5.9

9

.36

Fre

ehold

77,9

80

1

48

0

5

,300,0

00

3

83,7

00

7.2

1

.00

Fre

ehold

378,6

60

0

Cel

tic

House

, D

erby

7

8 0

8

,500,0

00

6

13,8

00

7.2

–

Fre

ehold

–0

4

0 0

3

,700,0

00

2

84,7

00

7.7

–

Fre

ehold

278,8

80

0

33

0

2

,150,0

00

1

80,4

80

8.4

3

.39

Fre

ehold

174,2

40

0

Tota

l M

idla

nd

s 311

0

£

29,4

70,0

00

£2,2

08,1

00

7.5

3

.88

£1,2

48,3

67

5

Lonsd

ale

Court

,

Bir

min

gham

Purp

ose

buil

t blo

ck o

f 12 o

ne

and t

wo b

edro

om

apar

tmen

ts

locate

d

in

Harb

ou

rne,

Bir

min

gh

am

. A

cq

uir

ed

in

Oct

ober

2017.

One

bed

: £550

Tw

o b

ed:

£640

Har

wood

Low

esto

ft L

td

Sax

on H

ouse

,

Der

by

Rec

entl

y

conver

ted

Bock

of

48

ap

art

men

ts

locate

d

in

Der

by p

rovid

ing o

ne

and t

wo

bed

roo

m

acco

mm

od

ati

on

,

Acq

uir

ed i

n A

pri

l 2018.

One

bed

: £619

Tw

o b

ed:

£728

Har

wood G

opher

Ltd

Rec

entl

y

conver

ted

blo

ck

of

78

ap

art

men

ts

locate

d

in

Der

by p

rovid

ing o

ne

and t

wo

bed

room

ac

com

modat

ion.

To

be

acquir

ed i

n Q

4 2

018

One

bed

: £593

Tw

o b

ed:

£733

Har

wood S

quir

rel

Ltd

Taw

ny a

nd C

arder

Pla

ce,

Can

nock

Tw

o r

ecen

tly c

onver

ted b

lock

s

of

on

e an

d

two

b

edro

om

ap

art

men

ts

in

Can

no

ck

.

Acq

uir

edin

August

2018

One

bed

: £526

Tw

o b

ed:

£623

Har

wood G

opher

Ltd

Shad

e M

ill/

Pri

nt

Work

s, L

eek

33

o

ne

an

d

two

b

ed

roo

m

apar

tmen

ts

in

two

conver

ted

blo

ck

s lo

cate

d

in

Leek

.

Acq

uir

ed i

n A

pri

l 2017.

One

bed

: £400

Tw

o b

ed:

£443

Har

wood S

quir

rel

Ltd

On

e b

ed:

£519

Tw

o b

ed:

£608

One

bed

: £453

Tw

o b

ed:

£484

Purp

ose

buil

t blo

ck o

f 52 u

nit

s

in W

alsa

ll p

rovid

ing o

ne

and

two

b

ed

roo

m

ap

art

men

ts.

Acq

uir

ed i

nO

ctober

2015.

Avonm

ore

Court

,

Wal

sall

Bas

s R

eal

Est

ate

9

Ltd

One

bed

: £493

Tw

o b

ed:

£555

48

o

ne

an

d

two

b

ed

roo

m

apar

tmen

ts w

ithin

a c

onver

ted

mil

l in

W

alsa

ll.

Acq

uir

ed

in

Oct

ober

2015.

Sm

ith’s

Flo

ur

Mil

l,

Wal

sall

Bas

s R

eal

Est

ate

18 L

td

Long

leas

ehold

87

* A

s at

30 A

pri

l 2

018

M

ark

et

N

o o

f N

o o

f

re

nta

l A

vera

ge

Pass

ing

P

RS

c

om

mer

cial

A

cquis

itio

n v

alu

eG

ross

te

nancy

Ave

rage

Ren

t (p

er

Pro

per

ty D

escr

ipti

on

H

om

es unit

s pri

ce(£

) (

£)

(pa)

Yie

ld (

yrs)

*re

nt

(pcm

)*Ten

ure

annum

)(£

)Vaca

nt*

SP

V

Sou

th W

est

Hu

b

1

5 3

2

,600,0

00

1

67,6

00

6.5

2

.93

Fre

ehold

157,2

80

0

3

0 0

4

,600,0

00

2

70,0

00

5.9

2

.89

Tw

o b

ed:

£694

Fre

ehold

249,9

00

2

1

6 0

2

,600,0

00

1

54,0

80

5.9

3

.80

Tw

o b

ed:

£850

Fre

ehold

138,1

20

1

1

6 0

3

,300,0

00

1

68,2

40

5.1

6

.31

Tw

o b

ed:

£807

Fre

ehold

163,2

00

0

Tota

l S

ou

th W

est

7

7 3

£

13,1

00,0

00

£

759,9

20

5.8

3

.98

£708,5

00

3

Bas

s R

eal

Est

ate

2

Ltd

One

bed

: £583

Tw

o b

ed:

£696

Purp

ose

buil

t blo

ck o

f 15 o

ne

and t

wo b

ed f

lats

in a

suburb

of

Bri

stol.

Ass

et incl

udes

thre

e

com

mer

cial

u

nit

s at

g

rou

nd

flo

or.

A

cq

uir

ed

in

Octo

ber

2015.

Churc

h R

oad

,

Bri

stol

30 p

urp

ose

buil

t tw

o b

edro

om

flat

s in

the

Bri

stol

suburb

of

Sto

ke

Gif

ford

. A

cq

uir

ed

in

Apri

l 2017.

Bar

nes

Court

,

Bri

stol

16 p

urp

ose

buil

t tw

o b

edro

om

flat

s in

the

Bri

stol

suburb

of

Hen

bu

ry.

Acq

uir

ed

in

Ap

ril

2017.

Sev

ern H

ouse

,

Bri

stol

16 t

erra

ced a

nd s

emi-

det

ached

ho

use

s p

rov

idin

g

two

an

d

thre

e bed

room

acc

om

modat

ion

in t

he

Bri

stol

suburb

of

Sto

ke

Gif

ford

. L

oca

ted

adja

cent

to

the

Barn

es

Co

urt

ass

et.

Acq

uir

ed i

n A

pri

l 2017.

Whit

ley

Mea

d/C

hurc

h

Road

, B

rist

ol

On

e b

ed:

£583

Tw

o b

ed:

£752

Har

wood B

rist

ol

Ltd

Har

wood B

rist

ol

Ltd

Har

wood B

rist

ol

Ltd

88

* A

s at

30 A

pri

l 2018

M

ark

et

N

o o

f N

o o

f

re

nta

l A

vera

ge

Pass

ing

P

RS

c

om

mer

cial

A

cquis

itio

n v

alu

e G

ross

te

nancy

Ave

rage

Ren

t (p

er

Pro

per

ty D

escr

ipti

on

H

om

es unit

s pri

ce(£

) (

£)

(pa)

Yie

ld (

yrs)

*re

nt

(pcm

)*Ten

ure

annum

)(£

)Vaca

nt*

SP

V

East

ern

Hu

b

3

4 0

6

,310,0

00

3

01,7

50

5.1

2

.53

Fre

ehold

298,9

80

3

2

3 0

1

,480,0

00

1

22,0

40

8.3

7

.24

Fre

ehold

110,1

00

2

1

8 0

1

,475,0

00

1

14,3

60

7.8

8

.28

Fre

ehold

107,8

80

0

2

0 0

1

,525,0

00

1

25,7

60

8.3

7

.50

Fre

ehold

120,0

00

0

1

2 0

885,0

00

7

5,2

00

8.5

7

.25

Fre

ehold

74,1

00

0

8

2

835,0

00

7

2,3

00

8.7

3

.14

Fre

ehold

64,3

56

1

Cro

wn M

eadow

Court

, L

ow

esto

ft

Purp

ose

buil

t blo

ck l

oca

ted i

n

Low

esto

ft p

rovid

ing 2

3 u

nit

s

and

one

and

two

bed

room

s.

Ass

et i

s te

nan

t ag

e re

stri

cted

to 55+

. A

cquir

ed in

O

ctober

2017.

One

bed

: £378

Tw

o b

ed:

£450

Har

wood

Low

esto

ft L

td

Her

ivan

Clo

se,

Low

esto

ft

18

p

urp

ose

b

uil

t re

tire

men

t

bungal

ow

s pro

vid

ing o

ne

and

two b

edro

om

acc

om

modat

ion.

Loca

ted i

n L

ow

esto

ft. A

sset

is

tenan

t ag

e re

stri

cted

to

55+

.

Acq

uir

ed i

n O

ctober

2017

One

bed

: £494

Tw

o b

ed:

£520

Har

wood

Low

esto

ft L

td

Her

ivan

Gar

den

s,

Low

esto

ft

20

p

urp

ose

b

uil

t re

tire

men

t

bungal

ow

s pro

vid

ing o

ne

and

two b

edro

om

acc

om

modat

ion.

Loca

ted i

n L

ow

esto

ft. A

sset

is

tenan

t ag

e re

stri

cted

to

55+

.

Acq

uir

ed i

n O

ctober

2017

One

bed

: £498

Tw

o b

ed:

£512

Har

wood

Low

esto

ft L

td

Sta

fford

Court

,

Low

esto

ft

Purp

ose

buil

t blo

ck l

oca

ted i

n

Lo

west

oft

p

rov

idin

g

12

apar

tmen

ts

of

on

e an

d

two

bed

room

s. A

sset

is

tenan

t ag

e

rest

rict

ed t

o 5

5+

. A

cquir

ed i

n

Oct

ober

2017.

One

bed

: £486

Tw

o b

ed:

£602

Har

wood

Low

esto

ft L

td

Wen

sum

Court

,

Gre

at Y

arm

outh

Purp

ose

buil

t blo

ck l

oca

ted i

n

Gre

at

Yar

mouth

pro

vid

ing

8

apar

tmen

ts

of

on

e an

d

two

bed

roo

ms.

A

sset

in

clu

des

2

com

mer

cial

u

nit

s at

g

rou

nd

flo

or.

A

sset

is

ten

an

t ag

e

rest

rict

ed t

o 5

5+

. A

cquir

ed i

n

Oct

ober

2017

One

bed

: £398

Tw

o b

ed:

£487

Har

wood

Low

esto

ft L

td

Pap

er M

ill

Yar

d,

Norw

ich

Pu

rpo

se

bu

ilt

an

d

part

co

nv

ers

ion

d

ev

elo

pm

en

t in

centr

al N

orw

ich.

Pro

vid

es o

ne

an

d

two

b

ed

roo

m

acco

mm

od

atio

n

Acq

uir

ed

in

Oct

ober

2015.

One

bed

: £665

Tw

o b

ed:

£753

Bas

s R

eal

Est

ate

4

Ltd

89

* A

s at

30 A

pri

l 2

018

M

ark

et

N

o o

f N

o o

f

re

nta

l A

vera

ge

Pass

ing

P

RS

c

om

mer

cial

A

cquis

itio

n v

alu

e G

ross

te

nancy

Ave

rage

Ren

t (p

er

Pro

per

ty D

escr

ipti

on

H

om

es unit

s pri

ce(£

) (

£)

(pa)

Yie

ld (

yrs)

*re

nt

(pcm

)*Ten

ure

annum

)(£

)Vaca

nt*

SP

V

1

8 0

1

,420,0

00

1

13,6

40

8.0

6

.31

Tw

o b

ed:

£448

Fre

ehold

96,8

40

2

44

0

3

,310,0

00

2

48,2

20

7.5

7

.5F

reeh

old

215,2

80

5

Tota

l E

ast

ern

1

77

2

£

17,2

40,0

00

£1,1

73,2

60

7.0

6

.16

£1,0

87,5

36

13

Nort

h a

nd

Nort

h W

est

1

2 0

2

,200,0

00

1

08,0

00

4.9

5

.00

Tw

o b

ed:

£599

Fre

ehold

86,2

38

2

5

7 0

6

,150,0

00

4

53,6

00

7.4

2

.00

Fre

ehold

402,6

00

6

2

4 0

2

,100,0

00

1

54,0

80

7.3

4

.13

Tw

o b

ed:

£491

Fre

ehold

141,4

80

1

Tota

l N

ort

h

an

d N

ort

h W

est

9

3 0

£

10,4

50,0

00

£

715,6

80

6.5

3

.71

£630,3

18

9

Tota

l 6

58

5

£

70,2

60,0

00

£3,6

74,7

22

7.0

4

.79

£3,6

74,7

22

30

Wen

sum

Gar

den

s,

Gre

at Y

arm

outh

Purp

ose

buil

t blo

ck l

oca

ted i

n

Gre

at Y

arm

outh

pro

vid

ing 1

8

two

b

ed

roo

m

ap

art

men

ts.

Ass

et i

s te

nan

t ag

e re

stri

cted

to 55+

. A

cquir

ed in

O

ctober

2017.

Har

wood

Low

esto

ft L

td

Wil

liam

Tubby

House

, L

ow

esto

ft

Co

nv

ert

ed

m

ill

bu

ild

ing

in

Lo

west

oft

p

rov

idin

g

44

apar

tmen

ts

of

on

e an

d

two

bed

room

s. A

sset

is

tenan

t ag

e

rest

rict

ed

to

55

+.

Acq

uir

ed

Oct

ober

2017

One

bed

: £410

Tw

o b

ed:

£725

Har

wood

Low

esto

ft L

td

On

e b

ed:

£502

Tw

o b

ed:

£569

Mel

vil

le/P

rest

bury

Court

, M

anch

este

r

12

two

bed

s fl

ats

wit

hin

2

purp

ose

buil

t blo

cks

loca

ted i

n

Did

sbu

ry,

Man

ch

est

er.

Acq

uir

ed i

n O

ctober

2017.

Har

wood

Low

esto

ft L

td

Old

Sch

ool

Loft

s,

Lee

ds

Co

nv

ert

ed

fo

rmer

sch

oo

l

pro

vid

ing

5

7

ap

art

men

ts

mo

stly

o

f o

ne

an

d

two

bed

room

s. L

oca

ted i

n a

Lee

ds

sub

urb

. A

cqu

ired

N

ov

emb

er

2017.

One

bed

: £589

Tw

o b

ed:

£711

Har

wood G

opher

Ltd

Bee

ch G

rove,

Pre

ston

Purp

ose

buil

t lo

ck o

f 24 t

wo

bed

roo

m

ap

art

men

ts

in

the

cen

tre

of

Pre

sto

n.

Acq

uir

ed

Feb

ruar

y 2

018.

On

e b

ed:

£589

Tw

o b

ed:

£626

On

e b

ed:

£520

Tw

o b

ed:

£626

Har

wood G

opher

Ltd

90

* A

s at

30 A

pri

l 2018

2. OCCUPANCY LEVELS AND OPERATIONAL COST

The properties in the Seed Portfolio currently operate with an average occupancy rate of 95 per cent. and the

Investment Adviser believes that there is an opportunity to further drive occupancy. The average tenancy

length on the portfolio is in excess of 4.79 years.

As at the date of this Prospectus, the HRE Group oversees the running of the Seed Portfolio and the Property

Manager has been, and will continue to be, retained to manage the Seed Portfolio.

The average rent of a one bedroom PRS Home is £520 per month and a two bedroom PRS Home £626 per

month.

On a typical acquisition at an expected gross yield of 7.5 per cent., operating costs would be expected to be

around 30 per cent. providing a net property yield of 5.25 per cent. as follows:

ERV

Property Cost Breakdown (per cent.) Comment

16.0

Maintenance and void costs 5.0

Tenancy Management Costs 9.0 Fixed fees agreed upfront with Managing Agent ––––––Total Running Costs 30.0

––––––The Investment Adviser believes that there is an opportunity to further reduce running costs to around

26 per cent. with the benefits of scale and is already seeing this in certain Hubs.

3. CASE STUDY

Barnes Court, Bristol

3.1 Asset Overview

Barnes Court, Bristol (the “Property”) consists of two purpose built Blocks of Apartments in a

northern suburb of Bristol consisting of 30 two bedroom flats with living room, kitchen-diner,

bathroom and a spacious double and single bedroom. The facilities include security entrance and

communal off road parking.

As illustrated by the maps below, Barnes Court is located adjacent to Bristol Parkway train station (on

the main London to South Wales railway line) and other good commuter links including the M4 and

M5 motorways. Stoke Gifford is in the northern suburbs of Bristol in South Gloucestershire. Local

businesses include the Bristol offices of Aviva (almost adjacent to the site), Hewlett Packard and the

University of the West of England.

General provisions for maintenance of common

parts and grounds, building insurance and block

management fees. Targeted funds for specific

investment including boilers plus reserve for future

works

Planned Asset Management Budget

Capex and sinking fund

Cleaning, minor repairs, replacement appliances,

council tax and insurance on void units

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Location of Barnes Court in the Bristol area

Source: Google Maps

Proximity of Barnes Court to Bristol Parkway train station

Source: Google Maps

3.2 Income Overview

• Over the last 12 months, occupancy has been on average 98 per cent., at its lowest 93 per cent.

for one month with two vacant units out of thirty on site.

• Average turnover time at the Property was 25 days, however over the last 6 months this has

reduced to 14.5 days.

• Average rent grew from £730 per month to £744 per month over the last 12 months.

• Headline rents grew by 3 per cent. over the period.

• Arrears were extremely low; there was only one instance of arrears over 30 days during the last

12 months, and this was cleared by the second month.

• There were no bad debts in 12 months.

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3.3 Running Costs

The Investment Adviser works with the Property Manager to respond to tenants, manage queries and

maintain the Property. The dedicated and funded hub manager oversees the lettings and maintenance

process at the Property. Over the last 12 months, the running costs of the Property at Barnes Court

have been:

Property Cost Breakdown ERV (per cent.)

Planned Asset Management Budget Capex and sinking fund 12.6

Maintenance and void costs 6.2

Tenancy Management Costs 10 ––––––––Total Running Cost 28.8

––––––––Tenancy costs are projected to decrease going forwards due to a negotiated step down in fees with

scale with the Property Manager.

3.4 Maintaining Assets and Provisioning for the Future

The Investment Adviser pursues a strategy of a programme of ongoing lifecycle reinvestment in the

properties. This involves investment through the annual asset management budget and maintenance,

with a sinking fund for longer term projects.

Assessing the works required starts at the acquisition and underwriting stage. From the acquisition

due diligence, the Investment Adviser determined that some of the windows on the Property should

be replaced on a phased basis. As such, funding of £30,000 was set aside upon purchase for this

project.

In determining the programme for reinvestment, a number of different factors are taken into

consideration for example; age of the building, mechanical and electrical components on site and sizes

of common areas. At the property at Barnes Court, there are no lifts with walk-up access only which

reduces the budget required for the maintenance and upkeep of the property. External areas are simple

grass or pavings and the buildings have pitched roofs in good repair on acquisition.

A lifecycle analysis is typically undertaken for a projected 10 year programme and assessed on an

annual basis. A typical programme sees the following structure:

Sinking Fund Accrual for large scale projectsExternal wall repair and re-pointing

Roof tile/flashings repair & replacementPhased Unit Redecoration (ongoing)Common Areas Internal Redecoration

Phased Unit Redecoration (ongoing)Sinking Fund Accrual for large scale projects

Phased Unit Redecoration (ongoing) Roof tile/flashings repair & replacement Sinking Fund Accrual for large scale projects

Phased Unit Redecoration (ongoing) Roof tile/flashings repair & replacement Sinking Fund Accrual for large scale projects

Phased Unit Redecoration (ongoing) Roof tile/flashings repair & replacement

Sinking Fund Accrual for large scale projects

Phased Unit Redecoration (ongoing)External wall repair and re-pointing


Phased Unit Redecoration (ongoing)Sinking Fund Accrual for large scale projects

Common Areas Internal Redecoration Phased Unit Redecoration (ongoing)


Common Areas Internal Redecoration Phased Unit Redecoration (ongoing) Roof tile/flashings repair & replacementSinking Fund Accrual for large scale projects

Common Areas Internal Redecoration Phased Unit Redecoration (ongoing)


Key LifecycleInvestment Events

(Excludes regularmaintenance items)

Year 10

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

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The reinvestment programme at the Property is as follows:

Regularity

Roof repairs Annual

External wall repairs/redecoration 5 years

Windows and door repairs Annual

Common Areas:

Renew floor coverings 5 years

Redecorations 3 years

Apartment finishes:

Internal redecoration (4 units) Annual

Upgrading kitchens/bathrooms (2 units) Annual

Mechanical and Electrical Annual

External Landscaping 3 years

Sinking fund accrual Annual

Annual spend as a percentage of rent 9-11%

This progressive reinvestment results in an asset that is continually appropriate for attracting and

retaining tenants.

3.5 Asset Management Opportunities

• The Property has the benefit of planning permission to add 12 additional units on site. The

expected gross development value of these new units is £2 million and the gross yield on cost

is estimated to be 9 per cent.

• The additional units on site will provide a more efficient use of the space on site plus the

opportunity to include new facilities for tenants on site. Depending on tenant appetite, this

could include a gym or a nursery.

Current site plan: Site plan with new units:

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Part B: Identified Pipeline

Assets have already been, and continue to be, identified through the Investment Adviser’s and its affiliates’

extensive contacts and relationships in the UK real estate sector which it has by virtue of its position as a

member of the HRE Group. The Investment Adviser will use an internal proprietary database of market

activity and its contacts to monitor relevant acquisition opportunities in the near term. The Identified Pipeline

comprises Property Assets and portfolios of Property Assets with an estimated value of approximately

£422 million, comprising 4,277 PRS Homes across multiple transactions, ranging from £2 million to

£80 million in aggregate.

The vendors of the Identified Pipeline are all private companies/developers with the exception of one lender

sale. Vendors are motivated to sell for a variety of reasons including capital recycling, retirement, portfolio

rationalisation and strategy shift. The expanding focus on PRS as an institutional asset class is driving

increasing liquidity and transactional volume in the market.

The majority of the Identified Pipeline has been sourced through off-market, private sales processes or early

approaches from agents who are aware that the HRE Group is a proven and reliable acquirer of similar

assets. In all instances, the vendors or real estate brokers are known to the Senior Managers, some have

previously transacted with the HRE Group, whilst others are Housing Associations, banks (or their agents),

and property managers of nearby assets managed by the HRE Group who are familiar with the Investment

Adviser’s intended activities.

The Investment Adviser has successfully purchased multiple times from a Manchester based specialist

developer over the last 12 months and on this basis has been given an off-market opportunity to acquire

further stock of up to 1,000 units in target locations in the 12 months following Admission. The Investment

Adviser is in similar discussions with two alternative vendors to secure access to further income producing

stock. Access to these assets has been gained on an off-market basis through the Investment Adviser’s

network. Where properties are recently refurbished or fitted out, they are only purchased when completed

and approximately 95 per cent. let. As such there will be no development, funding and letting risk in line

with the Company’s investment policy.

The Identified Pipeline is spread across England with locations focussed around the management Hubs and

capitalising on the existing infrastructure in place. This includes locations such as Birmingham, Nuneaton,

Burton-on-Trent and Derby in the Midlands Hub and Norwich and Norfolk in the Eastern Hub.

The locations of the Identified Pipeline assets are:

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The Property Assets in the Identified Pipeline range in size but where assets are in Blocks of Apartments

these have on average 41 PRS Homes per Block. Where a portfolio is under consideration, this includes

multiple assets that have been assessed by the Investment Adviser within the target Block size. The Identified

Pipeline includes certain Houses that the Investment Adviser has assessed are in sufficient concentrations to

achieve similar efficiencies to Block concentrations and are located within the vicinity of a property

management Hub.

The estimated average ERV yield across the Identified Pipeline is 8.14 per cent. Rents are at target levels

with expected rents of £500pcm in Leicester, £650pcm in a suburb of Birmingham and £750pcm in Norwich.

The majority of the Block of Apartments and Collections of Houses forming the Identified Pipeline have

been inspected by the Investment Adviser and initial due diligence undertaken to establish suitability. In

respect of the Identified Pipeline, approximately two thirds are at an advanced stage of negotiation.

Expected

PRS Number of Purchase Gross Yield

Portfolio Homes Blocks Price (£) (per cent.) Description

Portfolio 1 793 14 80,000,000 8.50

Portfolio 2 698 45 68,000,000 7.00

Portfolio 3 672 5 60,000,000 7.90

Portfolio 4 340 4 46,000,000 7.25

Portfolio 5 306 27,500,000 10.00

Portfolio 6 199 1 25,000,000 7.00

Portfolio 7 256 5 21,000,000 8.00

Portfolio 8 187 15 18,655,000 8.20

Portfolio 9 163 3 12,750,000 7.50

Locations across the North of England.

Off market opportunity to acquire

newly developed stock. Average rents

of approximately £500pcm. Heads of

terms have been agreed.

Locations across Birmingham. Off

market opportunity to acquire a broad

platform of apartments and houses with

an average rent of £468 pcm.

Locations across the North of England

and the Midlands. Average rents £500-

£600pcm. Off market opportunity to

acquire newly developed stock plus

additional development pipeline.

Newly developed assets in Midlands,

Northwest and southwest. Average

rents £750-800pcm. Off market

opportunity with known vendor from

whom HRE has previously purchased.

Purpose built and converted apartments

and Houses in an East Midlands town.

Includes ancillary commercial income.

Average rent of approximately

£500pcm.

Apartments

and Collection

of Houses

Recently converted Block in Norwich

providing one and two bedroom

apartments. Average rent of

approximately 750pcm

Five purpose built Blocks around

Bradford providing range of one and

two bed accommodation. Average rent

of approximately £550pcm

Purpose built and converted Blocks

providing one and two bedroom

apartments around Manchester

periphery. Average rent of

approximately £600pcm

Three purpose built Blocks in

Leicester. Average rent of

approximately £500pcm. Off market

introduction.

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Expected

PRS Number of Purchase Gross Yield

Portfolio Homes Blocks Price (£) (per cent.) Description

Portfolio 10 128 12,150,000 Net 9.8

Portfolio 11 111 10,000,000 7.50

Portfolio 12 78 2 9,500,000 7.00

Portfolio 13 77 1 9,500,000 7.25

Portfolio 14 90 1 7,250,000 8.50

Portfolio 15 35 1 3,700,000 8.00

Portfolio 16 48 1 3,500,000 8.50

Portfolio 17 35 1 2,600,000 8.00

Portfolio 18 28 1 2,350,000 9.10

Portfolio 19 33 1 2,300,000 8.50

––––––– –––––– ––––––––––– –––––––Total 4,277 104 £421,755,000 8.14

––––––– –––––– ––––––––––– –––––––The Identified Pipeline is a summary of suitable transactions that the Company is monitoring at the time of

publication of this Prospectus. The nature of the market, in particular for the smaller portfolios, is that it is

faster moving compared to the commercial real estate sector, and as such the Identified Pipeline will be

subject to change, potentially over short timescales for a number of reasons. In addition, whilst the

Investment Adviser has undertaken initial analysis of the Identified Pipeline, each portfolio is subject to

satisfactory completion of negotiations and due diligence which will include, amongst other things,

inspections, a formal valuation and legal title due diligence. Whilst the Company has not entered into any

agreements (other than those relating to heads of terms and exclusivity) with respect to any of these

opportunities and there can be no certainty that the Company will complete any of these acquisitions, the

Investment Adviser is confident that it will be able to deploy the remaining proceeds from the Issue within

12 months following Admission. If the Company proceeds to acquire any of these assets, it would finance

such acquisitions using the remaining proceeds of the Issue, debt finance and/or the issue of new Ordinary

Shares.

Houses in and around Birmingham. Off

market introduction. Heads of terms

have been agreed.

Collection of

Houses

Collection of Houses in Norfolk within

easy distance of Norwich. Average

rents of approximately £600pcm. In

exclusive off market discussions.

Collection of

Houses

Recently converted Blocks providing

one and two bedroom accommodation

in two Midlands locations. Average

rent of approximately £700pcm

Newly built Block of one and two

bedroom apartments in Derby. Average

rent £700pcm. Off market introduction.

Block in Burton. Average rents of

approximately £550-600pcm. Off

market introduction.

New conversion of one and two

bedroom apartments in Birmingham

suburb. Average rent of approximately

£700pcm

Block in Bradford. Off market

discussion. Average rent approximately

£500pcm.

Recently converted Block of one

bedroom apartments in Nuneaton.

Average rent approximately £500pcm.

Heads of terms have been agreed.

Recently converted Block of one and

two bedroom apartments in the West

Midlands. Average rent of £595pcm.

Recently refurbished Block in

Leicester providing one and two

bedroom apartments. Average rent of

approximately £500pcm

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PART 6

DIRECTORS, MANAGEMENT AND ADMINISTRATION

1. DIRECTORS

The Board comprises four directors, all of whom are non-executive and independent of the AIFM and the

Investment Adviser, with the exception of Jonathan Whittingham who is a director and member of the senior

management team of the Investment Adviser. The Directors are responsible for ensuring compliance with

the Company’s investment policy and the overall supervision of the Company. The Directors will meet at

least four times per year. The Directors are as follows:

1.1 Nick Jopling, Non-Executive Chairman

Nick Jopling has approximately 25 years’ experience in the residential property sector. He was

Executive Director of Grainger Plc until September 2017. He was previously with CB Richard Ellis

where he was Head of Residential and with Allsop LLP where he was Managing Director of the

residential investment business. He was a founder and Chairman of the Urban Land Institute’s UK

Residential Council and was a Member of Sir Adrian Montague’s committee that reviewed the

Barriers to Institutional Investment in Private Rented Homes in 2012.

1.2 David Lis, Non-Executive Director

David Lis was CIO of Equities and Multi-Assets at Aviva Investors, the global asset management

business with £267 billion AUM until he retired in 2016. Prior to this, he was Head of Equities at

Aviva Investors, with overall responsibility for £33 billion of active and passive funds across all major

markets and direct day-to-day responsibility for the active management of the £5.5 billion

Institutional UK Equity Fund, £1.1 billion Global Income Fund, £200 million Aviva Investors UK

Growth OEIC and £100 million UK Smaller Companies OEIC.

Before joining Norwich Union (now Aviva) in 1997, David spent a number of years as Head of

Investor Relations at Ludgate Communications, advising a number of major UK and international

companies on their financial communications. Earlier in his career, he co-founded Windsor

Investment Management, and also spent a number of years as a fund manager at both Morgan Grenfell

and J Rothschild Investment Management.

1.3 Clive Standish, Non-Executive Director

Clive Standish’s professional career began with N M Rothschild & Sons Ltd in London. In 1979 he

was appointed a partner with Dominguez & Barry in Australia and became a Member of the

Melbourne Stock Exchange in 1980. He was the Founding Executive Director at Dominguez Barry

Samuel Montagu Limited and subsequently Head of Capital Markets and Managing Director until

1991 and then CEO of SBC Warburg Dillon Read Australia.

In 1998 he was appointed Chairman and CEO for Asia Pacific UBS AG and Member of the Group

Managing Board and subsequently Member of the Group Executive Board. In 2003 he moved to

Zurich as Group Chief Financial Officer UBS AG until 2007 when he retired from the Board of

UBS AG.

Clive joined the charity Mentor as a Trustee in 2015.

1.4 Jonathan Whittingham, Non-Executive Director

Jonathan Whittingham founded the HRE Group in 2009 to aggregate the real estate investment

activities of the Harwood Capital Management Group. Jonathan is responsible for overall strategy of

the real estate function with a primary role of sourcing investment opportunities. Jonathan also takes

on direct responsibility for all investor relations.

98

Jonathan has sourced and transacted on in excess of £1.5 billion of real estate opportunities, including

£450 million of direct residential investments, with a specific focus historically on active value.

Jonathan is a main board Director of Harwood Capital Management and also a member of the Urban

Land Institute Midland Executive Committee (“ULI”). The ULI is the largest network of cross-

disciplinary real estate and land use experts which provides leadership in the responsible use of land

and in creating and sustaining thriving communities.

2. CORPORATE GOVERNANCE

The Company will from Admission, comply with all of the provisions of the UK Corporate Governance

Code issued by the Financial Reporting Council in April 2016 (the “Code”) save as set out below.

The Board has considered the principles and recommendations of the Association of Investment Companies

Code of Corporate Governance (the “AIC Code”) by reference to the AIC Corporate Governance Guide for

Investment Companies (the “AIC Guide”). The AIC Code, as explained by the AIC Guide, addresses all the

principles set out in the Code, as well as setting out additional principles and recommendations on issues that

are of specific relevance to the Company as an investment company. It is the intention of the Directors that

the Company will become a member of the Association of Investment Companies and will comply with the

recommendations of the AIC Code which it considers will provide better information to Shareholders.

The Financial Reporting Council (the “FRC”) the UK’s independent regulator for corporate reporting and

governance responsible for the Code, has endorsed the AIC Code and the AIC Guide. The terms of the FRC’s

endorsement mean that AIC members who report against the AIC Code and the AIC Guide meet fully their

obligations under the Code.

With effect from Admission, the Company intends to comply with the recommendations of the AIC Code

and the relevant provisions of the Code other than those relating to:

(a) the role of the chief executive;

(b) executive directors’ remuneration; and

(c) the need for an internal audit function.

For the reasons set out in the AIC Guide, the Board considers these provisions are not relevant to the position

of the Company, being an externally managed investment company.

2.1 Independence

The Board consists solely of non-executive Directors with Nick Jopling as Chairman. Save for

Jonathan Whittingham, all of the Directors are independent of the AIFM and the Investment Adviser

and any other company in the same group of companies as the AIFM or the Investment Adviser. The

Board’s policy on tenure is that continuity and experience are considered to add significantly to the

strength of the Board and, as such, no limit on the overall length of service of any of the Company’s

Directors, including the Chairman, has been imposed. New Directors will receive an induction from

the AIFM and the Company Secretary on joining the Board, and all Directors will receive other

relevant training as necessary.

2.2 Senior independent director

In view of its non-executive nature and the requirement of the Articles that all Directors stand for

re-election at each annual general meeting of the Company, the Board considers that it is not

appropriate for a senior independent director to be appointed.

2.3 Appointment, re-election and remuneration of Directors

Directors are selected and appointed by the Board as a whole. There is no separate nomination

committee as the Board is considered small relative to listed trading companies. The Directors are

therefore responsible for reviewing the size, structure and skills of the Board and considering whether

99

any changes are required or new appointments are necessary to meet the requirements of the

Company’s business or to maintain a balanced Board.

The Articles require that Directors submit themselves for re-election at each annual general meeting.

Further details are given at paragraph 4 of this Part 11 of this Prospectus.

The Company does not have a separate remuneration committee as the Board as a whole fulfils the

function of a remuneration committee.

2.4 Board and Directors’ performance appraisal

The performance of the Board committees and individual Directors will be evaluated through an

assessment process, led by the Chairman. The performance of the Chairman will be evaluated by the

other Directors, with the exception of Jonathan Whittingham.

2.5 The audit committee

David Lis is the chairman of the Company’s audit committee, which comprises the full Board other

than Jonathan Whittingham. In discharging its responsibilities, the audit committee will review the

annual and half yearly accounts, the system of internal controls, and the terms of appointment and

remuneration of the auditor. It is also the forum through which the auditor reports to the Board. The

audit committee is expected to meet at least twice a year. The objectivity of the auditor will be

reviewed by the audit committee, which will also review the terms under which the external auditor

is appointed to perform non-audit services. The audit committee will review the scope and results of

the audit, its cost effectiveness and the independence and objectivity of the auditor, with particular

regard to non-audit fees.

2.6 The management engagement committee

Nick Jopling is the chairman of the Company’s management engagement committee, which

comprises the full Board other than Jonathan Whittingham. The management engagement committee

will review the appropriateness of the AIFM’s, the Investment Adviser’s and the Property Manager’s

continuing appointment, together with the terms and conditions thereof on a regular basis.

2.7 Share dealing code

The Board has agreed to adopt and implement a dealing code for Directors and other persons

discharging managerial responsibility (as such term is defined in the Market Abuse Regulation)

(“PDMRs”). Its purpose is to ensure that the Directors, persons discharging managerial responsibility

and their closely associated persons do not abuse (and do not place themselves under suspicion of

having abused) inside information (as such term is defined in the Market Abuse Regulation) they may

have or be thought to have, in particular during periods leading up to the announcement of the

Company’s results. The Investment Adviser and its senior personnel discharging managerial

responsibilities (which shall include the Senior Managers) have volunteered to be treated as PDMRs

for the purpose of the Company’s share dealing code and have agreed to comply with the same,

whether or not they de facto constitute PDMRs for the purpose of the Market Abuse Regulation.

2.8 Fair treatment of investors

In addition, the Directors have certain statutory duties with which they must comply. These include a

duty upon each Director to act in the way he or she considers, in good faith, would be most likely to

promote the success of the Company for the benefit of its Shareholders as a whole.

The AIFM and the Investment Adviser will maintain conflict of interest policies to avoid and manage

any conflicts of interest that may arise between themselves and the Company.

No Shareholder has a right to obtain preferential treatment in relation to their investment in the

Company and the Company will not give preferential treatment to any Shareholder.

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3. INVESTMENT MANAGEMENT ARRANGEMENTS

3.1 AIFM

The Company has appointed the AIFM as its alternative investment fund manager pursuant to the

AIFM Agreement, the terms of which are set out in more detail below and in Part 11 of this

Prospectus.

The AIFM’s duties under the AIFM Agreement with regard to discretionary portfolio management

include, amongst other things, complying with the Company’s investment policy and keeping the

Group’s assets under review.

The AIFM is a private limited company and was incorporated in England and Wales on 18 September

2014 with registered number 09224491. The AIFM is an alternative investment fund manager and is

authorised and regulated by the FCA (reference number 648953).

3.2 Investment Adviser

The Investment Adviser has been appointed by the AIFM to act as investment adviser to the AIFMpursuant to the terms of the Investment Advisory Agreement. The Investment Adviser is appointed toadvise the AIFM and the Company on a day-to-day basis in accordance with the investment policyand to recommend and give advice to the AIFM and the Company in relation to the investments of theCompany. The Investment Adviser has been appointed by AIFM as its appointed representative.

The Investment Adviser will be responsible for advising the AIFM on a day-to-day basis in

accordance with the Company’s investment policy.

It is the Investment Adviser’s intention to become authorised by the FCA as a full-scope alternative

investment fund manager and then, subject to Board approval, be directly appointed as alternative

investment fund manager of the Company within 12 months following Admission and the AIFM shall

resign as the alternative investment fund manager of the Company in such circumstances. There is no

guarantee that the Investment Adviser will become authorised by the FCA as a full-scope alternative

investment fund manager.

The Investment Adviser is not currently authorised or regulated by the FCA but is an appointed

representative of the AIFM.

Under the terms of the Investment Advisory Agreement, the Investment Adviser may transact on the

Company’s behalf in relation to the PRS Homes in accordance with the Company’s investment

objective and investment policy.

The Investment Adviser’s team comprises three key personnel responsible for advising the AIFM in

relation to the Portfolio Assets:

Jonathan Whittingham, CEO

Jonathan is a Director of the Company. Paragraph 1.4 of this Part 6 contains further details of his

experience.

Peter McCluskey

Peter is a Chartered Surveyor with 25 years’ private sector experience joining the HRE Group in 2010.

He is the Director responsible for acquisition diligence, asset management and sales process,

including the appointment and management of external group advisers.

His seven years at the HRE Group has included oversight on transactions of around £1 billion,

including 2,450 residential homes since 2014. Prior to joining the HRE Group, Peter was joint

manager of a £500 million private property fund and a director at Savills Plc specialising in Building

Consultancy and managing the Edinburgh team. In both roles, he has been responsible for

co-ordinating extensive technical due diligence processes and asset management projects.

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Kitty Patmore

Kitty has worked with the HRE Group since 2013 and joined the HRE Group in April 2016 as a

director to manage operations, third party borrowings and indirect investments.

Kitty has over 14 years’ of finance, banking and real estate lending experience. She has extensive

knowledge of the end-to-end lending process from the origination, execution and distribution of

complex whole loan, mezzanine and senior real estate transactions through to the work through of

over 50 distressed loans and insolvency processes. Originally at Barclays Bank PLC and more latterly

as a Principal at DRC Capital LLP, since 2012 Kitty has sourced, structured and led on the due

diligence of more than £1.1 billion of real estate transactions across the UK.

Kitty is a National Director of the Investment Property Forum, an industry leading body with over

2,000 senior property professional members. Since 2013, she has sat on the Operational Board which

has responsibility for the oversight of operations and management.

3.3 Property Manager

The Company has entered into a property management agreement dated 6 September 2018 pursuant

to which the Property Manager is appointed to act as the property manager in respect of the

Company’s portfolio of PRS Homes.

The Property Manager’s duties under the Property Management Agreement with regard to property

management include, inter alia: (i) agreeing, with the Investment Adviser, operational budgets prior

to completion of acquisitions of Portfolio Assets which require the Property Manager to work within

defined parameters, and attend regular meetings with the Investment Adviser at which budgets and

performance will be reviewed; (ii) making payments of agreed and approved operational costs from

rent funds collected; (iii) remitting net cash to the Company; (iv) monitoring of costs against agreed

targets through regular reporting and management meetings with the Investment Adviser; (v)

co-ordinating new lettings and tenancy renewals; (vi) agreeing market rental values with the

Investment Adviser on the acquisition of Portfolio Assets; and (vii) ensuring all properties comply

with all relevant landlord and tenant, health and safety and other relevant legislation.

3.4 AIFM Agreement, the Investment Advisory Agreement and the Depositary Agreement

The AIFM Agreement

The Company has entered into the AIFM Agreement with the AIFM under which the AIFM has been

appointed to act as the Company’s alternative investment fund manager with overall responsibility for

discretionary portfolio management, providing alternative investment fund manager services,

ensuring compliance with requirements of AIFMD and risk management of the Group’s investments

subject to the overall supervision of the Directors. The AIFM manages the Group’s investments in

accordance with the policies laid down by the Board and in accordance with the investment

restrictions referred to in the AIFM Agreement.

The AIFM Agreement provides that the Company will pay to the AIFM a monthly fee of 0.05 per cent.

of the Company’s NAV with a minimum fee of £8,000.

The AIFM Agreement is terminable by any of the parties giving the other six months’ written notice.

The AIFM Agreement may be terminated by the Company immediately if the AIFM ceases to

maintain its alternative investment fund manager permission or fails to notify the Company of a

regulatory investigation which is relevant to the AIFM’s ongoing appointment as alternative

investment fund manager. The AIFM Agreement may be terminated by any of the parties immediately

if the other party in ongoing material breach of the AIFM Agreement or is the subject of insolvency

proceedings.

The AIFM in addition has a right of termination of the AIFM Agreement if the Investment Advisory

Agreement is terminated. The AIFM Agreement envisages that the Investment Adviser will be the

appointed representative of the AIFM and will supply certain secondees to the AIFM. The AIFM may

102

by giving written notice to the Company terminate the AIFM Agreement if such appointed

representative and secondment arrangements are terminated.

The Investment Advisory Agreement

The Investment Advisory Agreement provides that the Company will pay to the Investment Adviser

a Management Fee (quarterly in arrears) to ensure that the Investment Adviser is closely aligned to

the interests of the Shareholders.

The Management Fee will be comprised of the Net Rent Fee and the NAV Fee and will be calculated

at the following rates:

Net Rent Fee (based on the most recent NAV of the Company) (“Net Rent Fee”):




NAV Fee (based on the most recent NAV of the Company) (“NAV Fee”):

• £0 - £500,000,000 – 0.5 per cent. per annum of the Net Asset Value;

• £500,000,001 - £750,000,000 – 0.45 per cent. per annum of the Net Asset Value

• £750,000,001 - £1,000,000,000 – 0.4 per cent. per annum of the Net Asset Value; and

• £1,000,000,001 and thereon – 0.35 per cent. per annum of the Net Asset Value.

Both the Net Rent Fee and the NAV Fee (together the “Management Fee”) shall be paid quarterly in

arrears provided that 75 per cent. of the total annual Management Fee due will be paid in cash in

arrears on a quarterly basis, and 25 per cent. of the total annual Management Fee (net of any

applicable tax) will be payable in the form of Ordinary Shares rather than cash. The issue price for

such Ordinary Shares will be the prevailing NAV at the end of the relevant period concerned. If,

however, the Ordinary Shares are trading at a discount to the prevailing NAV at the relevant time, no

new Ordinary Shares will be issued and Ordinary Shares will be purchased in the secondary market.

In addition, any such Ordinary Shares issued or purchased for the Investment Adviser will be subject

to a minimum lock-in period of 24 months.

Once the Company has reached stabilisation, to the extent the target earnings per share of at least

5 pence is not met, the Management Fee will be reduced proportionately (such deductions being made

from the NAV only) and provided that the minimum NAV Fee payable shall be 0.1 per cent.

No performance fee will be payable to the Investment Adviser. The Investment Adviser’s appointment

will terminate upon the Company or the Investment Adviser providing no less than 24 months’ written

notice, not exercisable in the first 36 months.

For the duration of the Investment Advisory Agreement, the Investment Adviser is obliged to offer to

the Company all investment opportunities that it believes (having undertaken satisfactory due

diligence) would satisfy the criteria set out in the Company’s investment policy contained in this

Prospectus. To the extent that the Company does not wish to pursue any such offered investment

opportunity, the Investment Adviser is free to pursue such investment opportunity either in its own

right or with any other party and on such terms as it may agree with the relevant vendor.

The Investment Advisory Agreement also contains provisions pursuant to which the Senior Managers

are obliged to devote such time and efforts to the Company and the performance of the investment

advisory services as is reasonably required to conduct such services in accordance with the terms of

the Investment Advisory Agreement.

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Further details of the AIFM Agreement, the Property Management Agreement and the Investment

Advisory Agreement are set out in Part 11 of this Prospectus.

The Depositary Agreement

Ocorian (UK) Limited has been appointed as the Company’s depositary for the purposes of the

AIFMD. The Depositary’s regulatory status is that of a “PE AIF Depositary”, meaning broadly that it

is able to be a depositary of an AIF which has no redemption rights exercisable during a period of

five years from the date of initial investments and it either does not generally invest in custodial assets

or generally invests to acquire control over issuers or non-listed companies.

Under the terms of the Depositary Agreement, the Depositary is entitled to be paid a periodic annual

charge of £27,000 in aggregate which may be invoiced from the date of its appointment. In addition

to the periodic charge, the Depositary shall be entitled to be reimbursed by the Company for all costs

and expenses properly and reasonably incurred in the performance or arranging for the performance

of duties in its role as depositary. The amount and rate of the expenses shall be determined from time

to time between the Depositary and the AIFM.

The Depositary shall provide its services with the skill and care to be expected of a professional

supplier of depositary services. The Depositary, in performing the services, shall act honestly, fairly,

professionally, independently and in the interests of the Company and the investors. The Depositary

Agreement envisages that the Company will hold non-custody assets (being for example real

property) meaning that the Depositary’s duties and obligations shall in the main not extend to custody

obligations which apply in the case of custody assets.

The Depositary may terminate the Depositary Agreement by six months’ prior written notice to the

AIFM, but the Depositary may only retire once the AIFM (using all reasonable endeavours) has

appointed a successor depositary. The AIFM may terminate the Depositary Agreement by

three months’ prior written notice to the Depositary.

The Company and/or the AIFM may terminate the Depositary Agreement at any time if the

Depositary is the subject of insolvency proceedings, is no longer qualified to be a depositary of the

Company, or has committed an ongoing material breach of the Depositary Agreement. The Depositary

may terminate the Depositary Agreement at any time if the Company or the AIFM is the subject of

insolvency proceedings, the AIFM ceases to be the alternative investment fund manager of the

Company without the Depositary’s consent, or the Company or AIFM has committed an ongoing

material breach of the Depositary Agreement.

3.5 Conflicts of interest

(a) Senior Managers, employees and officers

The services of the AIFM, the Investment Adviser, their respective associates and their

respective officers including, but not limited to, the Senior Managers, are not exclusive to the

Company. Likewise, the Senior Managers do not exclusively provide services to the

Investment Adviser and may from time to time provide services to other members of the HRE

Group. The Directors have satisfied themselves that the AIFM and Investment Adviser have

procedures in place that address potential conflicts of interest.

(b) The HRE Group

The HRE Group, of which the Investment Adviser is a member, have managed the Seed

Portfolio prior to the date of Admission and will continue to manage, amongst other things,

direct and indirect property assets following the date of Admission. The Directors have

satisfied themselves that the HRE Group has procedures in place that address potential

conflicts of interest.

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(c) Investment Opportunities

Whilst the HRE Group’s investment policy and criteria differs from that of the Company,

investment opportunities may present themselves to members of the HRE Group which fall

within the scope of the Company’s investment policy. However, as set out in paragraph 3.4

above, the Investment Advisory Agreement contains provisions whereby the Investment

Adviser is obliged to offer to the Company all investment opportunities that it believes (having

undertaken satisfactory due diligence) would satisfy the criteria set out in the Company’s

investment policy contained in this Prospectus. To the extent that the Company does not wish

to pursue any such offered investment opportunity, the Investment Adviser is free to pursue

such investment opportunity either in its own right or with any other party and on such terms

as it may agree with the relevant vendor.

(d) Third Parties

The Investment Adviser has other relationships with third parties to whom it also owes duties

or in whom it has an interest. In fulfilling its role for the Company, the Investment Adviser will

ensure that it does not breach any restrictions that arise from those relationships.

(e) The Property Manger

The Property Manager has a long standing relationship with the HRE Group and will,

following Admission, continue to act as the property manager to several of the HRE Group’s

property assets. The Company and the Investment Adviser do not anticipate any conflicts of

interest arising as a result of the HRE Group’s history or continuing relationship with the

Property Manager.

(f) Oversight and management of conflicts of interest

The Investment Adviser will at all times have regard to its obligations to the Company and will

seek to ensure that conflicts are resolved fairly and in a timely fashion. The Directors have

satisfied themselves that the Investment Adviser has procedures in place to address any

potential conflicts of interest and that, where a conflict arises, the Investment Adviser will

allocate any opportunity to the Company on a fair basis.

In accordance with the terms of the Company’s conflict of interest policy, the Board will have

responsibility for the oversight and management of conflicts of interest that may affect the

Company. To the extent a potential acquisition or disposal would be a related party transaction

for the purposes of the Listing Rules, or would otherwise present a conflict of interest for the

Investment Adviser, the Investment Adviser must provide adequate notice of such proposed

related party transaction to enable the Board and the Company to comply with the relevant

Listing Rules that apply to related party transactions.

4. OTHER ADMINISTRATION ARRANGEMENTS

4.1 Administrator

The Company is a party to an administration agreement with the Administrator pursuant to which the

Administrator provides day-to-day administration of the Company and acts as administrator to the

Company, provides services in relation to the development and production of statutory annual reports

and accounts and interim accounts to Shareholders of the Company in accordance with IFRS and the

EPRA, and calculates the Net Asset Value of the Ordinary Shares based on information provided to

the Administrator by the Valuer.

4.2 Registrar

The Company is a party to the Registrar’s Agreement with the Registrar dated 4 September 2018

pursuant to which the Registrar provides share registrar services to the Company.

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4.3 Company Secretary

Link Company Matters Limited has been appointed as the Company Secretary pursuant to the terms

of the Company Secretary Agreement. The Company Secretary will provide day-to-day company

secretarial services to the Company.

Summaries of the above administration agreements are set out in paragraph 7 of Part 11 of this

Prospectus.

5. FEES AND EXPENSES

5.1 Formation and initial expenses

The Company will not charge investors any separate costs and expenses in connection with the Issue.

The Company will bear the costs of and expenses of the Issue (including the costs of incorporation of

the Company, the fees payable in relation to Admission, fees payable to the UK Listing Authority and

the London Stock Exchange, as well as the fees and expenses due under the Placing and Sponsor’s

Agreement, the fees payable to other professional advisers and other related expenses but excluding

the Acquisiton Costs in respect of the Seed Portfolio) (“Issue Costs”), subject to a cap of 2 per cent.

of the Gross Proceeds provided that at least the Target Gross Proceeds of £175 million are raised, and

therefore these costs and expenses will be borne indirectly by investors.

If the Issue Costs are such that the Net Asset Value per Ordinary Share at Admission would be less

than 98 pence (assuming Target Gross Proceeds of £175 million are raised), the Investment Adviser

has agreed to pay such proportion of the expenses of the Issue (which would ordinarily be payable by

the Company) so as to ensure that the Net Asset Value per Ordinary Share at Admission will be

98 pence (assuming Target Gross Proceeds of £175 million are raised) pursuant to the terms of the

Cost Coverage Agreement. If Gross Proceeds are less than Target Gross Proceeds, the InvestmentAdviser shall pay an amount equal to, but not exceeding, the sum it would have paid had the TargetGross Proceeds been raised pursuant to the Issue. This may result in the Net Asset Value being lessthan 98 pence.

All expenses incurred by any Intermediary are for its own account. Investors should confirm

separately with any Intermediary whether there are any commissions, fees or expenses that will be

applied by such Intermediaries in connection with any application made through that Intermediary

pursuant to the Intermediaries Offer. The Intermediary Terms and Conditions entered into by the

Intermediaries restrict the level of commission that Intermediaries are able to charge investors.

5.2 Ongoing annual expenses

The principal ongoing annual expenses of the Company will be the fees payable to the AIFM, the

Investment Adviser, the Property Manager, the Administrator, the Company Secretary, the Registrar,

the Valuer, the Company’s PR advisers and the Directors. Other ongoing operational expenses will be

borne by the Company including travel, accommodation, printing, audit, finance costs, legal fees

(including those incurred on behalf of the Company by the AIFM or the Investment Adviser),

corporate broking fees, annual London Stock Exchange fees, AIC membership fees, regulatory fees,

insurance costs and other expenses. All reasonable out of pocket expenses of the AIFM, the

Investment Adviser, the Administrator, the Company Secretary, the Registrar, the Valuer, the

Company’s PR advisers, all other service providers and the Directors relating to the Company will be

borne by the Company. It is estimated (on the basis that the Issue is fully subscribed) that the total

expenses of the Company for its first full financial year (excluding capital expenditure, management

fees and irrecoverable property running costs) will be approximately 0.38 per cent. of NAV. Given

that many of the fees paid to the Company’s service providers are irregular in their nature, the

maximum amount of fees, charges and expenses cannot be ascertained in advance.

5.3 PRIIPs Regulation

The AIFM has prepared a key information document as required under the PRIIPs Regulation. That

regulation requires costs to be calculated and presented in accordance with the detailed and

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prescriptive rules. The key information document is available on the Company’s website at

www.multifamilyhousingreit.com. The key information document, the contents of the Company’s,

and the websites accessible from hyperlinks in such websites, are not incorporated by reference into,

and do not form part of, this Prospectus. Notwithstanding the above, for the purposes of the PRIIPs

Regulation, the Company is a PRIIP manufacturer.

A paper copy of the key information document is available on written request to the AIFM at

136 Buckingham Palace Road, London SW1W 9SA.

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PART 7

THE ISSUE

1. THE ISSUE

The Company is targeting an issue of up to 175 million Ordinary Shares pursuant to the Issue, comprising

the Offering and the issue of the Reinvestment Shares, at the Issue Price of £1.00 per Ordinary Share. In this

Prospectus, the Placing, Offer for Subscription and the Intermediaries Offer are together referred to as the

“Offering” and the Offering and the issue of the Reinvestment Shares are together referred to as the “Issue”.

The total number of Ordinary Shares to be issued and their allocation to Investors under the Placing, the

Offer for Subscription and the Intermediaries Offer will be determined by the Company (following

consultation with Peel Hunt) after taking into account demand for the Ordinary Shares. If there is sufficient

demand, the Company may increase the number of Ordinary Shares issued pursuant to the Issue to

250 million following agreement with Peel Hunt. Any such increase will be announced through a Regulatory

Information Service and the Company’s website prior to Admission.

The actual number of Ordinary Shares to be issued pursuant to the Issue, and therefore the Gross Proceeds

or Net Proceeds, are not known as at the date of this Prospectus but will be notified by the Company via a

Regulatory Information Service prior to Admission. The Issue is not being underwritten. The maximum

Issue size should not be taken as an indication of the number of Ordinary Shares to be issued. Dealings in

the Ordinary Shares will not be permitted prior to Admission.

The Target Net Proceeds of the Issue are £171.5 million on the assumption that the Target Gross Proceeds

are £175 million.

2. REASONS FOR THE ISSUE AND USE OF PROCEEDS

The Issue is being made in order to fund:

(a) the acquisition of the Seed Portfolio for a total aggregate purchase price of £70.26 million (subject to

adjustment as stated below), comprising:

(i) £6,003,208 million in respect of the purchase price for acquiring the entire issued share capital

of each of the SPVs payable pursuant to the terms of the Share Purchase Agreements (subject

to adjustment in respect of (a) in the case of the Share Purchase Agreements relating toHarwood Squirrel Limited, Harwood (Bristol) Limited, Harwood Lowestoft Limited andHarwood Gopher Limited: (i) a deduction of the tax liabilities of the relevant SPVs; and (ii) a

deduction in an amount equal to the aggregate net current liabilities of the relevant SPVs or an

increase in an amount equal to the aggregate net current assets of the SPVs and (b) in the caseof the Share Purchase Agreements relating to Bass Real Estate No.2 Limited, Bass Real EstateNo.4 Limited, Bass Real Estate No.9 Limited and Bass Real Estate No.18 Limited certainrental apportionments);

(ii) a payment of £55,756,792 in respect of the repayment of shareholder and third party debt owed

by the SPVs; and

(iii) £8.5 million in respect of the purchase price of acquiring Celtic House, Derby which is due to

complete in Q4 of 2018;

(b) new investment in PRS Homes, including from the Identified Pipeline, in accordance with the

investment objective and investment policy of the Company; and

(c) the redemption of the Redeemable Preference Shares for £1,724,000, which have been issued in order

to fund the deposit paid in respect of the purchase of certain SPVs.

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3. THE PLACING

Peel Hunt has agreed to use its reasonable endeavours to procure subscribers pursuant to the Placing for the

Ordinary Shares on the terms and subject to the conditions set out in the Placing and Sponsor’s Agreement.

Details of the Placing and Sponsor’s Agreement are set out in paragraph 7.10 of Part 11 of this Prospectus.

The terms and conditions which shall apply to any subscription for Ordinary Shares procured by Peel Hunt

are set out in Part 12 of this Prospectus. The Placing will close at 12.00 noon on 25 September 2018 (or such

later date and the Company and Peel Hunt may agree).

If the Placing is extended, the revised timetable will be notified through a Regulatory Information Service.

Each Placee agrees to be bound by the Articles once the Ordinary Shares, which the Placee has agreed to

subscribe for pursuant to the Placing, have been acquired by the Placee. The contract to subscribe for the

Ordinary Shares under the Placing and all disputes and claims arising out of or in connection with its subject

matter or formation (including non-contractual disputes or claims) will be governed by, and construed in

accordance with, the laws of England and Wales. For the exclusive benefit of Peel Hunt, the Company, the

AIFM, the Investment Adviser and the Registrar, each Placee irrevocably submits to the jurisdiction of the

courts of England and Wales and waives any objection to proceedings in any such court on the ground of

venue or on the ground that proceedings have been brought in an inconvenient forum. This does not prevent

an action being taken against the Placee in any other jurisdiction. Commitments under the Placing, once

made, may not be withdrawn without the consent of the Directors.

4. THE OFFER FOR SUBSCRIPTION

The Directors are also proposing to offer Ordinary Shares under the Offer for Subscription, subject to the

terms and conditions of the Offer for Subscription set out in Part 13 of this Prospectus. These terms and

conditions and the Application Form attached as Appendix 1 to this Prospectus should be read carefully

before an application is made. The Offer for Subscription will close at 1.00 p.m. on 24 September 2018. If

the Offer for Subscription is extended, the revised timetable will be notified through a Regulatory

Information Service.

Applications under the Offer for Subscription must be for Ordinary Shares at the Issue Price, being £1.00 per

Ordinary Share. The aggregate subscription price is payable in full on application. Individual applications

must be for a minimum subscription of 1,000 Ordinary Shares and then in multiples of 1,000 Ordinary

Shares thereafter, although the Company, in consultation with Peel Hunt, may accept applications in any

amount (and below the minimum amount stated above) in its absolute discretion. Multiple subscriptions

under the Offer for Subscription by individual investors will not be accepted.

Completed Application Forms accompanied either by a cheque or banker’s draft or appropriate delivery

versus payment (“DVP”) instructions in relation to the Offer for Subscription must be posted or delivered

by hand (during normal business hours) to the Receiving Agent, Link Asset Services, so as to be received as

soon as possible and, in any event, no later than 1.00 p.m. on 24 September 2018.

Commitments under the Offer for Subscription, once made, may not be withdrawn without the consent of

the Directors.

Please also refer to the section below headed “CREST”.

5. THE INTERMEDIARIES OFFER

Investors may also subscribe for Ordinary Shares at the Issue Price of £1.00 per Ordinary Share pursuant to

the Intermediaries Offer. Only the Intermediaries’ clients (including retail investor clients) in the United

Kingdom, the Channel Islands and the Isle of Man are eligible to participate in the Intermediaries Offer.

Investors may apply to any one of the Intermediaries to be accepted as their client.

No Ordinary Shares allocated under the Intermediaries Offer will be registered in the name of any person

whose registered address is outside the United Kingdom, the Channel Islands or the Isle of Man. A minimum

application of 1,000 Ordinary Shares per Underlying Applicant will apply. Allocations to Intermediaries will

be determined solely by Peel Hunt.

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An application for Ordinary Shares in the Intermediaries Offer means that the Underlying Applicant agrees

to acquire the Ordinary Shares applied for at the Issue Price. Each Underlying Applicant must comply with

the appropriate money laundering checks required by the relevant Intermediary and all other laws and

regulations applicable to their agreement to subscribe for Ordinary Shares. Where an application is not

accepted or there are insufficient Ordinary Shares available to satisfy an application in full, the relevant

Intermediary will be obliged to refund the Underlying Applicant as required and all such refunds shall be

made without interest. The Company, the Investment Adviser, the AIFM and Peel Hunt accept no

responsibility with respect to the obligation of the Intermediaries to refund monies in such circumstances.

Each Intermediary has agreed, or will on appointment agree, to the Intermediaries Terms and Conditions,

which regulate, inter alia, the conduct of the Intermediaries Offer on market standard terms and provide for

the payment of a commission and/or fee (to the extent permissible by the rules of the FCA) to Intermediaries

from the Company if such Intermediary elects to receive a commission and/or fee. Pursuant to the

Intermediaries Terms and Conditions, in making an application, each Intermediary will also be required to

represent and warrant, inter alia, that they are not located in the United States and are not acting on behalf

of anyone located in the United States.

In addition, the Intermediaries may prepare certain materials for distribution or may otherwise provide

information or advice to certain investors in the United Kingdom, the Channel Islands and the Isle of Man,

subject to the terms of the Intermediaries Terms and Conditions. Any such materials, information or advice

are solely the responsibility of the relevant Intermediary and will not be reviewed or approved by any of the

Company, the AIFM, the Investment Adviser or Peel Hunt. Any liability relating to such documents shall be

for the relevant Intermediaries only.

6. ISSUE OF REINVESTMENT SHARES

The Company has entered into the Reinvestment Subscription Letters with the Reinvestment subscribers.

The Reinvestment Subscribers have agreed to reinvest the proceeds received by them pursuant to the Share

Purchase Agreements in Ordinary Shares in the Company at the Issue Price. Each of the Reinvestment

Subscription Letters is conditional on Admission.

The Company will issue and allot 19,528,639 Reinvestment Shares in aggregate pursuant to the terms of the

Reinvestment Subscription Letter.

Further details of the Reinvestment Subscription Letters are contained in paragraph 7.12 of Part 11 of this

Prospectus.

7. CONDITIONS TO THE ISSUE

The Issue is conditional, inter alia, on:

(a) the Placing and Sponsor’s Agreement becoming wholly unconditional (save as to Admission) and not

having been terminated in accordance with its terms at any time prior to Admission;

(b) Admission having occurred by no later than 8.00 a.m. on 28 September 2018 or such later time and/or

date as the Company and Peel Hunt may agree (being not later than 8.00 a.m. on 12 October 2018);

and

(c) the Minimum Net Proceeds being raised (or such lesser amount as the Company and Peel Hunt may

determine and notify to investors via a RIS announcement and a supplementary prospectus including

a working capital statement based on a revised minimum net proceeds figure).

The Directors also have the discretion not to proceed with the Issue even if all of the above conditions

(including raising the Minimum Net Proceeds (or such lesser proceeds in accordance with paragraph 7(c)

above) have been met). If the Issue does not proceed, all monies received under the Issue will be returned to

applicants without interest within 14 days at the relevant applicant’s risk.

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In the event that the Company, in consultation with the Investment Adviser and Peel Hunt, wishes to waive

condition 7(c) above, the Company will be required to publish a supplementary prospectus (including a

working capital statement based on a revised minimum net proceeds figure).

8. SCALING BACK, INCREASED DEMAND AND ALLOCATION

The Company is seeking to issue 175 million Ordinary Shares pursuant to the Issue. If there is sufficient

demand, the Company may increase the number of Ordinary Shares available for subscription to 250 million

following agreement with Peel Hunt. Any such increase will be announced through a Regulatory Information

Service and on the Company’s website. The Company, in consultation with Peel Hunt, reserves the right to

scale back applications in such amounts as it considers appropriate. The Company reserves the right to

decline in whole or in part any application for Ordinary Shares pursuant to the Issue. Accordingly, applicants

for Ordinary Shares may, in certain circumstances, not be allotted the number of Ordinary Shares for which

they have applied.

Peel Hunt (in the case of applications under the Placing), the Receiving Agent (in the case of applications

under the Offer for Subscription) or the relevant Intermediary (in the case of applications under the

Intermediaries Offer) will notify investors of the number of Ordinary Shares in respect of which their

application has been successful and the results of the Issue will be announced by the Company on or around

26 September 2018 via a Regulatory Information Service.

Subscription monies received in respect of unsuccessful applications (or to the extent scaled back) will be

returned by post without interest at the risk of the applicant to the bank account from which the money was

received if the applicant paid by electronic transfer. Alternatively a cheque will be sent to the address

provided on the relevant application form, as applicable.

There will be no scaling back of the Reinvestment Shares.

9. MAIN MARKET

Upon and following Admission, the Company will be subject to the Listing Rules, the Prospectus Rules, the

Disclosure Guidance and Transparency Rules, the Market Abuse Regulation and the Admission and

Disclosure Standards.

10. PLACING AND SPONSOR’S AGREEMENT

The Placing and Sponsor’s Agreement contains provisions entitling Peel Hunt to terminate the Issue (and the

arrangements associated with it) at any time prior to Admission in certain circumstances. If this right is

exercised, the Issue and these arrangements will lapse and any monies received in respect of the Issue will

be returned to each applicant without interest.

The Placing and Sponsor’s Agreement provides for Peel Hunt to be paid commission by the Company in

respect of the Ordinary Shares to be allotted pursuant to the Issue. Any Ordinary Shares subscribed for by

Peel Hunt may be retained or dealt in by it for its own benefit.

Peel Hunt is also entitled under the Placing and Sponsor’s Agreement to appoint subagents or delegate the

exercise of any of its powers, authorities or discretions, subject to applicable law and regulation.

Further details of the terms of the Placing and Sponsor’s Agreement are set out in paragraph 7.10 of Part 11

of this Prospectus.

11. GENERAL

The Net Proceeds, assuming Target Gross Proceeds of £175 million and that Issue Costs are equal to

2 per cent. of the Target Gross Proceeds, will amount to approximately £171.5 million, after the deduction

of the Issue Costs which are expected to amount to approximately £3.5 million in aggregate.

Pursuant to anti-money laundering laws and regulations with which the Company must comply in the UK,

the Company and its agents (and their agents) may require evidence in connection with any application for

Ordinary Shares, including further identification of the applicant(s), before any Ordinary Shares are issued.

In the event that there are any significant changes affecting any of the matters described in this Prospectus

or where any significant new matters have arisen after the publication of the Prospectus and prior to

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Admission, the Company will publish a supplementary prospectus. The supplementary prospectus will give

details of the significant change(s) or the significant new matter(s). In the event that a supplementary

prospectus is published prior to Admission, potential investors in the Issue will have a statutory right of

withdrawal.

12. ADMISSION, CLEARING AND SETTLEMENT

Applications will be made to (i) the UK Listing Authority for the Ordinary Shares to be admitted to the

premium listing segment of the Official List and (ii) the London Stock Exchange for all of the Ordinary

Shares to be admitted to trading on the Main Market. It is expected that Admission will become effective

and unconditional dealings will commence at 8:00 a.m. on 28 September 2018. There will be no conditional

dealings in the Ordinary Shares.

Ordinary Shares will be issued in registered form and may be held in either certificated or uncertificated

form. In the case of Ordinary Shares to be issued in uncertificated form pursuant to the Issue, these will be

transferred to successful applicants through CREST.

Where applicable, definitive share certificates in respect of the Ordinary Shares are expected to be

despatched by post at the risk of recipients to the relevant holders in the week commencing 8 October 2018.

Prior to the despatch of definitive share certificates in respect of any Ordinary Shares which are held in

certificated form, transfer of those Ordinary Shares will be certified against the Company’s register of

members. No temporary documents of title will be issued.

The ISIN of the Ordinary Shares is GB00BYWLBM79 and the SEDOL is BYWLBM7.

The Company does not guarantee that at any particular time market maker(s) will be willing to make a

market in the Ordinary Shares, nor does it guarantee the price at which a market will be made in the Ordinary

Shares. Accordingly, the dealing price of the Ordinary Shares may not necessarily reflect changes in the Net

Asset Value per Ordinary Share.

13. CREST

CREST is a paperless settlement procedure operated by Euroclear enabling securities to be evidenced

otherwise than by a certificate and transferred otherwise than by written instrument. Upon Admission, the

Articles will permit the holding of Ordinary Shares under CREST. The Company has applied for the

Ordinary Shares to be admitted as participating securities within the CREST system with effect from

Admission and it is expected that the Ordinary Shares will be admitted with effect from that time.

Accordingly, settlement of transactions in the Ordinary Shares following Admission may take place within

the CREST system if any Shareholder so wishes.

It is expected that the Registrar and/or Receiving Agent acting on behalf of the Company will arrange for

Euroclear to be instructed on 28 September 2018 to credit the appropriate CREST accounts of the

subscribers concerned or their nominees with their respective entitlements to Ordinary Shares. The names of

subscribers or their nominees investing through their CREST accounts will be entered directly on to the

share register of the Company.

The transfer of Ordinary Shares out of the CREST system following the Issue should be arranged directly

through CREST. However, an investor’s beneficial holding held through the CREST system may be

exchanged, in whole or in part, only upon the specific request of the registered holder to CREST for share

certificates or an uncertificated holding in definitive registered form.

CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will be able

to do so. An investor applying for Ordinary Shares in the Issue may elect to receive Ordinary Shares in

uncertificated form if such investor is a system-member (as defined in the CREST Regulations) in relation

to CREST. If a Shareholder or transferee requests Ordinary Shares to be issued in certificated form and is

holding such Ordinary Shares outside CREST, a share certificate will be despatched either to him or his

nominated agent (at his risk) within 21 days of completion of the registration process or transfer, as the case

may be, of the Ordinary Shares. Shareholders holding definitive certificates may elect at a later date to hold

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such Ordinary Shares through CREST or in uncertificated form provided they surrender their definitive

certificates and deliver the same, along with a duly completed CREST transfer form, to their CREST

provider.

14. MATERIAL INTEREST

14.1 By virtue of their subscriptions for Reinvestment Shares, on Admission:

(a) HRE, a company within the HRE Group, will have an interest in 2,150,000 Ordinary Shares

equating to 1.23 per cent. of the total issued share capital of the Company (assuming that

175 million Ordinary Shares are issued);

(b) Harwood Capital LLP, a company within the HRE Group, will have an interest in 8,574,252

Ordinary Shares equating to 4.9 per cent. of the total issued share capital of the Company

(assuming that 175 million Ordinary Shares are issued)1; and

(c) NASCIT will have an interest in 8,804,387 Ordinary Shares equating to 5.03 per cent. of the

total issued share capital of the Company (assuming that 175 million Ordinary Shares are

issued).

14.2 Nick Jopling, non-executive Chairman of the Company, intends to subscribe for 100,000 Ordinary

Shares at the Offer Price (such Ordinary Shares to be held in the name of his wife, Serena Jopling)

equating to 0.057 per cent. of the Company’s total issued share capital on Admission (assuming that

175 million Ordinary Shares are issued).

14.3 David Lis, non-executive Director of the Company, intends to subscribe for 100,000 Ordinary Shares

at the Offer Price equating to 0.057 per cent. of the Company’s total issued share capital on Admission

(assuming that 175 million Ordinary Shares are issued).

14.3 Clive Standish, non-executive Director of the Company, intends to subscribe for 50,000 Ordinary

Shares at the Offer Price equating to 0.029 per cent. of the Company’s total issued share capital on

Admission (assuming that 175 million Ordinary Shares are issued).

Notes:

1 HCN has directed that the Reinvestment Shares subscribed for by it will be registered in the name of Harwood Capital

LLP on Admission. Of these, 6,540,211 Ordinary Shares (representing 3.74 per cent. of the issued share capital on

Admission, assuming 175 million Ordinary Shares are issued) will be under the discretionary management of Harwood

Capital LLP and the remaining 2,034,041 Ordinary Shares (representing 1.16 per cent. of the issued share capital on

Admission, assuming 175 million Ordinary Shares are issued) will be under its non-discretionary management.

15. TYPICAL INVESTORS

The Ordinary Shares are designed to be suitable for institutional investors and professionally-advised private

investors. The Ordinary Shares may also be suitable for investors who are financially sophisticated, non-

advised private investors who are capable of evaluating the risks and merits of such an investment and who

have sufficient resources to bear any loss which may result from such an investment. Such investors may

wish to consult an independent financial adviser who specialises in advising on the acquisition of shares and

other securities before investing in the Ordinary Shares.

16. OVERSEAS PERSONS

Potential investors in any territory other than the United Kingdom should refer to the notices set out at the

front of this Prospectus.

The Company reserves the right to treat as invalid any agreement to subscribe for Ordinary Shares under the

Issue if it appears to the Company or its agents to have been entered into in a manner that may involve a

breach of the securities legislation of any jurisdiction.

113

Information for investors in the United States

Enforcement of Civil Liabilities

The Company is organised as a public limited company incorporated under the laws of England and Wales.

None of the Company’s directors or officers are citizens or residents of the United States. In addition, the

majority of the Company’s assets and all the assets of the Company’s directors and officers are located

outside the United States. As a result, it may not be possible for U.S. investors to effect service of process

within the United States upon the Company or its directors and officers located outside the United States or

to enforce in the U.S. courts or outside the United States judgements obtained against them in U.S. courts or

in courts outside the United States, including judgments predicated upon the civil liability provisions of the

U.S. federal securities laws or the securities laws of any state or territory within the United States. There is

doubt as to the enforceability in England and Wales, whether by original actions or by seeking to enforce

judgments of U.S. courts, of claims based on the federal securities laws of the United States. In addition,

punitive damages in actions brought in the United States or elsewhere may be unenforceable in England and

Wales.

Availability of Information

For so long as any of the Company’s securities are restricted securities, as defined in Rule 144(a)(3) under

the US Securities Act, as amended, we will, during any period in which the Company is neither subject to

Section 13 or 15(d) under the US Exchange Act pursuant to Rule 12g3-2(b) thereunder, make available to

any holder or beneficial owner of such securities or to any prospective purchaser, the information required

to be delivered pursuant to Rule 144A(d)(4) under the US Securities Act.

United States Transfer Restrictions

Each purchaser of the Company’s securities in the United States will be required to represent and agree as

follows:

(i) The purchaser (a) is a qualified institutional buyer (“QIB”), as defined in Rule 144A, or a broker-

dealer acting for the account of a QIB, (b) is acquiring the securities for its own account or for the

account of a QIB, and (c) is aware that the securities are restricted within the meaning of the US

Securities Act and may not be deposited into any unrestricted depositary facility, unless at the time of

such deposit the securities are no longer restricted.

(ii) The purchaser is aware that such securities have not been and will not be registered under the US

Securities Act and are being offered in the United States only to QIBs in a transaction not involving

any public offering in the United States within the meaning of the US Securities Act.

(iii) The purchaser understands and agrees that such securities may not be offered, sold, pledged or

otherwise transferred, except (a) to a person that the seller and any person acting on its behalf

reasonably believe is another QIB purchasing for its own account or for the account of a QIB or

(b) outside the United States in accordance with Regulation S under the US Securities Act or

(c) pursuant to an exemption from registration under the US Securities Act or (d) pursuant to an

effective registration statement under the US Securities Act.

Certain ERISA Considerations

Each holder of an Ordinary Share (and any transferee thereof) shall be deemed to acknowledge, represent,

warrant and agree that (i) it is not, and for so long as such holder holds such Ordinary Share will not be,

(A) an “employee benefit plan” (within the meaning of Section 3(3) of the U.S. Employee Retirement

Income Security Act of 1974, as amended (“ERISA”)) that is subject to Part 4 of Subtitle B of Title I of

ERISA, (B) a “plan” (within the meaning of Section 4975(e)(1) of the U.S. Internal Revenue Code of 1986,

as amended (the “Code”)) that is subject to Section 4975 of the Code, (C) a “benefit plan investor” within

the meaning of Section 3(42) of ERISA, (D) any other employee benefit plan or plan that is subject to U.S.

Federal, state or local laws or regulations or non-U.S. laws or regulations, which are similar in purpose and

intent to Section 406 of ERISA or Section 4975 of the Code (“Similar Laws”), or (E) any other entity,

account or other person the assets of which constitute (or are deemed to constitute) the assets of such an

114

employee benefit plan or plan for purposes of Title I of ERISA, Section 4975 of the Code or any Similar

Laws (each, a “Plan Investor”), and (ii) it shall not sell or otherwise transfer such Ordinary Share or any

interests therein to any Plan Investor. Notwithstanding anything herein to the contrary, Plan Investors shall

not be permitted to directly or indirectly acquire or hold any Ordinary Shares or any interests therein.

115

PART 8

VALUATION REPORT ON SEED PORTFOLIO

12 September 2018

The Directors

The Multifamily Housing REIT Plc

Beaufort House

51 New North Road

Exeter EX4 4EP

Craig Langley MRICS

E: [email protected]

DL: +44 (0) 20 7409 8032

The Directors

Multifamily Asset 1 Limited

Beaufort House

51 New North Road

Exeter EX4 4EP

33 Margaret Street

Peel Hunt LLP London

Moor House W1G 0JD

120 London Wall T: +44 (0) 20 7409 8644

EC2Y 5ET savills.com

Dear Sirs,

THE MULTIFAMILY HOUSING REIT

1. INSTRUCTIONS

In accordance with instructions received from The Multifamily Housing REIT Plc (the “Company”)

Multifamily Asset 1 Limited and Peel Hunt LLP (together “you”), dated 30 June 2018, we have undertaken

valuations of the twenty-two properties described in Schedules A and B (the “Properties”) (together the

“Portfolio”).

This Valuation Report (“Report”) has been prepared for the purpose of inclusion in the listing particulars

prepared for the purposes of EU Directive 2003/71/EC (the “Prospectus Directive”) and comprising the

listing particulars given in compliance with the listing rules made under Section 73A of the Financial

Services and Markets Act 2000 by the UK Listing Authority (the “Prospectus”). The Prospectus is being

published in connection with the Placing, Offer for Subscription and Intermediaries Offer being conducted

by the Company and the subsequent admission to the premium listing segment of the Official List and

trading on the London Stock Exchange’s main market for listed securities (“Admission”).

2. PURPOSE OF THE VALUATIONS

Our valuations are required to form part of the Prospectus for a REIT of Private Rented Sector Housing. As

per our instructions we have assessed the Market Value of the twenty-two properties, (all of which comprise

standing residential stock, which are let on assured shorthold tenancies), The Properties will be acquired by

116

Holdco shortly after Admission. Therefore, as per our instruction, our valuations for the purposes of the

Prospectus are based on the following Special Assumptions:

(a) The Properties are in a lettable condition;

(b) All Properties have a clean and marketable title;

(c) All of the units are let on standard assured shorthold tenancies with no security of tenure; and

(d) All Properties remain the same as per our previous inspections carried out over the course of 2017

and 2018.

3. COMPLIANCE WITH APPRAISAL AND VALUATION STANDARDS

This report has been prepared in accordance with Royal Institution of Chartered Surveyors’ (“RICS”)

Valuation – Professional Standards January 2017 incorporating the IVSC International Valuation Standards

issued June 2017 and effective from 1 July 2017 (the “RICS Red Book”), in particular in accordance with

the requirements of VPS 3 entitled “Valuation Reports”. The valuation is a Regulated Purpose Valuation as

defined in the RICS Red Book.

We further confirm that our valuations and report have been prepared in accordance with the relevant

provisions of the Listing Rules and the City Code on Takeovers and Mergers, Rule 5.6.5G of the Prospectus

Rules published by the Financial Conduct Authority and paragraphs 128 to 130 of the ESMA update of the

CESR recommendations for the consistent implementation of the European Commission’s Regulation on

Prospectuses No 809/2004 (“ESMA Guidelines”) and the Prospectus Directive. We also confirm that unless

otherwise defined, terms have the meaning given to them in the above sources.

4. STATUS OF VALUER

These valuations have been prepared by a number of surveyors under the supervision of Craig Langley

MRICS (Director). We confirm that they are all RICS Registered Valuers and have the knowledge, skills and

understanding to undertake these valuations competently and we are acting in the capacity of External Valuer

(as defined in the RICS Valuation – Professional Standards).

5. CONFLICTS OF INTEREST

In the 12 month period preceding the date of this Report, the total fees payable by the Company were less

than 5 per cent. of the total combined fee income of Savills (UK) Limited and Savills Advisory Services

Limited.

We are required by the RICS Red Book (UKPS5.4) to disclose the following:

Savills has had a material connection with two of the Properties comprising the Portfolio (being Saxon

House and Prestbury Court). More particularly, we provided previous valuation advice for loan security

purposes at the time of acquisition. Due to the previous work being an independent valuation on a RICS Red

Book basis, we consider this to be minor. We are not aware of any other conflict of interest, either with the

Property or with the Company, preventing us from providing you with independent valuations of

the Properties in accordance with the RICS Red Book. We will be acting as External Valuers, as defined in

the RICS Red Book.

6. OVERVIEW

The Portfolio comprises twenty-two Properties held for investment purposes which are located throughout

the UK. Twenty one of the Properties are held freehold and one is held long leasehold (over 50 years).

The overriding management of the units will be undertaken by Harwood Real Estate Asset Management

Limited with the support of the property manager, Centrick Property Sales Limited.

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For all of the Properties, we understand the target set of criteria for selection are:

Real Estate

• locations with sustainable residential demand and limited risk from competing developments;

• suitable demographic profile and proximity to appropriate local employers, transport links and


• capable of efficient management from established and future management Hubs considering both

location and scale;

• appropriate mid-market rental levels which are suitable for a broad spectrum of the local population;

• focus on one and two bedroom properties (except where local demand and affordability permits larger

properties);

• freehold ownership – long leasehold ownership will be considered where a suitable level of control

can be maintained over the asset; and

• target assets are subject to technical due diligence to ensure suitable age, construction and

configuration profile to mitigate maintenance exposure and operation risks such as external cladding

panels.

Converted properties may include income producing completed permitted developments, subject to due

diligence being completed to focus on structural components, unit sizes and specifications. The Investment

Adviser believes that permitted development provides an alternative viable route to continue to address the

housing shortfall in some areas.

Income

• Affordability of rents relative to the local population;

• Evidence of arrears, stable rent history, maintenance budget;

• Strong historic occupancy;

• Working population;

• Target tenants are across all age groups and often employed locally; and

• Economic rental offering for the local population.

Local Market

• Conurbations and employment centres largely in England, outside of Greater London;

• Rent and capital growth potential;

• Local employment focus;

• No evidence of oversupply in pipeline; and

• Sites protected from new local development.

The Company has instructed Savills Advisory Services Limited to value the Properties in connection with

the Prospectus for the REIT, in which the Properties will form part. We have carried out our valuations

against this background.

All the Properties are identified and described briefly in the attached Schedules.

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7. THE TWENTY-TWO PROPERTIES

We provide a brief summary of each of the twenty-two Properties below:

No Property Total Units 1 bed 2 bed 3 bed 4 bed Commercial

1 Church Road, Bristol 18 4 11 0 0 3

2 Paper Mill Yard, Norwich 34 6 26 2 0 0

3 Avonmore Court, Walsall 52 16 33 2 1 0

4 Smith’s Flour Mill, Walsall 48 4 44 0 0 0

5 Barnes Court, Bristol 30 0 30 0 0 0

6 Severn House, Bristol 16 0 5 11 0 0

7 Whitley Mead/Church Road, Bristol 16 0 10 6 0 0

8 Lonsdale Court, Birmingham 12 6 6 0 0 0

9 Melville/Prestbury Court, Manchester 12 0 12 0 0 0

10 Crown Meadow Court, Lowestoft 23 21 2 0 0 0

11 Herivan Close, Lowestoft 18 14 4 0 0 0

12 Herivan Gardens, Lowestoft 20 17 3 0 0 0

13 Stafford Court, Lowestoft 12 9 3 0 0 0

14 Wensum Court, Lowestoft 10 6 2 0 0 2

15 Wensum Gardens, Lowestoft 18 0 18 0 0 0

16 William Tubby House, Lowestoft 44 42 1 1 0 0

17 Shade Mill/Print Works, Leek 33 2 31 0 0 0

18 Old School Lofts, Leeds 57 30 21 0 6 0

19 Beech Grove, Preston 24 0 24 0 0 0

20 Saxon House, Derby 48 36 12 0 0 0

21 Celtic House, Derby 78 42 36 0 0 0

22 Beecroft Court, Cannock 40 22 18 0 0 0 –––– –––– –––– –––– –––– –––– TOTAL 663 277 352 22 7 5

–––– –––– –––– –––– –––– ––––8. TENURE AND TENANCIES

We have relied upon the details of tenure, tenancies and other information provided by the Company. In

addition, we have previously been provided with Certificates of Title supplied to us by the Company’s

solicitors and confirm as follows:

(a) where we have relied upon information provided to us by the Company, such information is not

inconsistent with the Certificates of Title;

(b) we have assumed that, save as may be disclosed by the Certificates of Title, the Properties possess

good marketable titles free from any unusual encumbrances, restrictions or obligations;

(c) we have assumed that, save as may be disclosed by the Certificates of Title, nothing would be revealed

by any local search or replies to usual enquiries of the seller which would materially adversely affect

the respective values of the Properties; and

(d) in respect of the long leasehold interests, we have assumed that consent to assign would not be

withheld or delayed by the landlord if required and that, save as may be disclosed by the Certificates

of Title, there are no outstanding arrears or breaches of covenant.

119

We detail the tenure of each Property below;

Freehold Properties

No Property

1 Church Road, Bristol

2 Paper Mill Yard, Norwich

3 Avonmore Court, Walsall

5 Barnes Court, Bristol

6 Severn House, Bristol

7 Whitley Mead/Church Road, Bristol

8 Lonsdale Court, Birmingham

9 Melville/Prestbury Court, Manchester

10 Crown Meadow Court, Lowestoft

11 Herivan Close, Lowestoft

12 Herivan Gardens, Lowestoft

13 Stafford Court, Lowestoft

14 Wensum Court, Lowestoft

15 Wensum Gardens, Lowestoft

16 William Tubby House, Lowestoft

17 Shade Mill/Print Works, Leek

18 Old School Lofts, Leeds

19 Beech Grove, Preston

20 Saxon House, Derby

21 Celtic House, Derby

22 Beecroft Court, Cannock

Leasehold Properties

4 Smith’s Flour Mill, Walsall

9. SOURCES OF INFORMATION

In undertaking our valuations we have been provided with, and have relied upon, information supplied to us

by the Company and their advisers. We have assumed that this information is full and correct. It follows that

if it is found to contain errors then our opinions of value may change.

Legal Documentation: We have relied on title documentation and leases together with a tenancy schedule

provided by the Company’s legal property advisers. We understand that all the Properties have good and

marketable title which is free from any onerous or restrictive conditions. We have not undertaken credit

enquiries into the financial status of the tenants and have assumed that they are capable of meeting all of

their obligations under the terms of their leases.

Inspections: We have carried out full inspections of each of the Properties and the dates of these are noted

on the attached Schedule. As agreed, except where we have been advised to the contrary, we have assumed

that there have been no material changes to any of the Properties or their surroundings that could have a

material effect on the value of the Company’s interest since our inspections.

Floor Areas: We have relied upon floor areas for the Properties provided by the Company. Which we

understand were calculated in accordance with the current RICS Code of Measuring Practice (6th Edition)

and upon which we have relied.

Tenancy: We have relied upon the tenancy schedule provided by the Company and the information

contained in the Certificates of Title. We have assumed all lease are on the same terms.

Building Surveys: We have not been provided with building surveys on the Properties. We have therefore

assumed all the Properties are structurally sound and built to current building regulations.

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Energy Performance Certificates: We have not been provided with EPC’s for the Properties. We have been

advised that all of the Properties are grade E or better by the Company’s adviser.

Environmental Surveys: We have not been provided with any environmental reports relating to the

Properties. All the Properties are residential and therefore we assume that any contamination that may have

previously existed would have been dealt with as part of the construction. We have therefore assumed that

all Properties are free from contamination.

Planning: We have relied on information on relevant planning consents provided to us and from our searches

of the relevant local authorities websites. In situations where there is no record, we have assumed all

construction was carried out in accordance with a valid planning permission and there are no outstanding

planning issues relating to any of the Properties.

10. DATE OF INSPECTION AND VALUATIONS

The Properties were inspected by the following on the dates listed below:

Property Date of Inspection Valuer Date of Valuation

Church Road, Bristol 14 Nov 17 Robert Sanato 30 June 2018

Paper Mill Yard, Norwich 01 Nov 17 Vicki Hacket 30 June 2018

Avonmore Court, Walsall 14 Nov 17 Tom O’Neill 30 June 2018

Smith’s Flour Mill, Walsall 14 Nov 17 David Farrow 30 June 2018

Barnes Court, Bristol 14 Nov 17 Robert Sanato 30 June 2018

Severn House, Bristol 14 Nov 17 Robert Sanato 30 June 2018

Whitley Mead/Church Road, Bristol 14 Nov 17 Robert Sanato 30 June 2018

Lonsdale Court, Birmingham 14 Nov 17 Christian Colbeck 30 June 2018

Melville/Prestbury Court, Manchester 15 Nov 17 Tom O’Neill 30 June 2018

Crown Meadow Court, Lowestoft 31 Oct 17 Vicki Hacket 30 June 2018

Herivan Close, Lowestoft 31 Oct 17 Vicki Hacket 30 June 2018

Herivan Gardens, Lowestoft 31 Oct 17 Vicki Hacket 30 June 2018

Stafford Court, Lowestoft 31 Oct 17 Vicki Hacket 30 June 2018

Wensum Court, Lowestoft 31 Oct 17 Vicki Hacket 30 June 2018

Wensum Gardens, Lowestoft 31 Oct 17 Vicki Hacket 30 June 2018

William Tubby House, Lowestoft 31 Oct 17 Vicki Hacket 30 June 2018

Shade Mill/Print Works, Leek 15 Nov 17 Tom O’Neill 30 June 2018

Old School Lofts, Leeds 19 Oct 17 William Ward 30 June 2018

Beech Grove, Preston 01 Nov 17 Tom O’Neill 30 June 2018

Saxon House, Derby 30 Jan 18 Michael Donaghy 30 June 2018

Celtic House, Derby 10 July 18 David Farrow 30 June 2018

Beecroft Court, Cannock 10 July 18 David Farrow 30 June 2018

For clarification, as per our instructions our valuations are based on the Specific Assumptions that the

Properties remain the same as at our inspections detailed above.

11. VALUATIONS

Basis of Valuations

Our valuation has been arrived at predominantly by reference to market evidence for comparable property

and we have adopted the investment approach. We can confirm that this report complies with the

International Valuation Standards as well as the Red Book.

We have made no allowance for any Capital Gains Tax or other taxation liability that might arise upon a sale

of the Property, nor have we allowed for any adjustment to any of the Properties’ income streams to take into

account any tax liabilities that may arise. Our valuations are exclusive of VAT (if applicable). We have

excluded from our valuations any additional value attributable to goodwill, or to fixtures and fittings which

are only of value in situ to the present occupier.

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No allowance has been made for rights, obligations or liabilities arising in relation to fixed plant and

machinery, and it has been assumed that all fixed plant and machinery and the installation thereof complies

with the relevant EEC legislation.

We have valued the twenty-two Properties on the following basis.

In undertaking our valuations, we have adopted the RICS definitions of Market Value and Market Rent,

as detailed below:

In undertaking our valuations, we have adopted the RICS definitions of Market Value and Market Rent, as

detailed below:

Valuation Standard VPS 4 1.2 of the Red Book defines Market Value (MV) as:

“The estimated amount for which an asset or liability should exchange on the valuation date between a

willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties

had each acted knowledgeably, prudently and without compulsion.”

Valuation Standard VPS 4 1.3 of the Red Book defines Market Rent (MR) as:

“The estimated amount for which an interest in real property should be leased on the valuation date between

a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper

marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”

Special Assumptions

For clarification, as per our instruction, we have adopted the Special Assumptions set out in paragraph 2 of

this report over and above the standard basis of Market Value and Market Rent as detailed above.

12. MARKET VALUE OF THE TWENTY-TWO PROPERTIES

We are of the opinion that the aggregate Market Value of the twenty-two freehold and leasehold interests in

the Properties, let on standard AST’s, as at 30 June 2018, is

Freehold Properties £65,620,000 Sixty Five Million and Six Hundred and

Twenty Thousand Pounds

Leasehold Properties £4,250,000 Four Million Two Hundred and

Fifty Thousand Pounds

£69,870,000

(SIXTY NINE MILLION EIGHT HUNDRED AND SEVENTY THOUSAND POUNDS)

The largest Property by value in the Portfolio is Celtic House, Derby, which represents 13 per cent. of the total.

13. AGGREGATE MARKET VALUE OF THE INDIVIDUAL UNITS FORMING PART OF THE

TWENTY-TWO PROPERTIES

Our assessment of the aggregate Market Value of the individual units within the twenty-two Properties

comprising the leasehold and freehold interests, on the Special Assumption that the units have the benefit of

vacant possession, as at 30 June 2018, is:

Freehold Properties £73,529,000 Seventy Three Million Five Hundred and

Twenty Nine Thousand Pounds

Leasehold Properties £4,720,000 Four Million Seven Hundred and

Twenty Thousand Pounds

£78,249,000

(SEVENTY EIGHT MILLION TWO HUNDRED AND FORTY NINE THOUSAND POUNDS)

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14. AGGREGATE MARKET RENTAL VALUE OF THE INDIVIDUAL UNITS COMPRISING

THE TWENTY-TWO PROPERTIES

Our assessment of the aggregate Market Rental Value of the individual units within the twenty-two

Properties comprising the leasehold and freehold interest, as at 30 June 2018 is:

Freehold Properties £4,528,960 per annum Four Million Five Hundred and Twenty

Eight Thousand Nine Hundred and

Sixty Pounds per annum

Leasehold Properties £328,000 per annum Three Hundred and Twenty Eight

Thousand Pounds per annum

£4,856,960 per annum

(FOUR MILLION EIGHT HUNDRED AND FIFTY SIX THOUSAND NINE HUNDRED AND SIXTY

POUNDS per annum)

To clarify the rental figure as reported is a net figure after deducting the ground rent payable.

15. SUMMARY OF VALUES

A summary of each of the values is set out below:

15.1 Freehold Properties

Aggregate

Vacant Aggregate

Possession Market Rental

Property Market Value Value Value

Church Road, Bristol £2,600,000 £2,886,500 £167,600

Paper Mill Yard, Norwich £5,920,000 £7,425,000 £301,740

Avonmore Court, Walsall £4,080,000 £4,430,000 £329,940

Barnes Court, Bristol £4,600,000 £4,972,000 £270,000

Severn House, Bristol £2,600,000 £3,040,000 £154,080

Whitley Mead/Church Road, Bristol £3,300,000 £3,830,000 £168,240

Lonsdale Court, Birmingham £1,490,000 £1,620,000 £87,480

Melville/Prestbury Court, Manchester £2,200,000 £2,435,000 £108,000

Crown Meadow Court, Lowestoft £1,480,000 £1,490,000 £122,040

Herivan Close, Lowestoft £1,475,000 £1,604,000 £114,360

Herivan Gardens, Lowestoft £1,525,000 £1,749,000 £125,760

Stafford Court, Lowestoft £885,000 £1,065,000 £75,200

Wensum Court, Lowestoft £835,000 £1,055,000 £72,300

Wensum Gardens, Lowestoft £1,420,000 £1,700,000 £113,640

William Tubby House, Lowestoft £3,310,000 £4,200,000 £248,220

Shade Mill/Print Works, Leek £2,150,000 £2,735,000 £180,480

Old School Lofts, Leeds £6,150,000 £6,740,000 £453,600

Beech Grove, Preston £2,100,000 £2,440,000 £154,080

Saxon House, Derby £5,300,000 £5,372,500 £383,700

Celtic House, Derby £8,500,000 £8,700,000 £613,800

Tawny and Carder Place, Cannock £3,700,000 £4,040,000 £284,700 –––––––––– –––––––––– –––––––––Total £65,620,000 £73,529,000 £4,528,960 –––––––––– –––––––––– –––––––––

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15.2 Leasehold Properties

Aggregate

Vacant Aggregate

Possession Market Rental

Property Market Value Value Value

Smith’s Flour Mill, Walsall £4,250,000 £4,720,000 £328,000 –––––––––– –––––––––– –––––––––Total £4,250,000 £4,720,000 £328,000 –––––––––– –––––––––– –––––––––

16. MARKET VALUE VERSES PURCHASE PRICE

RICS guidance requires for a valuer to comment whereby our values differ from the purchase price of a

property. In this regard we have been informed that the agreed purchase of all of the assets has been set at

our assessments of Market Value ascribed above.

The one exception to this is Paper Mill Yard, with the agreed purchase price being £6,310,000. This reflects

a premium of £390,000 (6.6%). The units forming this property are located in disparate blocks and it is

therefore essentially a broken investment. If we considered the investment on a, say 15 – 20% discount to

break up value as per the indicative market norm, this would result in a highly unrealistic yield for this type

of holding in this location. As a result, we believe the type of investor who would purchase this opportunity

would look to the break-up value and sell the units off individually. We have applied a yield that we think is

appropriate, which results in a higher discount than would be expected. We think this is reasonable however

as an investor who then intends to sell the units off individually faces the risk of potential falls in capital

values.

In light of this and in the context of the difference in value being less than 10% we do not consider that the

proposed purchase price is unreasonable.

17. NO MATERIAL CHANGE

We are not aware of any material changes to the Properties which would affect our valuations between the

valuation date and the date of this report.

18. GENERAL ASSUMPTIONS

Our report and valuations are carried out on the basis of the following General Assumptions:

General Conditions and Assumptions

The property details on which each valuation has been based are as set out in the Report. Various

assumptions have been made as to tenure, letting, taxation, town planning, and the condition and repair of

buildings and sites.

If any of the information or assumptions on which the valuations have been based are subsequently found to

be incorrect, the valuation figures may also be incorrect and should be considered.

18.1 That the Properties are not subject to any unusual or especially onerous restrictions, encumbrances or

outgoings contained in the Title. Should there be any mortgages or charges, we have assumed that the

property would be sold free of them. We have not inspected the Title Deeds or Land Registry

Certificate.

18.2 That we have been supplied with all information likely to have an effect on the value of the Properties,

and that the information supplied to us and summarised in this report is both complete and correct.

18.3 That the buildings have been constructed and are used in accordance with all statutory and bye-law

requirements, and that there are no breaches of planning control and any future construction or use

will be lawful.

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18.4 That the Properties are not adversely affected, nor likely to become adversely affected, by any

highway, town planning or other schemes or proposals, and that there are no matters adversely

affecting value that might be revealed by a local search, replies to usual enquiries, or by any statutory

notice (other than those points referred to above).

18.5 That the Properties are structurally sound, and that there are no structural, latent or other material

defects, including rot and inherently dangerous or unsuitable materials or techniques, whether in parts

of the Properties we have inspected or not, that would cause us to make allowance by way of capital

repair (other than those points referred to above). Our inspection of the Properties and our Report do

not constitute a building survey or any warranty as to the state of repair of the Property.

18.6 That the Properties are connected, or capable of being connected without undue expense, to the public

services of gas, electricity, water, telephones and sewerage.

18.7 That in the construction or alteration of the Properties no use was made of any deleterious or

hazardous materials or techniques, such as high alumina cement, calcium chloride additives,

woodwool slabs used as permanent shuttering and the like (other than those points referred to above).

We have not carried out any investigations into these matters.

18.8 That the Properties have not suffered any land contamination in the past, nor is it likely to become so

contaminated in the foreseeable future. We have not carried out any soil tests or made any other

investigations in this respect, and we cannot assess the likelihood of any such contamination.

18.9 That any tenant is capable of meeting its obligations, and that there are no arrears of rent or

undisclosed breaches of covenant.

18.10 We will not make any allowance for any Capital Gains Tax or other taxation liability that might arise

upon a sale of the Property.

18.11 Our valuations will be exclusive of VAT (if applicable).

18.12 No allowance will be made for any expenses of realisation.

18.13 Excluded from our valuations will be any additional value attributable to goodwill, or to fixtures and

fittings which are only of value in situ to the present occupier.

18.14 Energy Performance Certificates (EPCS) are required for the sale, letting, construction or alteration

of all residential buildings, and on non-domestic residential buildings over 538 sq ft (50 sq m) in

England and Wales. The effect of EPCS on value appears to be limited. We will not consider the

Property’s EPC rating(s) in forming our opinion of value.

18.15 No allowance will be been made for rights, obligations or liabilities arising under the Defective

Premises Act 1972, and it will be assumed that all fixed plant and machinery and the installation

thereof complies with the relevant UK and EEC legislation.

18.16 Our valuations will be based on market evidence which has come into our possession from numerous

sources, including other agents and valuers and from time to time this information is provided

verbally. Some comes from databases such as the Land Registry or computer databases to which

Savills Advisory Services Limited subscribes. In all cases, other than where we have had a direct

involvement with the transactions being used as comparables in our Report, we are unable to warrant

that the information on which we have relied is correct.

19. PUBLICATION

This report has been prepared for inclusion in the Prospectus to be issued by the Company dated

12 September 2018. The contents of this report may be used only for the specific purpose to which it refers.

Before this report, or any part thereof, is reproduced or referred to, in any document, circular or statement

our written approval as to the form and context of such publication or disclosure must first be obtained.

125

For the avoidance of doubt such approval is required whether or not Savills Advisory Services Limited is

referred to by name and whether or not the contents of our report are combined with others.

This report has been produced for the inclusion in the Prospectus and may not be reproduced or used in

connection with any other purposes without our prior consent.

Savills Advisory Services Limited has given and not withdrawn its written consent to the inclusion of their

report in the Prospectus.

20. RESPONSIBILITY STATEMENT

Save for any responsibility arising under Prospectus Rule 5.5.3R(2)(f) to any person as and to the extent

there provided, to the fullest extent permitted by law we do not assume any responsibility and will not accept

any liability to any other person for any loss suffered by any such person as a result of, arising out of, or in

accordance with this report or our statement, required by and given solely for the purposes of complying with

Annex I item 23.1 of the Prospectus Directive Regulation, consenting to its inclusion in the Prospectus.

For the purpose of Prospectus Rule 5.5.3R(2)(f), we accept responsibility for the information within this

report and valuations and declare that we have taken all reasonable care to ensure that the information

contained in the report and valuations is, to the best of our knowledge, in accordance with the facts and

contains no omission likely to affect its import. This declaration is included in the Document in compliance

with Annex 1 item 1.2 of the Prospectus Directive Regulation.

Yours faithfully

Craig Langley MRICS Michael Sharpe Neal FRICS

DIRECTOR DIRECTOR

RICS Registered Valuer RICS Registered Valuer

For and on behalf of Savills Advisory Services Limited

126

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127

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128

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129

PART 9

TAXATION

1. GENERAL

The statements on taxation below are intended to be a general summary of certain tax consequences

that may arise in relation to the Company (which in this case, and for the purposes of this Part 9 will

be the Company as the principal company of the Group), the other members of the Group and

Shareholders. This is not a comprehensive summary of all technical aspects of the taxation of the

Company, its Shareholders and the other members of the Group and is not intended to constitute legal

or tax advice to investors. Prospective investors should familiarise themselves with, and where

appropriate should consult their own professional advisers on, the overall tax consequences of

investing in the Company. The statements relate to investors acquiring Ordinary Shares for

investment purposes only, and not for the purposes of any trade. As is the case with any investment,

there can be no guarantee that the tax position or proposed tax position prevailing at the time an

investment in the Company is made will endure indefinitely. The tax consequences for each investor

of investing in the Company may depend upon the investor’s own tax position and upon the relevant

laws of any jurisdiction to which the investor is subject.

The statements of UK tax laws set out below relate to the UK tax implications of a UK resident and

domiciled individual or UK-resident company investing in the Company (unless expressly stated

otherwise). The tax consequences may differ for investors who are not resident in the UK for tax

purposes. Investors should seek their own professional advice as to this, as well as to any other relevant

laws and regulations in the jurisdiction in which they are resident for tax purposes. The statements are

based on current tax legislation and HMRC practice, both of which are subject to change at any time,

possibly with retrospective effect.

In this Part 9, reference to the Group are to the Company and each subsidiary which is a member of its group

for the purposes of section 606 of the CTA 2010.

2. UK TAX TREATMENT OF THE GROUP

Unless and until REIT status is obtained, the Company and each other member of the Group will be subject

to UK corporation tax on its profits and gains on the basis that the Company and each other member of the

Group will be UK tax resident as a result of being incorporated in the UK. The special rules which apply to

the taxation of a company which enters the REIT Regime are summarised below and, together with the

conditions which the Company and the Group are required to satisfy in order to enter and thereafter remain

within the REIT Regime, are described in further detail in Part 10.

A REIT does not suffer UK corporation tax on the profits (income and capital gains) from its Property Rental

Business, provided that certain conditions are satisfied. Instead, distributions in respect of the Property

Rental Business will be treated for UK tax purposes as UK property income in the hands of Shareholders

(see further below for details on the UK tax treatment of shareholders in a REIT).

However, UK corporation tax remains payable in the normal way in respect of income and gains from a REIT’s

Residual Business. Dividends relating to the Residual Business are treated for UK tax purposes as normal

dividends. Any normal dividend paid by the Company is referred to in this Part 9 as a “Non-PID Dividend”.

The tax treatment of a dividend paid by the Company in the first accounting period after it achieves REIT

status would depend on whether it is deemed to be paid out of profits that arose before or after the Group

became a REIT. In addition, where on an on-going basis after the Group enters the REIT Regime the

Company makes distributions to Shareholders in excess of the amount required to satisfy the “distribution

condition” for each accounting period (see further below in Part 10), distributions to Shareholders are likely

to consist of a mixture of PID and Non-PID Dividends as calculated in accordance with specific attribution

rules. The Company will provide Shareholders with a certificate setting out how much, if any, of their

dividends is a PID and how much is a Non-PID dividend.

130

3. UK TAX TREATMENT OF SHAREHOLDERS

The following paragraphs are intended as a general guide only and are based on the Company’s

understanding of current UK tax law and HMRC practice, each of which is subject to change. They

are not advice. This section is divided into two parts. Section A describes the position prior to entry of

the Group into the REIT Regime and Section B describes the position following entry into the REIT

Regime. Except where otherwise indicated, Sections A and B apply only to Shareholders who are

resident for tax purposes solely in the UK; and only to Shareholders who hold their Ordinary Shares

as investments and who are the absolute beneficial owners thereof.

Shareholders who are in any doubt about their tax position, or who are subject to tax in a jurisdiction

other than the UK, should consult their own appropriate independent professional adviser.

3.1 Section A — The position prior to the Company’s entry into the REIT Regime

(a) UK taxation of dividends

The Company will not be required to withhold tax at source when paying a dividend.

With effect from 6 April 2018, each individual is entitled to an annual tax-free dividend

allowance of £2,000. If the amount of any dividend which a UK-resident individual

Shareholder receives from the Company, when added to other dividend income received by the

individual in the tax year in which the dividend is received, is less than or equal to £2,000, the

individual will have no liability for income tax in respect of the receipt of the dividend.

If the amount of any dividend which a UK-resident individual Shareholder receives from the

Company, when added to other dividend income received by the individual in the tax year in

which the dividend is received, exceeds £2,000, the excess amount will be subject to income

tax at either the dividend ordinary rate (currently 7.5 per cent.), the dividend upper rate

(currently 32.5 per cent.) or the dividend additional rate (currently 38.1 per cent.), depending

on the individual’s total taxable income for the tax year in question and disregarding any

personal allowance to which the individual may be entitled.

UK-resident corporate Shareholders (other than dealers and certain insurance companies) are

not liable to corporation tax in respect of UK dividends provided that the dividends are exempt

under Part 9A of the Corporation Tax Act 2009.

(b) UK taxation of disposals for UK residents

Any gain on disposal (by sale, transfer or redemption) of Ordinary Shares by Shareholders

resident in the UK for taxation purposes should be subject to capital gains tax in the case of an

individual Shareholder, or UK corporation tax on chargeable gains in the case of a corporate

Shareholder. Individuals may have gains reduced by annual exemptions (£11,700 for 2018-

2019) or allowable losses. Companies subject to UK corporation tax will no longer be entitled

to indexation allowance in respect of any chargeable gain made on the Ordinary Shares.

The rate of UK capital gains tax will usually be 10 per cent. for individual Shareholders who

are chargeable to UK income tax at the basic rate for gains up to the unused portion of the basic

rate band and otherwise will usually be 20 per cent. including for individual Shareholders

taxable at rates other than the basic rate.

(c) UK taxation of disposals for non UK residents

Non UK residents are currently generally not liable to tax on chargeable gains, except if the

asset is held as part of a branch or agency, permanent establishment, of non UK residents in the

UK. The UK Government have announced that from 1 April 2019, non UK residents will be

taxable on disposals of shares in property rich companies (which should include the Company)

where the shareholder has a qualifying holding, broadly a minimum of 25 per cent. interest.

131

(d) UK stamp duty and SDRT

The following comments are intended as a guide to the current general stamp duty and SDRT

position and do not relate to persons such as market makers, brokers, dealers, intermediaries

and persons connected with depository arrangements or clearance services, to whom special

rules apply.

No UK stamp duty or SDRT will be payable on the issue of the Ordinary Shares. UK stamp

duty (at the rate of 0.5 per cent. of the amount or value of the consideration for the transfer

rounded up where necessary to the nearest £5) is payable on any instrument of transfer of

Ordinary Shares. An exemption from stamp duty is available for instruments transferring

shares where the amount or value of the consideration is £1,000 or less and it is certified on the

instrument that the transaction effected by it does not form part of a larger transaction or series

of transactions in respect of which the aggregate amount or value of the consideration exceeds

£1,000.

A charge to SDRT will also arise in respect of an unconditional agreement to transfer Ordinary

Shares (at the rate of 0.5 per cent. of the amount or value of the consideration for the Ordinary

Shares). However, if an instrument of transfer is executed in pursuance of the agreement and

duly stamped within six years of the date on which the agreement became unconditional, the

SDRT charge will generally be cancelled and any SDRT which has already been paid can

generally be reclaimed. Shares held in dematerialised form on CREST will usually be subject

to SDRT and not stamp duty as no instrument of transfer is usually executed. The liability to

pay stamp duty or SDRT is normally satisfied by the purchaser or transferee.

3.2 Section B — The position following the Company’s entry into the REIT Regime

The following paragraphs relate only to certain limited aspects of the UK taxation treatment of PIDs

and Non-PID Dividends paid by the Company, and to disposals of Ordinary Shares in the Company,

in each case after the Group achieves and maintains REIT status. They apply only to Shareholders

who are the absolute beneficial owners of both PIDs, their Non-PID Dividends and their Ordinary

Shares in the Company.

The following paragraphs do not comment on the tax position of any person who is a Shareholder who

holds excessive rights in the Company, which in accordance with Chapter 6 Part 12 CTA 2010 is

generally a corporate Shareholder with at least a 10 per cent. interest in the Ordinary Shares and

distributions thereon.

(a) UK taxation of Non-PID Dividends

Non-PID Dividends paid by the Company will be taxed in the same way as dividends paid by

the Company prior to entry into the REIT Regime (as outlined above), whether in the hands of

individual or corporate Shareholders and regardless of whether the Shareholder is resident for

tax purposes in the UK.

(b) UK taxation of PIDs

(i) UK taxation of individual Shareholders

Subject to certain exceptions, a PID will generally be treated in the hands of

Shareholders who are individuals as the profits of a single UK property business (as

defined in section 264 of the Income Tax (Trading and Other Income) Act 2005). A PID

is, together with any Property Income Distribution from any other REIT, treated as a

separate UK property business from any other UK property business (a “different UK

property business”) carried on by the relevant Shareholder. This means that any surplus

expenses from a Shareholder’s different UK property business cannot be offset against

a PID as part of a single calculation of the profits of the Shareholder’s UK property

business. The PID will be taxable at the individual’s marginal income tax rate,

20 per cent., 40 per cent. or 45 per cent. as appropriate. However, the basic rate of

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income tax (currently 20 per cent.) will be withheld by the Company (where required)

on the PID. Please see below for further detail regarding withholding tax.

(ii) UK taxation of corporate Shareholders

Subject to certain exceptions, a PID will generally be treated in the hands of

Shareholders who are within the charge to UK corporation tax as profits of a property

business (as defined in Part 4 of the Corporation Tax Act 2009 (“Part 4 property

business”)). A PID is, together with any Property Income Distribution from any other

REIT, treated as a separate Part 4 property business from any other Part 4 property

business (a “different Part 4 property business”) carried on by the relevant

Shareholder. This means that any surplus expenses from a Shareholder’s different Part 4

property business cannot be offset against a PID as part of a single calculation of the

Shareholder’s Part 4 property business profits. The current corporation tax rate is

19 per cent. due to reduce to 17 per cent. from 1 April 2020. Losses arising from a

Shareholder’s different Part 4 property business may however be deducted from the

Shareholder’s total profits in the accounting period in which they arise or, provided that

the Shareholder continues to carry on the different Part 4 property business, subsequent

periods.

(iii) UK taxation of Shareholders who are not resident for tax purposes in the UK

Where a Shareholder who is resident for tax purposes outside the UK receives a PID,

the PID will generally be chargeable to UK income tax as profits of a UK property

business. A non UK resident corporate is only subject to income tax at the basic rate

whilst non UK resident individuals will be subject to income at their marginal income

tax rate. The basic rate of income tax will be withheld by the Company on payment of

the PID.

(iv) Withholding tax

(A) General

Subject to certain exceptions summarised below, the Company is required to

withhold income tax at source at the basic rate (currently 20 per cent.) from its

PIDs. The Company will provide Shareholders with a certificate setting out the

gross amount of the PID, the amount of tax withheld, and the net amount of the

PID.

(B) Shareholders resident in the UK

Where tax has been withheld at source by the Company, Shareholders who are

individuals may, depending on their particular circumstances, either be liable to

further UK income tax on their PID at their applicable marginal income tax rate,

incur no further UK tax liability on their PID, or be entitled to claim repayment

of some or all of the UK income tax withheld on their PID.

Corporate Shareholders who are resident for tax purposes in the UK will

generally be liable to pay UK corporation tax on their PID and if (exceptionally)

income tax is withheld at source, the tax withheld can be set against their liability

to UK corporation tax or against any income tax which they themselves are

required to withhold in the accounting period in which the PID is received.

(C) Shareholders who are not resident for tax purposes in the UK

It is not possible for a Shareholder to make a claim under a relevant double

taxation treaty for a PID to be paid by the Company gross or subject to

withholding at a reduced tax rate. The right of a Shareholder to claim the

repayment of any part of the UK income tax withheld from a PID will depend on

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the existence and terms of any double taxation convention between the UK and

the country in which the Shareholder is resident for tax purposes.

(D) Exceptions to requirement to withhold income tax

In certain circumstances the Company is not obliged to withhold UK income tax

at source from a PID. These include where the Company reasonably believes that

the person beneficially entitled to the PID is a company resident for tax purposes

in the UK, or a charity, or a company resident for tax purposes outside the UK

with a permanent establishment in the UK which is required to bring the PID into

account in computing its chargeable profits. In addition, the exceptions also apply

where the Company reasonably believes that the PID is paid to the scheme

administrator of a registered pension scheme, the sub-scheme administrator of

certain pension sub-schemes, the account manager of an ISA, the plan manager

of a Personal Equity Plan (PEP), or the account provider for a Child Trust Fund,

in each case, provided the Company reasonably believes that the PID will be

applied for the purposes of the relevant fund, scheme, account or plan.

In order to pay a PID without withholding tax, the Company will need to be

satisfied that the Shareholder concerned is entitled to that treatment.

3.3 UK taxation of chargeable gains in respect of Ordinary Shares in the Company

The following comments apply to both individual and corporate Shareholders, regardless of whether

or not such Shareholders are resident for tax purposes in the UK.

Chargeable gains arising on the disposal of Ordinary Shares in the Company following entry into the

REIT Regime should be taxed in the same way as chargeable gains arising on the disposal of shares

in the Company prior to entry into the REIT Regime. This tax treatment is outlined further above.

The entry of the Group into the REIT Regime will not constitute a disposal of Ordinary Shares in the

Company by Shareholders for UK chargeable gains purposes.

3.4 UK stamp duty and UK SDRT

See paragraph 3.1(d) of this Part 9.

3.5 ISAs, SSASs and SIPPs

With effect from 1 July 2014 the new ISA (“NISA”) regime commenced in the UK which, amongst

other things, removed the concept of stocks and shares and cash components of an ISA. For the

2018/19 tax year NISAs have a subscription limit of £20,000, all of which can be invested in stocks

and shares.

The Ordinary Shares will be a qualifying investment for the stocks and shares component of an ISA,

provided they are acquired by an ISA plan manager pursuant to the Offer for Subscription.

In addition, the Ordinary Shares in the Company should be eligible for inclusion in a Small

Self-Administered Scheme (“SSAS”) or a Self-Invested Personal Pension (“SIPP”), provided that the

relevant SSAS or SIPP does not hold its interest in the Company for the purpose of enabling a member

of the SSAS or SIPP (or a person connected with the member) to occupy a PRS Home and does not

directly or indirectly hold an interest of 10 per cent. or more in the share capital or voting rights of

the Company, or in distributions made by the Company, or the assets of the Company available for

distribution on a winding up.

If you are in any doubt as to your tax position you should consult your professional adviser.

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4. US FEDERAL INCOME TAX CONSIDERATIONS

4.1 General

This section describes certain U.S. federal income tax consequences to U.S. Shareholders of

acquiring, owning, and disposing of the Ordinary Shares. It applies only to U.S. Shareholders who

acquire their Ordinary Shares in the initial offering through this Prospectus and who hold such

Ordinary Shares as capital assets for U.S. federal income tax purposes. This section does not apply to

a Shareholder who is member of a special class of Shareholders subject to special U.S. tax rules,

including:

• a dealer in securities,

• a real estate investment trust (for U.S. federal income tax purposes) or regulated investment

company,

• a trader in securities that elects to use a mark-to-market method of accounting for securities

holdings,

• a tax-exempt organization,

• a U.S. tax-deferred account, including an “individual retirement account” or “Roth IRA,”

• a bank or other financial institution, or a life insurance company,

• a person that actually or constructively owns 10 per cent. or more of either the voting power or

the value of the Ordinary Shares (as such terms are defined in the U.S. federal tax laws),

• a person that holds Ordinary Shares as part of a straddle or a hedging, integrated or conversion

transaction,

• a former citizen or long term resident of the United States,

• a U.S. Shareholder (as defined below) whose functional currency is not the U.S. dollar.

This section is based on the U.S. Internal Revenue Code of 1986, as amended, its legislative history,

existing and proposed U.S. Treasury Regulations, published rulings and court decisions, as well as the

Convention Between the Government of the United States of America and the Government of the

United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the

Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital Gains, (together with

the Protocol thereto, the “Treaty”), all as of the date hereof and all subject to change, possibly on a

retroactive basis. No ruling will be sought from the U.S. tax authority in any respect of this discussion

and no assurance can be given that the U.S. tax authority will not assert a position different to that

expressed herein.

A Shareholder is a “U.S. Shareholder” if such Shareholder is a beneficial owner of Ordinary Shares

and if such Shareholder is, for U.S. federal income tax purposes:

• an individual who is a citizen or resident of the United States,

• a corporation (or other entity that is treated as a corporation for U.S. federal income tax

purposes) created or organized in or under the laws of the United States, any state thereof, or

the District of Columbia,

• an estate whose income is subject to U.S. federal income tax regardless of its source, or

• a trust, if (1) a U.S. court can exercise primary supervision over the trust’s administration and

one or more U.S. persons are authorized to control all substantial decisions of the trust or (2)

such trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated

as a U.S. person.

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If a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) is

a Shareholder, the tax treatment of a partner in the partnership will generally depend upon the status

of the partner and the activities of the partnership. A Shareholder that is a partnership, and partners in

such partnership, should consult their own tax advisors regarding the tax consequences of acquiring,

owning and disposing of the Ordinary Shares.

Shareholders should consult their own tax advisors regarding the U.S. federal, state and local and

other tax consequences of acquiring, owning and disposing of Ordinary Shares in their particular

circumstances.

This discussion addresses only U.S. federal income taxation to U.S. Shareholders. Shareholders

should consult their own tax advisors as to potential application of U.S. state and local tax laws, any

other U.S. tax laws (such as the gift, alternative minimum, or estate tax) and other U.S. laws and

foreign laws, including the laws of the United Kingdom.

This discussion is addressed only to U.S. Shareholders. If you are not a U.S. Shareholder please

consult your own tax advisors as to the consequences of acquiring, owning and disposing of the

Ordinary Shares of the Company.

4.2 Taxation of U.S. Shareholders

(a) Passive Foreign Investment Company Considerations

The Company believes that its Ordinary Shares are likely to be treated as stock of a passive

foreign investment company (a “PFIC”) for U.S. federal income tax purposes for its current

taxable year and for the foreseeable future, but this conclusion is a factual determination that

is made annually. The Company does not intend to monitor its PFIC status on a going forward

basis.

In general, the Company will be a PFIC with respect to a U.S. Shareholder if for any taxable

year of the Company in which Ordinary Shares are held by such U.S. Shareholder:

• at least 75 per cent. of the Company’s gross income for the taxable year is “passive

income”; or

• at least 50 per cent. of the value, determined on the basis of a quarterly average, of the

Company’s gross assets is attributable to assets that produce or are held for the

production of “passive income.”

For purposes of the PFIC rules, “passive income” generally includes dividends, interest,

royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or

business), annuities and gains from the disposition of assets that produce passive income. Cash

is generally treated as an asset that produces passive income and all cash held by the Company

is expected to be treated as an asset that produces passive income. If a foreign corporation owns

at least 25 per cent. by value of the stock of another corporation, the foreign corporation is

treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other

corporation, and as receiving directly its proportionate share of the other corporation’s income.

Moreover, Ordinary Shares will be treated as stock of a PFIC with respect to a U.S.

Shareholder if the Company is a PFIC at any time during the period in which such U.S.

Shareholder holds the Ordinary Shares, even if the Company ceases to be treated as a PFIC,

unless certain special elections are made.

If the Company is treated as a PFIC, and a U.S. Shareholder does not make one of the elections

described below, such U.S. Shareholder will be subject to special tax rules with respect to:

• any gain realized on the sale or other disposition of Ordinary Shares; and

• any excess distribution that the Company makes to such U.S. Shareholder (generally,

any distributions during a single taxable year that are greater than 125 per cent. of the

average annual distributions received by such U.S. Shareholder in respect of its

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Ordinary Shares during the three preceding taxable years or, if shorter, such U.S.

Shareholder’s holding period for its Ordinary Shares).

Under these rules:

• the gain or excess distribution will be allocated ratably over the U.S. Shareholder’s

holding period for its Ordinary Shares;

• the amount allocated to the taxable year in which the U.S. Shareholder realized the gain

or excess distribution will be taxed as ordinary income;

• the amount allocated to each prior year, with certain exceptions, will be taxed at the

highest tax rate in effect applicable to ordinary income for the applicable class of

taxpayers for that year; and

• the interest charge generally applicable to underpayments of tax will be imposed in

respect of the tax attributable to each prior year.

Assuming the Company is a PFIC, the general tax treatment for U.S. Shareholders described

above would apply to indirect distributions and gains deemed to be realized by U.S.

Shareholders in respect of any of the Company’s subsidiaries that are also PFICs. The

Company believes that the Company and its subsidiaries are also likely to be PFICs.

(b) QEF Election

The special PFIC tax rules described above will not apply to a U.S. Shareholder who elects to

have the Company treated as a “qualified electing fund” with respect to such U.S. Shareholder

(such election, a “QEF election”) and the Company provides certain required information to

U.S. Shareholders to give effect to such election. The Company does not intend to provide U.S.

Shareholders with the information required to make an effective QEF election.

(c) Mark-to-Market Election

If the Company is a PFIC and the Ordinary Shares are treated as marketable stock, a U.S.

Shareholder may make a mark-to-market election with respect to its Ordinary Shares requiring

the U.S. Shareholder to currently include any appreciation in its Ordinary Shares in its income

as ordinary income on an annual basis to avoid gain and excess distributions being treated as

earned ratably over the U.S. Shareholder’s holding period (and therefore, also avoiding the

application of the interest charge described above). However, a mark-to-market election will

generally not be available unless the Ordinary Shares are regularly traded on a qualified

exchange and, further, would not mitigate the adverse implications of PFIC status with respect

to any subsidiaries of the Company. The Company cannot guarantee that its Ordinary Shares

will be traded on a qualified exchange or be sufficiently traded on such an exchange, and thus,

the Company cannot guarantee its Ordinary Shares would be treated as marketable stock.

If the Company is treated as a PFIC for any taxable year with respect to a U.S. Shareholder and

a QEF election is not in effect, such U.S. Shareholder may be able to make a deemed sale

election if the Company ceases to be treated as a PFIC in subsequent taxable years. The effect

of the deemed sale is generally to “purge” the Company’s stock of its characterization as stock

of a PFIC, and thereafter, such Company stock generally would not be treated as stock of a

PFIC with respect to such U.S. Shareholder, provided that the Company does not become a

PFIC again in a subsequent taxable year. Upon making a deemed sale election with respect to

the Company’s stock, generally such electing U.S. Shareholder would be treated as having sold

all of such U.S. Shareholder’s stock in the Company for its fair market value on the last day of

the Company’s last taxable year during which the Company was treated as a PFIC, and such

deemed sale generally would be treated as a taxable disposition that is subject to the PFIC tax

rules described above. The U.S. Shareholder’s holding period in the non-PFIC Ordinary Shares

would be treated as beginning on the day following the deemed sale for purposes of the PFIC

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rules. U.S. Shareholders should consult their own tax advisors as to the availability and

consequences of a deemed sale election.

A U.S. Shareholder must generally file an IRS Form 8621 (“Information Return by a

Shareholder of a Passive Foreign Investment Company”) with its U.S. federal income tax

return for any taxable year in which the Company is a PFIC with respect to such U.S.

Shareholder. U.S. Shareholders are urged to consult their own tax advisors concerning the

filing of IRS Form 8621.

(d) Taxation of Dividends

Notwithstanding any election a U.S. Shareholder makes with regard to its Ordinary Shares

(discussed above), dividends received from the Company will not constitute qualified dividend

income taxable at long-term capital gains rates for a non-corporate U.S. Shareholder if the

Company is a PFIC either in the taxable year of the distribution or the preceding taxable year.

Moreover, such U.S. Shareholder’s Ordinary Shares will continue to be treated as stock in a

PFIC if the Company was a PFIC at any time during such U.S. Shareholder’s holding period

in its Ordinary Shares, even if the Company is not currently a PFIC (unless a deemed sale

election is made to purge characterization of a U.S. Shareholder’s Ordinary Shares as stock of

a PFIC, as discussed above). Dividends that a U.S. Shareholder receives that do not constitute

qualified dividend income are not eligible for taxation at the preferential rate of taxation under

current law applicable to qualified dividend income. Instead, such U.S. Shareholder will be

subject to U.S. federal income tax at rates applicable to ordinary income on the gross amount

of any such distribution treated as a dividend.

Dividends are taxable to U.S. Shareholders as ordinary income when such dividends are

received, actually or constructively. Such dividends will not be eligible for the dividends-

received deduction generally allowed to U.S. corporations in respect of dividends received

from other U.S. corporations.

The amount of a dividend distribution that U.S. Shareholders must include in their income

(including the amount of U.K. taxes withheld if any) will be the U.S. dollar value of the sterling

payments made, determined at the spot sterling/U.S. dollar rate on the date the dividend

distribution is includible in such U.S. Shareholder’s income, regardless of whether the payment

is in fact converted into U.S. dollars. Generally, any gain or loss resulting from currency

exchange fluctuations during the period from the date a dividend payment is included in

taxable income to the date the payment is converted into U.S. dollars will be treated as ordinary

income or loss and will not be eligible for the special tax rate applicable to qualified dividend

income. The currency gain or loss generally will be income or loss from sources within the

United States for foreign tax credit limitation purposes. If dividends received in sterling are

converted into U.S. dollars on the day they are received, the U.S. Shareholder generally will

not be required to recognize foreign currency gain or loss in respect of the dividend income.

Subject to applicable limitations, UK taxes withheld from dividends on Ordinary Shares at arate not exceeding any applicable rate under the United States double taxation treaty with theUK (the “Treaty”) generally will be creditable against the U.S. Shareholder’s U.S. federalincome tax liability. UK taxes withheld in excess of any applicable rate under the Treaty willnot be eligible for credit against a U.S. Shareholder’s U.S. federal income tax liability. In lieuof claiming a credit, a U.S. Shareholder may elect to deduct such UK taxes in computing itstaxable income, subject to applicable limitations. An election to deduct foreign taxes instead ofclaiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year. Therules governing foreign tax credits are complex, and U.S. Shareholders should consult their taxadvisors regarding the creditability of foreign taxes in their particular circumstances.

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(e) Taxation of Capital Gains

If the PFIC rules discussed above were not to apply, when a U.S. Shareholder sells or otherwise

disposes of its Ordinary Shares, such U.S. Shareholder generally will recognize capital gain or

loss for U.S. federal income tax purposes equal to the difference between the U.S. dollar value

of the amount realized and such U.S. Shareholder’s tax basis, determined in U.S. dollars, in its

Ordinary Shares. Capital gain of a non-corporate U.S. Shareholder is generally taxed at a

preferential rate of taxation under current law where the Shareholder has a holding period

greater than one year. Such gain or loss will generally be income or loss from sources within

the United States for foreign tax credit limitation purposes. The deductibility of capital losses

is subject to certain limitations.

4.3 Net Investment Income Tax

Subject to certain limitations, an additional tax of 3.8 per cent. is imposed on the “net investment

income” of certain U.S. Shareholders who are citizens and resident aliens, and on the undistributed

“net investment income” of certain estates and trusts. Among other items, “net investment income”

generally would include dividends paid on Ordinary Shares and certain net gain from the sale or other

taxable disposition of Ordinary Shares, less certain deductions. U.S. Shareholders should consult their

own tax advisors concerning the effect, if any, of this net investment income tax on holding Ordinary

Shares in their particular circumstances.

4.4 Backup Withholding and Information Reporting

For a non-corporate U.S. Shareholder, information reporting requirements, on Internal Revenue

Service Form 1099, generally will apply to:

• dividend payments or other taxable distributions made to such U.S. Shareholder within the

United States or by a U.S. payor; and

• the payment of proceeds to such U.S. Shareholder from the sale of Ordinary Shares effected at

a U.S. office of a broker.

Additionally, backup withholding may apply to such payments to a non-corporate U.S. Shareholder

that fails to provide an accurate taxpayer identification number, is notified by the Internal Revenue

Service that such non-corporate U.S. Shareholder has failed to report all interest and dividends

required to be shown on its U.S. federal income tax returns, or in certain circumstances, fails to

comply with applicable certification requirements. Certain U.S. Shareholders (including, among

others, corporations) are not subject to backup withholding.

Backup withholding is not an additional tax. A non-corporate U.S. Shareholder generally may obtain

a refund of any amounts withheld under the backup withholding rules that exceed such Shareholder’s

U.S. federal income tax liability by timely filing a refund claim with the Internal Revenue Service.

4.5 Disclosure of Information with respect to Foreign Financial Assets

Certain U.S. Shareholders who hold any interest in “specified foreign financial assets,” including the

Ordinary Shares, during such U.S. Shareholders’ taxable year must attach to their U.S. federal income

tax return for such year certain information with respect to each asset (IRS Form 8938 “Statement of

Specified Foreign Financial Assets”) if the aggregate value of all of such assets exceeds $50,000 on

the last day of the tax year or more than $75,000 at any time during the tax year (or a higher dollar

amount prescribed by the Internal Revenue Service). For this purpose, a “specified foreign financial

asset” includes any depositary, custodial or other financial account maintained by a foreign financial

institution, and certain assets that are not held in an account maintained by a financial institution,

including any stock or security issued by a person other than a U.S. person. Penalties apply for failure

to furnish the required information. U.S. Shareholders should consult their own tax advisers

concerning any obligation that they may have to furnish information to the Internal Revenue Service

as a result of holding the Ordinary Shares.

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5. AUTOMATIC EXCHANGE OF INFORMATION

The UK has entered into international agreements with a number of jurisdictions which provide for the

exchange of information in order to combat tax evasion and improve tax compliance. These include, but are

not limited to, an Inter-governmental Agreement with the US in relation to FATCA, the OECD’s Multilateral

Competent Authority Agreement for the Common Reporting Standard, the European Council Directive on

administrative cooperation in the field of taxation and International Tax Compliance Agreements with

Guernsey, Jersey, the Isle of Man and Gibraltar. In connection with such international agreements the

Company may, among other things, be required to collect and report to HMRC certain information regarding

Shareholders and other account holders of the Company and HMRC may pass this information on to tax

authorities in other jurisdictions in accordance with the relevant international agreements.

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PART 10

THE REIT REGIME

1. QUALIFICATION AS A REIT

Subject to meeting a number of conditions, a company may become a REIT (which in this case, and for the

purposes of this Part 10, will be the Company as principal company for the Group) by serving notice on

HMRC that it is a REIT from a date specified in that notice. Any property rental business the Company or

any other member of the Group has been to that date carrying on is deemed to cease at the point of entry to

the REIT Regime and accordingly, the property rental business carried on by the Company and each relevant

member of the Group subsequently is deemed to be a new business, established and commenced at the date

of entry into the REIT Regime. At the point of entry into the REIT Regime the accounting period of the

Company and each other member of the Group is deemed to end for tax purposes and another accounting

period will begin.

In order to qualify as a REIT, the Company must satisfy certain conditions throughout each accounting

period in which it is to be treated as a REIT. A non-exhaustive summary of the material conditions is set out

below.

In this Part 10, references to the Group are to the Company and each subsidiary which is a member of its

group for the purposes of section 606 of the CTA 2010.

1.1 Company conditions

A company must be solely resident in the UK for tax purposes, it must not be an open-ended

investment company and its ordinary shares must be admitted to trading on a recognised stock

exchange, such as the London Stock Exchange, and either listed on the exchange or traded on it.

A company must also not be a “close company” for UK tax purposes, which generally means it must

not be controlled (through the holding of in excess of 50 per cent. of share capital/voting rights etc.)

by five or fewer persons or, broadly, must have more than 35 per cent. of shares listed and in public

hands. There is an exception however for this condition for the first three years following entry into

the REIT Regime. For the purposes of this close company test the holdings of certain types of

institutional investors are not taken into account.

1.2 Share capital restrictions

There must only be one class of ordinary share in issue and the only other shares a company may issue

are non-voting fixed rate preference shares.

1.3 Restrictions on types of borrowing

The company must not be party to any loan in respect of which the lender is entitled to interest which

exceeds a reasonable commercial return on the consideration lent or where the interest depends to any

extent on the results of the Company’s business or on the value of any of its assets.

2. ON-GOING CONDITIONS FOR MAINTAINING REIT STATUS

In addition to satisfying the above conditions on entry into the REIT Regime, the Group would be required

to satisfy the conditions summarised below on an on-going basis during each accounting period in order to

maintain REIT status:

(a) The Property Rental Business must throughout each accounting period involve at least three

properties and have no one property representing more than 40 per cent. of the total value of all the

properties involved in the business.

(b) The Company is required to distribute to Shareholders (subject to the availability of sufficient

distributable reserves) 100 per cent. of the income profits arising in each accounting period which are

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derived from distributions of profits or gains of the Property Rental Business of another UK REIT and

at least 90 per cent. of the income profits arising from the Group’s Property Rental Business derived

from other sources in each accounting period (broadly, calculated using normal tax rules and

disregarding non-UK source profits of a non-UK member of the REIT or of a non-UK member of a

UK REIT from which the REIT receives such a distribution). Such distributions will be in the form

of a PID and must generally be made on or before the filing date for the tax return for the accounting

period.

(c) The income profits arising to the Property Rental Business must represent at least 75 per cent. of the

total profits for the accounting period. Such profits are calculated in accordance with International

Accounting Standards, before deduction of tax and excluding, broadly, gains and losses on the

disposal of property and revaluation of properties, and certain exceptional items.

(d) At the beginning of the accounting period the gross fair value of the assets in the Property Rental

Business (including cash held on deposit and shares in another UK REIT) must represent at least

75 per cent. of the total fair value of assets held. However, a breach should not occur in the first

accounting period upon entry into the REIT Regime, provided that the test is met at the end of the first

accounting period.

3. EFFECTS OF BECOMING A REIT

3.1 Tax exemption

A REIT does not suffer UK corporation tax on the profits (income and capital gains) derived from its

Property Rental Business. UK corporation tax will still apply in the normal way in respect of any

income and gains of any Residual Business.

3.2 The 10 per cent. rule

A REIT may become subject to an additional tax charge if it pays a distribution to corporate

shareholders that hold at least 10 per cent. of share capital or voting rights and/or are entitled to at

least 10 per cent. of distributions. This tax charge will not be incurred if the REIT has taken reasonable

steps to avoid making distributions to such a shareholder in line with HMRC guidance.

3.3 Distributions — obligations to withhold tax

Subject to certain exceptions, a REIT is required to withhold income tax at source at the basic rate

(currently 20 per cent.) from PIDs. A REIT must also provide shareholders with a certificate setting

out the amount of tax withheld. Tax is not required to be deducted when distributions are paid to

certain types of shareholder including UK corporate and UK tax-exempt bodies (such as SIPPs and

ISAs). Where distributions are made to shareholders resident in a country with a double taxation

treaty with the UK, tax should be withheld and the shareholder if eligible may seek a refund of the

tax where the treaty withholding tax rate is lower.

3.4 Interest cover ratio

A tax charge will arise if, in respect of any accounting period, the ratio of the income profits (before

capital allowances) to the financing costs incurred in respect of the Property Rental Business is less

than 1.25. The amount (if any) by which the financing costs exceeds the amount of those costs which

would cause that ratio to equal 1.25 is chargeable to corporation tax up to a maximum of 20 per cent.

of the income profits of the Property Rental Business.

4. EXIT FROM THE REIT REGIME

After joining the REIT Regime, a REIT can give notice to HMRC that it wishes to leave the REIT Regime

at any time.

It is important to note that following satisfaction of the REIT conditions by the Company and the Group, the

Company will not be able to guarantee continued compliance with all the conditions and the REIT Regime

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may cease to apply in certain circumstances. Broadly, HMRC may require the Company and the other

members of the Group to exit the REIT Regime if:

(a) any breach of the conditions relating to the Qualifying Property Rental Business, or an attempt to

avoid tax, is considered sufficiently serious;

(b) a certain number of minor or inadvertent breaches, by the Company or members of the Group, of the

conditions occur in a specified period; or

(c) HMRC has issued two or more notices, to the Company or members of the Group, in relation to the

avoidance of tax within a 10 year period of the first notice having been given.

5. DESCRIPTION OF THE REIT PROVISIONS IN THE ARTICLES

5.1 Introduction

The Articles contain provisions designed to enable the Company to demonstrate to HMRC that it has

taken “reasonable steps” to avoid paying a dividend (or making any other distribution) to any

Substantial Shareholder.

If a distribution is paid to a Substantial Shareholder and the Company has not taken reasonable steps

to avoid doing so, the Company would become subject to a UK corporation tax charge.

The Articles contain special articles for this purpose (the “Special Articles”). A summary of the

Special Articles is set out in this paragraph 5.

The Special Articles:

• provide Directors with powers to identify its Substantial Shareholders (if any);

• prohibit the payment of dividends on Ordinary Shares that form part of a Substantial

Shareholding, unless certain conditions are met;

• allow dividends to be paid on Ordinary Shares that form part of a Substantial Shareholding

where the Shareholder has disposed of sufficient interests in all or some of the shares

concerned, including the rights to dividends on its Ordinary Shares;

• seek to ensure that if a dividend is paid on Ordinary Shares that form part of a Substantial

Shareholding and arrangements of the kind referred to in the preceding paragraph are not met,

the Substantial Shareholder concerned does not become beneficially entitled to that dividend;

and

• allow for the Directors to require, in certain circumstances, that Ordinary Shares forming part

of a Substantial Shareholding be sold or arrange for such shares to be sold.

5.2 Cardinal principle

(a) The Special Articles provide that it is a cardinal principle (“Cardinal Principle”) that, for so

long as the Company qualifies as a REIT or is the principal company of a group UK real estate

investment trust (a “Group REIT”) for the purposes of Part 12 of the CTA 2010, neither the

Company nor any member of the Group REIT should be liable to pay tax under section 551 of

the CTA 2010 on or in connection with a Distribution.

(b) The Special Articles support such Cardinal Principle by, among other things, imposing

restrictions and obligations on the members and, indirectly, certain other persons who may

have an interest in the Company, and shall be construed accordingly so as to give effect to such

Cardinal Principle.

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5.3 Notification of Substantial Shareholder and other status

(a) Every member and any other relevant person who is or becomes a Substantial Shareholder or

a Relevant Registered Shareholder must notify the Company in writing on becoming a

Substantial Shareholder.

(b) The Directors may, by serving written notice, require a person to provide the Company with

such information as they require to assess whether that person is a Substantial Shareholder or

a Relevant Registered Shareholder or in order to comply with any reporting obligation within

a set period as specified by the Board in the written notice.

5.4 Distributions in respect of Substantial Shareholdings

(a) The Directors may withhold payment of a Distribution on or in respect of any shares in the

Company on the condition that:

(i) they believe that such shares are shares by virtue of which (in whole or in part) the

member is a Substantial Shareholder; and

(ii) they are not satisfied that such Substantial Shareholder would not be beneficially

entitled to the Distribution if it was paid.

(b) A Distribution so withheld may subsequently be paid on the following basis:

(i) if the Directors are satisfied that the conditions for withholding payment summarised in

the above paragraph are not satisfied then the whole amount of the Distribution withheld

shall be paid; and

(ii) if the Directors are satisfied that sufficient interests in all or some of the shares

concerned have been transferred to a third party so that such transferred shares no longer

form part of a Substantial Shareholding then the Distribution attributable to such shares

shall be paid (provided the Directors are satisfied that following such transfer such

shares concerned do not form part of a Substantial Shareholding); and

(iii) if the Directors are satisfied that as a result of a transfer of interests in shares referred to

in the paragraph above, the remaining shares no longer form part of a Substantial

Shareholding then the Distribution attributable to such shares shall be paid.

(c) In addition the Directors may also withhold payment of a Distribution if any person fails to

satisfactorily comply with a notice given by the Directors as referred to in paragraph 5.3 above

within the period specified in the notice. Such a Distribution so withheld may be paid upon the

relevant person satisfactorily complying with the notice.

(d) A Substantial Shareholder may satisfy the Directors that he is not beneficially entitled to a

Distribution by means of a certification procedure.

5.5 Excess Charge

If a Distribution is paid on a Substantial Shareholding and an Excess Charge becomes payable then

the Substantial Shareholder shall pay the amount of any such Excess Charge and all costs and

expenses incurred by the Company in connection with the recovery of such amount.

5.6 Distribution trust

Any Distribution paid on or in respect of a Substantial Shareholding (except where the Substantial

Shareholder is not entitled to the Distribution) and any income arising from it shall be held, by the

person to whom the Distribution is made or by another recipient of the Distribution, on trust for the

persons nominated by the relevant Substantial Shareholder in accordance with the Articles, or if no

such nominations is made within 12 years after the date the Distribution is made, for the Company or

such persons as may be nominated by the Directors from time to time.

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5.7 Obligation to dispose

(a) If the Directors believe that:

(i) in respect of any Distribution declared or announced, the condition set out in

paragraph 5.4(a) above is satisfied in respect of any shares in the Company in relation

of that Distribution;

(ii) a notice given by the Directors pursuant to paragraph 5.3 above in relation to any shares

in the Company has not been complied with to the satisfaction of the Directors within

the period specified in such notice; or

(iii) any information, certificate or declaration provided by a person in relation to any shares

in the Company was materially inaccurate or misleading,

then the Directors may by notice in writing require any person they believe to be holding all or

part of a Substantial Shareholding to dispose, within 21 days of the date of service of the notice

from the Directors (or such longer or shorter time as the Directors consider to be appropriate

in the circumstances), of such number of shares and to take such other steps as will cause the

condition set out in paragraph 5.4(a) above no longer to be satisfied (a “Disposal Notice”)

(b) Further provisions allow for the Directors to arrange for shares to be sold if the Disposal Notice

is not complied with or in circumstances where an Excess Charge (as mentioned in paragraph 5

above) become payable. Any sale made as a result of a Disposal Notice shall be at the price

which the Directors consider to be the best price reasonably obtainable. The Directors shall not

be liable to the holder or holders of the relevant share for any alleged deficiency in the amount

of the sale proceeds or any other matter relating to the sale. The net proceeds of the sale (less

any amount to be retained pursuant to paragraph 5.5 above and the expenses of sale) shall be

paid to the former holder or holders of the relevant share.

5.8 General

(a) The Directors shall be entitled to presume without enquiry, unless any Director has reason to

believe otherwise, that a Person is not a Substantial Shareholder or a Relevant Registered

Shareholder.

(b) The Directors are not required to give any reasons for any decision or determination (including

any decision or determination not to take action in respect of a particular person) under these

Special Articles and any such determination or decision is to be final and binding on all persons

unless and until it is revoked or changed by the Directors. Any disposal or transfer made or

other thing done by or on behalf of the Board or any Director pursuant to the Special Articles

in connection with the Company’s REIT status shall be binding on all persons and shall not be

open to challenge on any ground whatsoever.

(c) Without limiting their liability to the Company, the Directors shall be under no liability to any

other person, and the Company shall be under no liability to any Shareholder or any other

person, for identifying or failing to identify any person as a Substantial Shareholder or a

Relevant Registered Shareholder.

(d) The Directors may from time to time require any person who is or claims to be a person to

whom a Distribution may be paid without deduction of tax under Regulation 7 of the Real

Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006 to provide such

information, certificates or declarations as they may require to establish whether such person

is so entitled.

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PART 11

ADDITIONAL INFORMATION ON THE COMPANY

1. RESPONSIBILITY

1.1 The Directors of the Company, whose names appear on page 51 of this Prospectus, and the Company

each accept responsibility for the information contained in this Prospectus. To the best of the

knowledge and belief of the Company and the Directors (who have taken all reasonable care to ensure

such is the case), the information in this Prospectus is in accordance with the facts and does not omit

anything likely to affect the import of such information.

1.2 The Investment Adviser accepts responsibility for, and authorises, and consents to the inclusion of,

the statements attributed to it contained in this Prospectus. To the best of the knowledge and belief of

the Investment Adviser (who has taken all reasonable care to ensure that such is the case) those

statements are in accordance with the facts and do not omit anything likely to affect the import of

those statements.

2. GENERAL

2.1 The Company was incorporated and registered in England and Wales on 25 May 2018 with the name

The Multifamily Housing REIT plc and is a public company limited by shares, with registered number

11383471. The Company operates under the Companies Act (and the regulations from time to time

made thereunder). Its registered office is at Beaufort House, 51 New North Road, Exeter EX4 4EP

(telephone number: 01392 477500). The Company is tax resident in the UK. Save for its compliance

with the Companies Act, the Listing Rules, the Disclosure Guidance and Transparency Rules, the

Market Abuse Regulation, the Prospectus Rules and the Admission and Disclosure Standards, the

Company is not an authorised or regulated entity. The Company is not authorised or regulated as a

collective investment scheme by the FCA.

2.2 The AIFM is a private limited company incorporated in England and Wales with registered

number 9224491 on 18 September 2014. Its registered office is at 136 Buckingham Palace Road,

London SW1W 9SA (telephone number 020 3696 1302). The AIFM is authorised and regulated by

the FCA with reference number 648953.

2.3 The Investment Adviser is private limited company and was incorporated in England and Wales with

the registered number 11521260 on 16 August 2018. Its registered office is at 6 Stratton Street,

London W1J 8LD (telephone number 020 7640 3200). The Investment Adviser is not an authorised

or regulated entity, and accordingly is not subject to the same level of regulatory supervision as the

AIFM. The Investment Adviser has been appointed to act as an appointed representative of the AIFM.

2.4 On 29 May 2018, the Registrar of Companies granted the Company a certificate under section 761 of

the Companies Act entitling it to commence business and to exercise its borrowing powers.

2.5 The Company has filed a notice with the Registrar of Companies of its intention to carry on business

as an investment company pursuant to section 833 of the Companies Act.

2.6 Following Admission, the Ordinary Shares will be admitted to the premium listing segment of the

Official List and to trading on the Main Market.

3. SHARE CAPITAL

3.1 The Company’s Ordinary Shares are denominated in sterling.

3.2 On incorporation, one Ordinary Share was issued (fully paid) for the purposes of incorporation to

HRE as the subscriber to the Company’s memorandum of association, and in addition, on

incorporation, 50,000 Redeemable Preference Shares were issued fully paid up to their nominal value

to HRE.

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3.3 By an ordinary resolution passed on 6 September 2018, the Directors were generally andunconditionally authorised in accordance with Section 551 of the Companies Act to exercise thepowers of the Company to allot Redeemable Preference Shares up to an aggregate nominal value of£1,674,000, such authority to expire immediately following Admission save that the Company may,at any time prior to the expiry of such authority, make an offer or enter into an agreement which wouldor might require the allotment of Redeemable Preference Shares in pursuance of such an offer oragreement as if such authority had not expired.

3.4 On 6 September 2018, 1,674,000 Redeemable Preference Shares were issued fully paid up to theirnominal value to HRE in order to pay the deposit referred to in paragraph 11 of Part 2 of thisProspectus.

3.5 Set out below is the issued share capital of the Company:

(a) as at the date of this Prospectus; and

(b) immediately following the Issue (assuming the Issue is in respect of 175 million Ordinary

Shares):

Immediately following

Admission and redemption

As at the date of the Redeemable

of this Prospectus Preference Shares

Aggregate Aggregate

nominal nominal

value (£) Number value (£) Number

Ordinary Shares £0.01 1 1,750,000 175,000,000

Redeemable Preference Shares1 1,724,000 1,724,000 0 0

Note:

1 The Redeemable Preference Shares will be redeemed on or shortly following Admission out of the proceeds of

the Issue. The Ordinary Shares are not redeemable.

3.6 Following the redemption of the Redeemable Preference Shares on or immediately following

Admission, the Company will have a single class of Ordinary Shares in issue.

3.7 As at the Last Practicable Date, the Company did not hold any Ordinary Shares in treasury and no

Ordinary Shares were held by or on behalf of the Company itself or by subsidiaries of the Company.

3.8 No Ordinary Shares are currently in issue with a fixed date on which entitlement to a dividend arises

or within a time limit after which entitlement to a dividend will lapse in accordance with the Articles

and there are no arrangements in force whereby future dividends are waived or agreed to be waived.

3.9 The Ordinary Shares being issued in connection with the Issue are being issued at £1.00 per Ordinary

Share of which £0.99 per Ordinary Share constitutes share premium.

3.10 No person has voting rights that differ from those of other Shareholders.

3.11 As at the Last Practicable Date, save in connection with the Issue, there were no acquisition rights

and/or obligations over any of the Company’s unissued capital and no undertakings to increase the

Company’s capital.

3.12 By ordinary and special shareholder resolutions passed on 17 August 2018:

(a) the Directors were generally and unconditionally authorised in accordance with Section 551 of

the Companies Act to exercise all the powers of the Company to allot Ordinary Shares up to

an aggregate nominal amount of £2,500,000 in connection with the Issue, such authority to

expire immediately following Admission, save that the Company may, at any time prior to the

expiry of such authority, make an offer or enter into an agreement which would or might

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require the allotment of Ordinary Shares in pursuance of such an offer or agreement as if such

authority had not expired (“Resolution 1”);

(b) the Directors were generally empowered (pursuant to Section 570 of the Companies Act) to

allot Ordinary Shares for cash pursuant to Resolution 1 as if Section 561 of the Companies Act

did not apply to any such allotment, such power to expire immediately following Admission,

save that the Company may, at any time prior to the expiry of such authority, make an offer or

enter into an agreement which would or might require the Ordinary Shares to be allotted after

such expiry and the Directors may allot equity securities in pursuance of such an offer or

agreement as if such power had not expired (“Resolution 2”);

(c) upon the expiry of the authority granted in Resolution 2 above, the Directors be generally and

unconditionally authorised in accordance with Section 551 of the Companies Act to exercise

all the powers of the Company to:

(i) allot Ordinary Shares up to a maximum aggregate nominal value of the lower of (a)

£833,333.33; and (b) one third of the entire issued share capital of the Company

immediately following Admission; and further

(ii) allot Ordinary Shares up to an aggregate nominal amount of the lower of (a)

£833,333.33; and (b) one third of the entire issued share capital of the Company

immediately following Admission in connection with an offer by way of a rights issue

in favour of holders of Ordinary Shares in the capital of the Company in proportion (or

near as may be practicable) to their existing holdings of Ordinary Shares, but subject to

such exclusions, limits, restrictions or other arrangements as the Directors deem

necessary,

such authority to expire at the earlier of 17 November 2019 and the conclusion of the next

annual general meeting of the Company, save that the Company may, at any time prior to the

expiry of such authority, make an offer or enter into an agreement which would or might

require the allotment of Ordinary Shares in pursuance of such an offer or agreement as if such

authority had not expired;

(d) upon the expiry of the authority granted in Resolution 2 above, the Directors were generally

empowered (pursuant to Section 570 of the Companies Act) to allot Ordinary Shares for cash

pursuant to the authority referred to in Resolution 1 above as if Section 561(1) of the

Companies Act did not apply to any such allotment, such power to expire at the earlier of

17 November 2019 and the end of the first annual general meeting of the Company:

(i) in connection with an offer of equity securities in favour of holders of Ordinary Shares

in proportion to their existing holdings of Ordinary Shares, but subject to such

exclusions, limits, restrictions or other arrangements as the Directors deem necessary;

and

(ii) otherwise than as set out in paragraph 3.10(d)(i) above, up to 20 per cent. of the entire

issued share capital of the Company immediately following Admission,

save that the Company may, at any time prior to the expiry of such authority, make an offer or

enter into an agreement which would or might require the Ordinary Shares to be allotted after

such expiry and the Directors may allot equity securities in pursuance of such an offer or

agreement as if such power had not expired;

(e) conditionally upon the issue of Ordinary Shares by the Company pursuant to the Issue and the

payment up in full thereof and upon the approval of the Court, it was resolved that the amount

standing to the credit of the share premium account of the Company following completion be

reduced in its entirety;

(f) the Articles were adopted as the new articles of association of the Company;

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(g) the Company was authorised in accordance with Section 701 of the Companies Act to make

market purchases (within the meaning of Section 693(4) of the Companies Act) of Ordinary

Shares provided that:

(i) the maximum number of Ordinary Shares authorised to be purchased is 14.99 per cent.

of the Ordinary Shares in issue immediately following completion of the Issue;

(ii) the minimum price which may be paid for an Ordinary Share is £0.01;

(iii) the maximum price which may be paid for an Ordinary Share must not be more than the

higher of (i) 5 per cent. above the average of the mid-market value of the Ordinary

Shares for the five Business Days before the purchase is made or (ii) that stipulated by

the regulatory technical standards adopted by the EU pursuant to the Market Abuse

Regulation from time to time; and

(iv) such authority will expire on the earlier of the conclusion of the first annual general

meeting of the Company and 17 November 2019, save that the Company may contract

to purchase Ordinary Shares under the authority thereby conferred prior to the expiry of

such authority, which contract will or may be executed wholly or partly after the expiry

of such authority and may purchase Ordinary Shares in pursuance of such contract; and

(h) a general meeting of the Company other than an annual general meeting may be called on not

less than 14 days’ notice.

3.13 The provisions of Section 561(1) of the Companies Act (which, to the extent not disapplied pursuant

to Sections 570 and 573 of the Companies Act, confer on Shareholders rights of pre-emption in

respect of the allotment of equity securities which are, or are to be, paid up in cash) apply to issues

by the Company of equity securities save to the extent disapplied as mentioned above.

3.14 The Companies Act abolished the requirement for companies incorporated in England and Wales to

have an authorised share capital. Furthermore, the Articles do not contain a provision expressly

limiting the number of Ordinary Shares that can be issued by the Company.

3.15 In accordance with the authority referred to in paragraph 3.10(a) above, it is expected that the

Ordinary Shares to be issued pursuant to the Issue will be allotted (conditionally upon Admission)

pursuant to a resolution of the Board to be passed shortly before Admission in accordance with the

Companies Act.

3.16 Save as disclosed in this Part 11 of this Prospectus, no share or loan capital of the Company has since

the date of incorporation of the Company been issued or been agreed to be issued, fully or partly paid,

either for cash or for a consideration other than cash, and no such issue is now proposed.

3.17 The Company has not granted any options over its share or loan capital which remain outstanding and

has not agreed, conditionally or unconditionally, to grant any such options and no convertible

securities, exchangeable securities or securities with warrants have been issued by the Company.

3.18 All of the Ordinary Shares will be in registered form and will be eligible for settlement in CREST.

Temporary documents of title will not be issued.

3.19 Applicants who have signed and returned Application Forms in respect of the Offer for Subscription

may not withdraw their applications for Ordinary Shares, subject to their statutory rights of

withdrawal in the event of the publication of a supplementary prospectus.

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4. ARTICLES

The Articles were adopted, conditional on Admission, by way of a special resolution on 17 August 2018 and

contain provisions, inter alia, to the following effect.

4.1 Objects

The Articles do not provide for any objects of the Company and accordingly the Company’s objects

are unrestricted.

4.2 Variation of Rights

Subject to the provisions of the Companies Act as amended and every other statute for the time being

in force concerning companies and affecting the Company (the Statutes), if at any time the share

capital of the Company is divided into different classes of shares, the rights attached to any class may

be varied or abrogated either with the consent in writing of the holders of three-quarters in nominal

value of the issued shares of that class or with the sanction of a special resolution passed at a separate

meeting of the holders of the shares of that class (but not otherwise). At every such separate general

meeting the necessary quorum shall be at least two persons holding or representing by proxy at least

one-third in nominal value of the issued shares of the class in question (but at any adjourned meeting

any holder of shares of the class present in person or by proxy shall be a quorum), any holder of shares

of the class present in person or by proxy may demand a poll and every such holder shall on a poll

have one vote for every share of the class held by him.

4.3 Alteration of share capital

The Company may by ordinary resolution:

(a) consolidate and divide all or any of its share capital into shares of larger nominal value than its

existing shares;

(b) sub-divide its shares, or any of them, into shares of smaller nominal value than its existing

shares; and

(c) determine that, as between the shares resulting from such a sub-division, one or more shares

may, as compared with the others, have any such preferred, deferred or other rights or be

subject to any such restrictions as the Company has power to attach to unissued or new shares.

4.4 Issue of shares

Subject to the provisions of the Companies Act and without prejudice to any rights attaching to any

existing shares, any share may be issued with such rights or restrictions as the Company may by

ordinary resolution determine (or if the Company has not so determined, as the Directors may

determine).

4.5 Dividends

Subject to the provisions of the Companies Act, the Company may by ordinary resolution declare

dividends in accordance with the respective rights of the Shareholders but no dividends shall exceed the

amount recommended by the Directors. Subject to the provisions of the Companies Act, the Directors

may pay interim dividends, or dividends payable at a fixed rate, if it appears to them that they are justified

by the profits of the Company available for distribution. If the Directors act in good faith they shall not

incur any liability to the holder of shares conferring preferred rights for any loss they may suffer by the

lawful payment of an interim dividend on any shares having deferred or non-preferred rights.

Subject to the rights of persons (if any) entitled to shares with special rights as to dividend, all

dividends shall be declared and paid according to the amounts paid up on the shares on which the

dividend is paid. If any share is issued on terms that it ranks for dividend as from a particular date, it

shall rank for dividend accordingly. In any other case, dividends shall be apportioned and paid

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proportionately to the amount paid up on the shares during any portion(s) of the period in respect of

which the dividend is paid.

Monies representing unclaimed or unpaid dividends or other sums payable by the Company in respect

of a share may be made use of by the Board for the benefit of the Company until claimed. The

payment of any unclaimed dividend or other amount payable by the Company in respect of a share

into a separate account will not constitute the Company a trustee in respect of it. Any dividend

unclaimed after a period of 12 years from the date the dividend was declared or became due for

payment will be forfeited and revert to the Company.

A general meeting declaring a dividend may, on the recommendation of the Board, direct that it is to

be satisfied by the distribution of assets (including paid up shares or securities of any other body

corporate). The Board may direct that any interim dividend be satisfied wholly or partly by the

distribution of assets on the same basis. Where any difficulty arises concerning a distribution, the

Board may settle it as it considers appropriate.

The Board may, with the authority of an ordinary resolution, offer any holders of Ordinary Shares the

right to elect to receive fully paid Ordinary Shares instead of cash in respect of all or part of any

dividend to which that resolution applies.

4.6 Voting Rights

Subject to any rights or restrictions attached to any shares, on a show of hands every Shareholder

present in person has one vote, every proxy present who has been duly appointed by a Shareholder

entitled to vote has one vote and every corporate representative present who has been duly authorised

by a corporation has the same voting rights as the corporation would be entitled to. On a poll every

Shareholder has one vote for every share of which he is the holder. A Shareholder entitled to more

than one vote need not, if he votes, use all his votes or cast all the votes he uses the same way. In the

case of joint holders, the vote of the senior who tenders a vote shall be accepted to the exclusion of

the vote of the other joint holders, and seniority shall be determined by the order in which the names

of the holders stand in the register of members.

4.7 Transfer of shares

A share in certificated form may be transferred by an instrument of transfer, which may be in any

usual form or in any other form approved by the Board, signed by or on behalf of the transferor and,

where the share is not fully paid, by or on behalf of the transferee. A share in uncertificated form may

be transferred by means of the relevant electronic system concerned.

The Ordinary Shares are freely transferable although they are subject to the restrictions in the Articles

described below.

In their absolute discretion, the Directors may refuse to register the transfer of a share in certificated

form unless:

(a) all the shares to which it relates are fully paid and of the same class;

(b) the instrument of transfer is properly stamped, or is certified or otherwise shown to the Board’s

satisfaction to be exempt from Stamp duty and is presented for registration at the registered

office of the Company or such other place as the Board may decide and is accompanied by the

certificate for the share to which it relates and such other evidence as the Board may require to

show the right of the transferor to make the transfer;

(c) the instrument of transfer indicates to the Board that the transferee is not a Non-Qualified

Holder (see below); and

(d) is in favour of a single transferee or not more than four joint transferees, in each case being a

natural or legal person.

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The Directors may refuse to register a transfer of a share in uncertificated form if it is in favour of

more than four persons jointly or in any case where the Company is entitled to refuse to register the

transfer under the CREST Regulations.

In accordance with the CREST Regulations, if the Directors refuse to register a transfer of a share,

they shall within two months after the date on which the transfer was lodged with the Company or, in

the case of an uncertificated share, the date on which the appropriate instruction was received by or

on behalf of the Company send to the transferee notice of refusal.

No fee shall be charged for the registration of any instrument of transfer or other document or

instruction relating to or affecting the title to any share.

The Board may, under the Articles, decline to recognise any instrument of transfer relating to

certificated shares to any person whose holding or beneficial ownership of shares may result in: (i) the

Company, any member of its group, or the Company’s investment adviser or investment manager

being in violation of, or required to register under, the US Investment Company Act or the US

Commodity Exchange Act of 1974, as amended (the “US CEA”) or being required to register its

shares under the US Exchange Act of 1934 (the “US Exchange Act”); (ii) the Company not being a

“foreign private issuer” as such term is defined in Rule 3b-4(c) of the US Exchange Act; (iii) the assets

of the Company being deemed to be “plan assets” within the meaning of the US Employee Retirement

Income Security Act of 1974, as amended (“ERISA”) and US Department of Labor regulations and

guidance issued thereunder, or of a “plan” within the meaning of section 4975 of the US Internal

Revenue Code of 1986 (the “US Tax Code”), or of a plan or other arrangement subject to section 503

of the US Tax Code or provisions under applicable federal, state, local, non-US or other laws or

regulations that are substantially similar to section 406 of ERISA, section 503 of the US Tax Code or

section 4975 of the US Tax Code; (iv) the Company, any member of its group, or the Company’s

investment adviser or investment manager not being in compliance with FATCA, the US Investment

Company Act, the US Exchange Act, the US CEA, section 4975 of the US Tax Code, section 503 of

the US Tax Code, ERISA or any applicable federal, state, local, non-US or other laws or regulations

that are substantially similar to section 406 of ERISA, section 503 of the US Tax Code or section 4975

of the US Tax Code; or (v) the Company being a “controlled foreign corporation” for the purposes of

the US Tax Code (such persons being “Non-Qualified Holders”).

If a Shareholder becomes, or holds Ordinary Shares on behalf of, a Non-Qualified Holder, such

Shareholder shall notify the Board immediately. If it shall come to the notice of the Board that any

Ordinary Shares are owned directly, indirectly, or beneficially by a Non-Qualified Holder, the Board

may give notice to such person requiring him either: (i) to provide the Board with sufficient

satisfactory documentary evidence to satisfy the Board that such person is not a Non-Qualified

Holder; or (ii) to sell or transfer his shares to a person who is not a Non-Qualified Holder and to

provide the Board with satisfactory evidence of such sale or transfer. Pending such sale or transfer the

Board may suspend the exercise of any voting or consent rights and rights to receive notice of, or

attend, meetings of the Company and any rights to receive dividends or other distributions with

respect to such Ordinary Shares, and the Shareholder shall repay the Company any amounts

distributed to such Shareholder by the Company during the time such holder held such Ordinary

Shares. If any person upon whom such a notice is served does not either: (i) transfer his Ordinary

Shares to a person who is not a Non-Qualified Holder; or (ii) establish to the satisfaction of the Board

that he is not a Non-Qualified Holder, the Board may determine that: (a) such person shall be deemed

to have forfeited his Ordinary Shares and the Board shall be empowered at their discretion to follow

the forfeiture procedures; or (b) to the extent permitted under the CREST Regulations, the Board may

arrange for the Company to sell the Ordinary Shares at the best price reasonably obtainable to any

other person so that the Ordinary Shares will cease to be held by a Non-Qualified Holder, in which

event the Company may, but only to the extent permitted under the CREST Regulations, take any

action whatsoever that the Board considers necessary in order to effect the transfer of such Ordinary

Shares by the holder of such Ordinary Shares, and the Company shall pay the net proceeds of sale to

the former holder upon its receipt of the sale proceeds and the surrender by him of the relevant share

certificate or, if no certificate has been issued, such evidence as the Board may reasonably require to

152

satisfy themselves as to his former entitlement to the share and to such net proceeds of sale and the

former holder shall have no further interest in the relevant shares or any claim against the Company

in respect thereof. No trust will be created and no interest will be payable in respect of such net

proceeds of sale.

4.8 Distribution of assets on a winding up

If the Company is wound up, the Company’s assets available for distribution shall be divided among

the members in proportion to the nominal amounts of capital paid up on their shares, subject to the

terms of issue of or rights attached to any shares.

4.9 Restrictions on rights: failure to respond to a Section 793 notice or a tax reporting notice

If a Shareholder, or any other person appearing to be interested in shares held by that Shareholder,

fails to provide the information requested in a notice given to him under section 793 of the Companies

Act by the Company in relation his interest in shares (the “Specified Shares”) within 10 days of the

notice, sanctions shall apply unless the Directors determine otherwise. The sanctions available are the

suspension of the right to attend or vote (whether in person or by representative or proxy) at any

general meeting or any separate meeting of the holders of any class or on any poll and, where the

Specified Shares represent at least 0.25 per cent. of their class (excluding treasury shares), the

withholding of any dividend payable in respect of those shares and the restriction of the transfer of

those shares (subject to certain exceptions).

If a Shareholder, or any other person appearing to be interested in shares held by that Shareholder,

fails to provide the information requested in a tax reporting notice given to him in relation his interest

in shares (also, the “Specified Shares”) within 10 days of the notice, the Board may in its absolute

discretion at any time after such date give notice to such Shareholder requiring him to sell or transfer

the Specified Shares to a person who is not a Non-Qualified Holder or himself a holder of Specified

Shares within 10 days (or 5 days in the case of ERISA-related violations) and within such 10 days

(or 5 days in the case of ERISA-related violations) to provide the Board with satisfactory evidence of

such sale or transfer.

4.10 Untraced Shareholders

Subject to various notice requirements, the Company may sell the shares registered in the name of a

particular Shareholder if, during a period of 12 years before the service of a notice of sale (“Initial

Period”):

(a) shares have been registered in that Shareholder’s name throughout that period; and

(b) the Company has paid at least three cash dividends in respect of such shares,

and during the Initial Period the Company has not received any authenticated communication from

such Shareholder or any cash payment from him in respect of an allotment of shares and no dividend

was cashed or other method of payment has been effected.

4.11 Appointment and Retirement of Directors

The number of directors (other than alternate directors) of the Company shall not be less than two and,

unless the Company determines otherwise by ordinary resolution, shall not be subject to any

maximum.

Subject to the Articles, the Company may by ordinary resolution appoint a person who is willing to

act as a Director. The Board may appoint as a Director any person who is willing to act as such.

Each Director shall stand for election at the annual general meeting immediately following his

appointment and for re-election at each annual general meeting thereafter. A Director retiring at a

meeting shall, if he is not re-elected at such meeting, retain office until the conclusion of the meeting

or adjourned meeting at which he is due to retire.

153

4.12 Powers of Directors

The business of the Company shall be managed by the Board who may exercise all of the Company’s

powers and may do such acts on the Company’s behalf which are not required to be done in general

meeting subject to the provisions of the Articles and any direction given by special resolution.

4.13 Borrowings

Subject to the below, the Board may exercise all the Company’s powers to borrow money and to

mortgage or charge all or part of its undertaking, property and assets (present or future) and uncalled

capital and to issue debentures and other securities and to give security, whether outright or as

collateral for a debt, liability or obligation of the Company or of a third party.

The Board shall restrict the Company’s borrowings and shall exercise all voting and other rights or

powers of control exercisable by the Company in relation to its subsidiary undertakings so as to

ensure (as regards subsidiary undertakings, to the extent possible by such exercise) that the aggregate

principal amount outstanding in respect of moneys borrowed by any undertaking in the Group

(exclusive of intra-Group loans) does not, without the previous sanction of an ordinary resolution,

exceed the limit set out the Company’s investment policy as approved by the members from time to

time (“Borrowing Limit”).

The Auditor’s written confirmation as to the amount of the Borrowing Limit or the amount of any

borrowings shall be conclusive and binding on all concerned.

4.14 Directors’ interests

The Directors may authorise any situation or matter relating to a particular Director and to which

Section 175 of the Companies Act applies, subject to the requirements and restrictions under that

Section, on such terms (if any) as they think fit. The Directors may terminate, withdraw or vary any

such conflicts authorisation previously given by giving notice to the Director concerned.

Provided that a Director has disclosed his interest in the matter concerned in accordance with the

Companies Act he is not required to account to the Company for any profit, remuneration or other

benefit derived from or in connection with, being a party to any transaction or arrangement with the

Company or in which the Company is otherwise interested, holding any other office or place of profit

with the Company (except that of auditor) in conjunction with his office of Director, acting by himself

or through a firm which he is associated in a professional capacity with the Company or being a

director or other officer of, or employed by or otherwise interested in any body corporate in which the

Company or any other member of the Group is interested.

4.15 Voting at board meetings

No business shall be transacted at any meeting of the Directors unless a quorum is present and the

quorum may be fixed by the Directors; unless so fixed at any other number the quorum shall be two.

A Director shall not be counted in the quorum present in relation to a matter or resolution on which

he is not entitled to vote but shall be counted in the quorum present in relation to all other matters or

resolutions considered or voted on at the meeting. An alternate Director who is not himself a Director

shall, if his appointor is not present, be counted in the quorum.

A decision taken at a board meeting shall be decided by a majority of votes. In the case of an equality

of votes, the chairman of the meeting shall have a second or casting vote.

A Director shall not be entitled to vote on a resolution (or count in the quorum on any resolution)

relating to any contract in which he is interested unless that interest cannot reasonably be regarded as

likely to give rise to a conflict of interest or save in any of the following circumstances:

(a) any transaction or arrangement in which the Director is interested by means of an interest in

shares, debentures or other securities in or through the Company;

154

(b) the giving of any security, guarantee or indemnity to a Director in respect of money lent or

obligations incurred by him or by any other person at the request of or for the benefit of the

Company (or any of its subsidiary undertakings);

(c) the giving of any security, guarantee or indemnity to a third party in respect of a debt or

obligation of the Company (or any of its subsidiary undertakings) for which the Director

himself has assumed responsibility wholly or in part under a guarantee or indemnity or by the

giving of security;

(d) an offer of securities by the Company (or any of its subsidiary undertakings) in which the

Director is or may be entitled to participate as a holder of securities or in the underwriting or

sub-underwriting of which he is to participate;

(e) a contract with or relating to another company in which the Director does not have an interest

in shares representing one per cent. or more of either any class of the equity share capital, or

the voting rights in, such company;

(f) an arrangement for the benefit of employees of the Company (or any of its subsidiary

undertakings) which does not award the Director any privilege or benefit not generally

awarded to the employees to whom such arrangement relates;

(g) insurance which the Company proposes to maintain or purchase for the benefit of Directors or

for the benefit of persons including any Director; or

(h) a proposal for the Company (i) to provide the Director with an indemnity permitted by law,

(ii) to provide him with funds in circumstances permitted by law to meet his defence

expenditure in respect of any civil or criminal proceedings or regulatory investigation or other

regulatory action or in connection with any application for any category of relief permitted by

law, or (iii) to do anything to enable him to avoid incurring any such expenditure.

If a question at a meeting of Directors as to the entitlement of any Director to vote is not resolved by

his agreeing to abstain from voting, it is to be referred to the chairman or, if he is the Director

concerned, the remainder of the Board. The chairman’s ruling (or, in his case, the Board’s ruling) on

the matter will be final and conclusive and binding, unless the nature or extent of the Director’s

interest, as known to him, has not been adequately disclosed to the meeting.

4.16 Directors’ fees and expenses

The Company may pay to the Directors for their services as Directors such aggregate amount of fees

as the Board decides of up to £350,000 per annum, or such larger amount as the Company may by

ordinary resolution decide. Any such fees payable shall be in addition to any salary, remuneration or

other amount payable to him pursuant to other provisions of the Articles and shall accrue from day-

to-day.

A Director may be paid all travelling, hotel and other expenses properly incurred by him in connection

with the discharge of his duties as a Director, including any professional fees incurred by him (with

the Board’s approval or in accordance with any procedures prescribed by the Board) in taking

independent professional advice in connection with the discharge of such duties.

4.17 Indemnity

Subject to the provisions of, and restrictions in, the Companies Act, the Company may indemnify any

person who is a Director of the Company or of any associated company, against any liability pursuant

to any qualifying third party indemnity provision or any qualifying pension scheme indemnity

provision, or on any other basis as is lawful, in each case as the Board may decide and purchase and

maintain insurance for any person who is a Director of the Company or of any associated company

against any liability.

155

4.18 General meetings

The Board shall convene annual general meetings in accordance with the Companies Act and other

applicable law and regulation and shall decide the place and the time and date at which an annual

general meeting is convened to be held. The Board may convene a general meeting, which is not an

annual general meeting, whenever and wherever it considers appropriate.

In the case of the annual general meeting, the required notice for such meeting shall be as provided

for in the Companies Act (which, as at the date of this Prospectus, is at least twenty-one clear days’

notice) which shall be given to all the members and to the auditors. All other general meetings shall

be convened on such notice as shall be as provided for in the Companies Act (which, as at the date of

this Prospectus, is at least fourteen clear days’ notice) which shall be given to all the members and to

the auditors.

No business shall be transacted at any meeting unless a quorum is present. Two persons entitled to

vote upon the business to be transacted, each being a Shareholder or a proxy for a Shareholder or a

duly authorised representative of a corporation which is a Shareholder (not including for this purpose

two persons who are proxies or corporate representatives of the same Shareholder), shall be a quorum.

A Shareholder is entitled to appoint another person as his proxy to exercise all or any of his rights to

attend and to speak and vote at a meeting of the Company. A Shareholder may appoint more than one

proxy in relation to a meeting, provided that each proxy is appointed to exercise the rights attached to

a different share or shares held by him. Subject to the provisions of the Companies Act, any

corporation (other than the Company itself) which is a Shareholder may, by resolution of its directors

or other governing body, authorise such person(s) to act as its representative(s) at any meeting of the

Company, or at any separate meeting of the holders of any class of shares.

Delivery of an appointment of proxy shall not preclude a Shareholder from attending and voting at

the meeting or at any adjournment of it.

Directors may attend and speak at general meetings and at any separate meeting of the holders of any

class of shares, whether or not they are Shareholders.

A poll on a resolution may be demanded at a general meeting either before a vote on a show of hands

on that resolution or immediately after the result of a show of hands on that resolution is declared.

A poll may be demanded by the Chairman or by: (a) not less than five members having the right to vote

at the meeting; or (b) a member or members representing not less than one-tenth of the total voting

rights of all the members having the right to vote at the meeting; or (c) a member or members holding

shares conferring a right to vote at the meeting, being shares on which an aggregate sum has been paid

up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

4.19 Non-United Kingdom Shareholders

Other than as referred to above, there are no limitations in the Articles on the rights of non-United

Kingdom Shareholders to hold, or to exercise voting rights attached to, the Ordinary Shares. However,

non-United Kingdom Shareholders may not be entitled to receive documents and information sent or

supplied by the Company unless they have provided to the Company an address in the United

Kingdom to which such documents and information may be sent or, subject to and in accordance with

the Companies Act, an address to which notices may be sent in electronic form.

4.20 CREST

CREST is a paperless settlement system enabling securities to be evidenced otherwise than by a

certificate and transferred otherwise than by a written instrument. The Company has applied for the

ordinary shares to be admitted to CREST and it is expected that the ordinary shares will be so

admitted, and accordingly enabled for settlement in CREST, as soon as practicable after admission

has occurred.

156

The Articles are consistent with CREST membership and, amongst other things, allow for the holding

and transfer of shares in uncertificated form. The Articles contain other provisions in respect of

transactions with the shares in the Company in uncertificated form and generally provide for the

modifications of certain provisions of the articles so that they can be applied to transactions with

shares in the Company in uncertificated form.

4.21 Lien and forfeiture

The Company shall have a first and paramount lien on every share which is not fully paid for all

amounts payable to the Company (whether presently or not) in respect of that share to the extent and

in the circumstances permitted by the Companies Act. The Board may sell any share on which the

Company has a lien if a sum in respect of which the lien exists is presently payable and is not paid

within 14 days after notice has been sent to the holder of the share demanding payment and stating

that if the notice is not complied with the share may be sold.

The Board may from time to time make calls on members in respect of any money unpaid on their

shares, subject to the terms of allotment of the shares. Each member shall (subject to receiving at least

14 days’ notice) pay to the Company the amount called on his shares.

If a call or any instalment of a call remains unpaid in whole or in part after it has become due and

payable, the Board may give the person from whom it is due not less than 14 days’ notice requiring

payment of the amount unpaid together with any interest which may have accrued and any costs,

charges and expenses incurred by the Company by reason of such non-payment. The notice shall

name the place where payment is to be made and shall state that if the notice is not to be complied

with, the shares in respect of which the call was made is liable to be forfeited.

4.22 REIT provisions

A summary of the REIT provisions included in the Articles is set out in paragraph 5 of Part 10 of this

Prospectus.

5. DIRECTORS’ AND OTHER INTERESTS

5.1 It is estimated that the aggregate remuneration to be paid and benefits in kind granted to Directors by

the Company in respect of the first financial period of the Company to 31 March 2019 will not exceed

£250,000.

5.2 All of the Directors are non-executive directors. None of the Directors have service contracts with the

Company nor are any such service contracts proposed.

5.3 Each of the Directors has entered into a letter of appointment with the Company dated 17 August

2018. The Company has the right to terminate each appointment (without compensation for early

termination and without notice) if the relevant Director is required to vacate office in accordance with

the Articles and in certain other limited circumstances set out in their letters of appointment. Save in

such circumstances, each letter of appointment may be terminated by either a Director or the

Company on giving to the other three months’ prior written notice. All Directors are subject to

retirement in accordance with the Articles. Each Director’s appointment is for a term of three years

subject to election at the first annual general meeting of the Company to be held in 2019 and re-

election at each annual general meeting thereafter in accordance with the Articles. None of the

Directors receive any pension benefits from the Company, nor do they participate in any bonus or

incentive schemes. Accordingly, there are no amounts set aside or accrued by the Company to provide

pension, retirement or similar benefits to the Directors. The fees payable to each Director pursuant to

their letters of appointment are as follows:

(a) Jonathan Whittingham – no consideration;

(b) David Lis and Clive Standish – £45,000 per annum. David Lis will also be paid an additional

£5,000 per annum for his role as chairman of the audit committee; and

(c) Nick Jopling – £75,000 per annum. Nick Jopling will also be paid an additional

£5,000 per annum for his role as chairman of the management engagement committee.

157

The fees will be reviewed annually. The Company will also pay insurance premiums in respect of

directors’ and officers’ insurance taken out on behalf of the Directors.

5.4 The total emoluments payable to the Directors will not be varied in consequence of the Issue.

5.5 Save as set out in paragraph 5.14 of this Part 11, no Director has or has had any interest in any

transactions which are or were unusual in their nature or conditions or significant to the business of

the Company and which were effected by the Company since its date of incorporation or remain in

any respect outstanding or unperformed.

5.6 No loan or guarantee has been granted or provided by any member of the Company for the benefit of

any Director.

5.7 Save as set out in paragraph 5.14 of this Part 11, there are no arrangements or understandings with

major Shareholders, customers, suppliers or others, pursuant to which any Director was selected.

5.8 Save for the terms of the Placing and Sponsor’s Agreement disclosed in paragraph 7.10 below, there

are no restrictions agreed by any Director on the disposal within a certain period of time of their

holdings in the Company’s securities.

5.9 As at the date of this Prospectus and immediately following Admission, other than as disclosed in

paragraph 5.10 and paragraph 5.14 below, there are no interests of any Director, including any

connected persons of any Director, the existence of which is known to, or could with reasonable

diligence be ascertained by, that Director whether or not held through another party, in the share

capital of the Company or any options in respect of such capital.

5.10 The Directors have confirmed that they intend to subscribe in the Issue for the following number of

Ordinary Shares:

Percentage

of issued

Ordinary Shares

Number of following

Name Ordinary Shares Admission1

Nick Jopling2 100,000 0.057

David Lis 100,000 0.057

Clive Standish 50,000 0.029

Notes:

1 The percentages shown above are calculated on the assumption that 175 million Ordinary Shares are issued pursuant to

the Issue.

2. Such Ordinary Shares to be held in the name of Nick Jopling’s wife, Serena Jopling.

5.11 Details of those companies (other than the Company and Holdco) and partnerships of which the

Directors have been directors or partners at any time within the previous five years ended on the date

of this Prospectus are as follows:

Name Current directorships/partnerships Past directorships/partnerships

Clive Standish Ardenside Angus PTY Limited Ganymed PTY LPD (Deregistered)

Exhall PTY Limited

Mentor Foundation UK

Alba Investment Properties Holdings

Limited

Alba Investment Properties Limited

Bass Real Estate No. 1 Limited





Broadhall Hampton Limited

(Dissolved)

Illius Properties Limited (in

Liquidation)

Folderbeach Limited (in Liquidation)

Harwood Marmot Limited (in

Liquidation)

Jonathan

Whittingham

158

















Hampton Investment Properties

Limited

Harwood Capital Management

Limited

Harwood Gerbil Limited

Harwood Gopher Limited

Harwood Lowestoft Limited

Harwood (Bristol) Limited

Harwood Squirrel Limited

Harwood Coypu Limited

Harwood Red Limited

Harwood Shrew 2 Limited

Harwood Real Estate Limited

Stratton Street (Mouse No.1) Limited

Stratton Street (Anthony) Limited

Harwood Shrew Limited (in

Liquidation)

JW Property Management Limited

(Dissolved)

Kelvinhaugh Student Accommodation

Limited (Dissolved)

Tramworks Limited (Dissolved)

W.G. Mitchell (2005) Limited

(Dissolved)

W.G. Mitchell Enterprises Limited

(Dissolved)

W.G. Mitchell (Seven) Limited

(Dissolved)

W.G. Mitchell (Fifteen) Limited

(Dissolved)

W.G. Mitchell (George Street) Limited

(Dissolved)

W.G. Mitchell (Charlotte Square)

Limited (Dissolved)

Jonathan

Whittingham

(cont)

Nick Jopling Square House (Consultancy) LLP

Tm Jopling and Partners

31-37 Disbrowe Road Freehold

Company Limited

Atlantic Metropolitan (U.K.) Limited

BPT Limited

BPT (Assured Homes) Limited

BPT (Bradford Property Trust)

Limited

BPT Bridgewater (Home Reversions)

Limited

BPT (Residential Investments)

Limited

BPT (Residential Management

Services) Limited

Brierley Green Management Company

Limited

Bridgewater (Home Reversions

Number 1) Limited

Bridgewater (Home Reversions

Number 2) Limited

Bridgewater Equity Release Nominees

(No 1) Limited

Bridgewater Equity Release Nominees

(No 2) Limited

159


Bridgewater Equity Release Limited

Bridgewater Tenancies Limited

Bridgewater Lifetime Mortgages

Limited

Bridgewater Property Holdings

Limited

Bromley No 1 Limited

Bromley No.1 Holdings Limited

Bromley Property Investments

Limited

Bromley Property Holdings Limited

Chrisdell Limited

City Property Developments Limited

(Dissolved)

City Property Developments (No.2)

Limited (Dissolved)

Curzon Park Limited

Derwent Developments Limited

Derwent Developments (Curzon)

Limited

Economic Reversions Limited

Ekacroft Limited (Dissolved)

Elm Reversions Limited

Equity Release (Increments)

Nominees No.3 Limited













Equity Release (Increments) Limited


Nominees No. 1 Limited




Nominees No. 2 Limited

Equity Release Investment Properties

Limited

Faside Estates Limited

Formation Homes Limited (Dissolved)

Frincon Holdings Limited

Gibson Gardens (Paignton) Limited

(Dissolved)

GIP Limited

Globe Brothers Estates Limited

Nick Jopling

(cont)

160


Grainger Asset Management Limited

Grainger (Aldershot) Limited

Grainger (Barnsbury) Limited

(Dissolved)

Grainger Bradley Limited

Grainger (Clapham) Limited

Grainger Developments Limited

Grainger (Elder) Limited (Dissolved)

Grainger Employees Limited

Grainger Europe (No. 2) Limited

Grainger Europe (No. 4) Limited

Grainger Europe Limited

Grainger Finance Company Limited

Grainger (Hadston) Limited

Grainger (Hornsey) Limited

Grainger Homes (Gateshead) Limited

Grainger Homes Limited

Grainger Housing & Developments

Limited

Grainger Invest (No.1 Holdco)

Limited

Grainger K&C Lettings Limited

Grainger Kensington & Chelsea

Limited

Grainger Land & Regeneration

Limited

Grainger (London) Limited

Grainger Maidenhead Limited

Grainger OCCC Limited

Grainger (Octavia Hill) Limited

Grainger Pearl Holdings Limited

Grainger Pearl Limited

Grainger Pimlico Limited

Grainger Plc

Grainger Properties Limited

Grainger (Peachey Number 2) Limited

(Dissolved)

Grainger Ramp Limited

Grainger Real Estate Limited

Grainger REIT 1 Limited



Grainger Res Limited (Dissolved)

Grainger Residential Limited

Grainger Residential Management

Limited

Grainger Rural Limited

Grainger Rural Developments Limited

(Dissolved)

Grainger Serviced Apartments Limited

Grainger Seven Sisters Limited

Grainger Southwark Limited

Nick Jopling

(cont)

161


Nick Jopling

(cont)

Grainger (Shoreditch) Limited

(Dissolved)

Grainger Trust Limited

Grainger Upminster Limited

GREIT Limited

Hamsard 2518 Limited

Hamsard 2517 (New Business)

Limited



Helical Grainger Limited

Helical Grainger (Holdings) Limited

H I Tricomm Holdings Limited

Holdfield Limited (Dissolved)

Home Properties Limited

Home SGO Properties Limited

Hulcote Village Limited

Infrastructure Investors Defence

Housing (Bristol) Limited

Jesmond Place Management Limited

King Street Developments

(Hammersmith) Limited

Langwood Properties Limited

Margrave Estates Limited

Mariners Park Estate North

Management Company Limited

Mariners Park Estate South

Management Company Limited

Milford Reversions Limited

N & D London Limited

N & D Southern Limited

N & D Properties (Midlands) Limited

Northumberland & Durham Property

Trust Limited

Owners Of The Middleborough Estate

Limited (The)

Park Developments (Liverpool)

Limited

Park Estates Investments (Liverpool)

Limited

Park Estates (Liverpool) Limited

PHA Limited

PHA Housing Limited (Dissolved)

Portland House Holdings Limited

Retirement Bridge Housing Limited

Retirement Bridge Limited

Retirement Bridge Management

Limited

Retirement Housing No. 1 (2007)

Limited

Reversions Financing Limited

Reversions Financing (No.1) 2011

Limited

162


5.12 Save as set out in paragraph 5.15 below, as at the date of this Prospectus for at least the previous five

years, none of the Directors has:

(a) had any convictions in relation to fraudulent offences;

(b) been a director of a company which has been placed in receivership, compulsory liquidation,

creditors voluntary liquidation, administration, company voluntary arrangement or made any

composition or arrangement with its creditors generally or of any class of its creditors whilst

he was a director of that company or within 12 months after he ceased to be a director of that

company;

(c) been a partner in a partnership which has been placed in compulsory liquidation, administration

or made a partnership voluntary arrangement whilst he was a partner in that partnership or

within 12 months after he ceased to be a partner in that partnership;

(d) had any asset placed in receivership or any asset of a partnership in which he was a partner

placed in receivership whilst he was a partner in that partnership or within 12 months after he

ceased to be a partner in that partnership;

(e) been subject to any official public incrimination and/or sanctions or publicly criticised by

statutory or regulatory authorities (including designated professional bodies) or disqualified by

a court from acting as a member of the administrative, management or supervisory bodies of

an issuer or from acting in the management or conduct of the affairs of any issuer for at least

the previous five years (for this purpose “issuer” has the meaning ascribed to it by Appendix I

to the Prospectus Rules).

Nick Jopling

(cont)

Rotation Finance Limited

RPQH Limited (Dissolved)

Southvale Investments Limited

Sovereign Nominees No.2 Limited

Sovereign Nominees Limited

St Andrew’s Property Holdings

Limited (Dissolved)

Suburban Homes Limited

The Greenhalgh Court Management

Company Limited

The Tilt Estate Company Limited

(Dissolved)

Tricomm Housing (Holdings) Limited

Tricomm Housing Limited

Victoria Court (Southport) Limited

Walworth Investment Properties

Limited

Warren Court Limited

West Waterlooville Developments

Limited

David Lis BCA Marketplace Plc

Electra Private Equity Plc

Melrose Industries Plc

The Investor Forum CIC

Friends Life Funds Limited

Friends Life Investments Limited

(Dissolved)

163

5.13 Save as set out in paragraph 5.14 below, there are no potential conflicts of interest between any duties

of the Directors to the Company and their private interests and/or other duties. Save for Jonathan

Whittingham, all of the Directors are independent of the AIFM and the Investment Adviser and any

other company in the same group of companies as the AIFM or the Investment Adviser.

5.14 Jonathan Whittingham is:

(a) a Senior Manager and was selected as a Director because of his position of a Senior Manager

of the Investment Adviser;

(b) a director of each of the SPVs to be acquired by Holdco pursuant to the Share Purchase

Agreements;

(c) a director and shareholder of HRE, which is:

(i) the seller of one of the SPV’s, Harwood Squirrel Limited, to be acquired by Holdco

pursuant to one of the Share Purchase Agreements; and

(ii) a Reinvestment Subscriber which will subscribe for such number of Reinvestment

Shares set out against its name in paragraph 9.4 of Part 2 of this Prospectus on

Admission; and

(d) is a director and shareholder of the Investment Adviser.

5.15 In the previous five years:

(a) the following companies, all of which were established to hold property assets, were dissolved

or voluntarily liquidated whilst Jonathan Whittingham was a director as a result of the disposal

of all of their assets:

(i) Broadhall Hampton Limited (Dissolved);

(ii) Illius Properties Limited (in Liquidation);

(iii) Folderbeach Limited (in Liquidation);

(iv) Kelvinhaugh Student Accommodation Limited (Dissolved);

(v) Tramworks Limited (Dissolved);

(vi) W.G. Mitchell (2005) Limited (Dissolved);

(vii) W.G. Mitchell Enterprises Limited (Dissolved);

(viii) W.G. Mitchell (Seven) Limited (Dissolved);

(ix) W.G. Mitchell (Fifteen) Limited (Dissolved);

(x) W.G. Mitchell (George Street) Limited (Dissolved); and

(xi) W.G. Mitchell (Charlotte Square) Limited (Dissolved),

(b) JW Property Management Limited was dissolved whilst Jonathan Whittingham was a director

as it never commenced trading and was surplus to requirements for which it was established;

and

(c) the following companies were dissolved whilst Nick Jopling was a director as a result routine

corporate structure management:

(i) City Property Developments (No.2) Limited (Dissolved);

(ii) City Property Developments Limited (Dissolved);

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(iii) Ekacroft Limited (Dissolved);

(iv) Formation Homes Limited (Dissolved);

(v) Gibson Gardens (Paignton) Limited (Dissolved);

(vi) Grainger (Barnsbury) Limited (Dissolved);

(vii) Grainger (Elder) Limited (Dissolved);

(viii) Grainger (Peachey Number 2) Limited (Dissolved);

(ix) Grainger Res Limited (Dissolved);

(x) Grainger (Shoreditch) Limited (Dissolved);

(xi) Grainger Rural Developments Limited (Dissolved);

(xii) Holdfield Limited (Dissolved);

(xiii) PHA Housing Limited (Dissolved);

(xiv) RPQH Limited (Dissolved);

(xv) St Andrew’s Property Holdings Limited (Dissolved); and

(xvi) The Tilt Estate Company Limited (Dissolved).

(d) Ganymed PTY LDP was deregistered whilst Clive Standish was a director as it was a corporate

trustee and was no longer required.

6. SUBSTANTIAL SHARE INTERESTS

6.1 As at the date of this Prospectus, all of the issued share capital of the Company is held by HRE.

Pending the allotment of Ordinary Shares pursuant to the Issue, the Company is controlled by HRE.

6.2 Other than as set out below, as at the Last Practicable Date, the Company was not aware of any person

who, immediately following Admission, would be directly or indirectly interested in three per cent.

or more of the issued share capital of the Company:

Percentage

of issued

share capital

Number of immediately

Ordinary following

Name Shares Admission1

North Atlantic Smaller Companies Investment Trust Plc 8,804,387 5.03

Harwood Capital LLP2 8,574,252 4.9

Notes:

1 The percentages shown above are calculated on the assumption that 175 million Ordinary Shares are issued pursuant to

the Issue.

2 HCN has directed that the Reinvestment Shares to be subscribed for by it will be registered in the name of Harwood

Capital LLP on Admission. Of these, 6,540,211 Ordinary Shares (representing 3.74 per cent. of the issued share capital

of the Company on Admission, assuming 175 million Ordinary Shares are issued) will be under the discretionary

management of Harwood Capital LLP and the remaining 2,034,041 Ordinary Shares (representing 1.16 per cent. of the

issued share capital of the Company on Admission, assuming 175 million Ordinary Shares are issued) will be under its

non-discretionary management.

6.3 As at the date of this Prospectus, save as disclosed above, the Company and the Directors are not

aware of any person who, immediately following Admission, directly or indirectly, jointly or

severally, exercises or could exercise control over the Company.

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6.4 As at the date of this Prospectus, the Directors are not aware of any person who could, directly or

indirectly, jointly or severally, own or exercise control over the Company or of any arrangements, the

operation of which may result in a change of control of the Company.

7. MATERIAL CONTRACTS OF THE COMPANY

The following are the only contracts (not being contracts entered into in the ordinary course of business)

which have been entered into by the Company since its incorporation and which are or may be material to

the Company or have been entered into by the Company at any time and contain a provision under which

the Company has any obligation or entitlement which is material to the Company at the date of this

Prospectus:

7.1 Share Purchase Agreements

(a) Holdco and HRE have entered into a share purchase agreement dated 10 September 2018

pursuant to which Holdco has agreed to purchase the entire issued share capital of Harwood

Squirrel Limited for £114,282 (subject to certain completion accounts adjustments). Holdco

has also agreed to procure that any shareholder debt and third party debt is repaid. The

agreement is conditional upon Admission having taken place and contains customary

warranties and indemnities. HRE has directed Holdco to retain the proceeds due to be received

by it and pay them to the Company in settlement of the undertaking to pay the subscription

price for the Reinvestment Shares subscribed for by HRE.

(b) Holdco and HCN, a company registered in England and Wales with number 8370052 have

entered into a share purchase agreement dated 10 September 2018 pursuant to which Holdco

has agreed to purchase the entire issued share capital of Harwood Lowestoft Limited and

Harwood (Bristol) Limited for £630,316 (subject to certain completion accounts adjustments).

Holdco has also agreed to procure that any shareholder debt and third party debt is repaid. The

agreement is conditional upon Admission having taken place and contains customary

warranties and indemnities. HCN has directed Holdco to retain the proceeds due to be receivedby it and pay them to the Company in settlement of the undertaking to pay the subscriptionprice for the Reinvestment Shares subscribed for by HCN.

(c) Holdco and NASCIT have entered into a share purchase agreement dated 10 September 2018

pursuant to which Holdco has agreed to purchase the entire issued share capital in Harwood

Gopher Limited for the consideration of £100,001 (subject to certain completion accounts

adjustments). Holdco has also agreed to procure that any shareholder debt and third party debt

is repaid. The agreement is conditional upon Admission having taken place and contains

customary warranties and indemnities. NASCIT has directed Holdco to retain the proceeds dueto be received by it and pay them to the Company in settlement of the undertaking to pay thesubscription price for the Reinvestment Shares subscribed for by NASCIT.

(d) Holdco and Bass Real Estate Limited, a company registered in Jersey with registration number

119309, have entered into a share purchase agreement dated 10 September 2018 pursuant to

which Holdco has agreed to purchase the entire issued share capital of Bass Real Estate No.2

Limited, Bass Real Estate No.4 Limited, Bass Real Estate No.9 Limited and Bass Real Estate

No.18 Limited for the sum of £17,240,000 (subject to adjustment in respect of certain rental

apportionments) less the amount of shareholder and third party debt owed by the relevant SPVs

(being, £12,081,391). The agreement is conditional upon Admission having taken place and

contains customary warranties and indemnities.

7.2 AIFM Agreement

The Company and the AIFM have entered into a management agreement dated 6 September 2018

pursuant to which the AIFM is appointed to act as the Company’s alternative investment fund

manager with overall responsibility for portfolio management, providing alternative investment fund

manager services, ensuring compliance with requirements of AIFMD and risk management of the

Group’s investments subject to the overall supervision of the Directors. The AIFM manages the

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Group’s investments in accordance with the policies laid down by the Board and in accordance with

the investment restrictions referred to in the AIFM Agreement.

Under the terms of the AIFM Agreement, the AIFM is also responsible for obtaining and maintaining

from the FCA all approvals necessary for the AIFM to be appointed and continue to act as alternative

investment fund manager of the Company in accordance with the AIFMD; and is required to provide,

subject to the overall supervision of the Directors all such risk management services to the Company

as are required by the AIFMD. The AIFM Agreement sets out in particular that the AIFM (referred to

as the AIFM in the AIFM Agreement) shall (i) implement a risk management system with respect to

the Company pursuant to which the AIFM is able to identify, measure, manage and monitor the risks

to the Company’s investment strategy and to which the Company is or may be exposed; (ii) ensure

that the risks associated with the investment positions of the Company and their overall effect on the

Company portfolio can be properly identified, measured, managed and monitored on an ongoing

basis; (iii) where agreed with the Company, or where required by law, (a) establish and implement

quantitative and/or qualitative risk limits for the Company, taking into account all relevant risks; and

(b) carry out stress testing, in accordance with such procedures as the AIFM may reasonably deem to

be appropriate.

Under the terms of the AIFM Agreement, the AIFM has agreed to act in good faith and with

reasonable skill and care as would be expected of a professional investment manager, and shall use

the services of appropriately qualified, trained and experienced staff and devote sufficient resources

to the performance of its duties.

In terms of liability, under the AIFM Agreement the AIFM broadly shall not be liable for losses

suffered by the Company unless it is primarily attributable to the negligence, wilful default or fraud

of the Investment Manager or its affiliates. In addition under the AIFM Agreement the Company

indemnifies the AIFM and its affiliates against any loss suffered by such persons in the proper

performance of its duties or obligations under the AIFM Agreement (unless such loss is caused by that

person’s negligence, wilful default or fraud).

The AIFM Agreement provides that the Company will pay to the AIFM a monthly fee of 0.05 per cent

of NAV with a minimum fee of £8,000.

The AIFM Agreement is terminable by any of the parties giving the other six months’ written notice.

The AIFM Agreement may be terminated by the Company immediately if the AIFM ceases to maintain

its alternative investment fund manager permission or fails to notify the Company of a regulatory

investigation which is relevant to the AIFM’s ongoing appointment as alternative investment fund

manager. The AIFM Agreement may be terminated by any of the parties immediately if the other party

is in ongoing material breach of the AIFM Agreement or is the subject of insolvency proceedings.

The AIFM in addition has a right of termination of the AIFM Agreement if the Investment Advisory

Agreement is terminated. The AIFM Agreement envisages that the Investment Adviser will be the

appointed representative of the AIFM and will supply certain secondees to the AIFM. The AIFM may

by giving written notice to the Company terminate the AIFM Agreement if such appointed

representative and secondment arrangements are terminated.

The AIFM Agreement is governed by the laws of England and Wales.

7.3 Investment Advisory Agreement

The Investment Adviser has been appointed by the AIFM to act as investment adviser to the AIFM

pursuant to the terms of the Investment Advisory Agreement. The Investment Adviser is appointed to

advise the AIFM and the Company on a day-to-day basis in accordance with the investment policy

and to recommend and give advice to the AIFM and the Company in relation to the investments of

the Company. The Investment Adviser has been appointed by AIFM as its appointed representative.

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Pursuant to the terms of the Investment Advisory Agreement, the Company shall pay to the

Investment Adviser the following fees:

Net Rent Fee (based on the most recent NAV of the Company):




NAV Fee (based on the most recent NAV of the Company):

• £0 - £500,000,000 – 0.5 per cent. per annum of the Net Asset Value;

• £500,000,001 - £750,000,000 – 0.45 per cent. per annum of the Net Asset Value

• £750,000,001 - £1,000,000,000 – 0.4 per cent. per annum of the Net Asset Value; and

• £1,000,000,001 and thereon – 0.35 per cent. per annum of the Net Asset Value.

Both the Net Rent Fee and the NAV Fee (together the “Management Fee”) shall be paid quarterly in

arrears provided that 75 per cent. of the total annual Management Fee due will be paid in cash in

arrears on a quarterly basis, and 25 per cent. of the total annual Management Fee (net of any

applicable tax) will be payable in the form of Ordinary Shares rather than cash. The issue price for

such Ordinary Shares will be the prevailing NAV at the end of the relevant period concerned. If,

however, the Ordinary Shares are trading at a discount to the prevailing NAV at the relevant time, no

new Ordinary Shares will be issued and Ordinary Shares will be purchased in the secondary market.

In addition, any such Ordinary Shares issued or purchased for the Investment Adviser will be subject

to a minimum lock-in period of 24 months.

Once the Company has reached stabilisation, to the extent the target earnings per share of at least

5 pence is not met, the Management Fee will be reduced proportionately (such deductions being made

from the NAV only) and provided that the minimum NAV payable shall be 0.1 per cent.

No performance fee will be payable to the Investment Adviser. The Investment Adviser’s appointment

will terminate upon the Company or the Investment Adviser providing no less than 24 months’ written

notice, not exercisable in the first 36 months.

The AIFM or the Company has the right to terminate the Investment Advisory Agreement by notice

in writing to the Investment Adviser if the Investment Adviser shall commit any material breach of

the Investment Advisory Agreement and shall have failed (within 30 days after having been required

in writing by the AIFM so to do) to remedy such breach to the satisfaction of the AIFM; if the

Investment Adviser is subject to administration or insolvency proceedings; or if the Investment

Adviser ceases to hold the necessary regulatory permissions to perform its obligations under the

Investment Advisory Agreement.

The Investment Adviser shall have the right to terminate the Investment Advisory Agreement by

notice in writing to the AIFM if it commits any material breach of the Investment Advisory

Agreement and shall have failed (within 30 days after having been required in writing by the

Investment Adviser so to do) to remedy such breach to the satisfaction of the Investment Adviser; or

if the AIFM or Company is subject to administration or insolvency proceedings.

Neither the Investment Adviser nor its members, officers, employees, agents or delegates shall be

liable for any loss to the Company arising from any errors of fact or judgement or any action taken or

omitted to be taken by it, except to the extent that such loss is due to the negligence, wilful default or

fraud of the Investment Adviser or its members, officers, employees, agents or delegates.

The Investment Adviser shall indemnify the AIFM and its officers, employees and agents and the

Company against all direct liability or loss suffered or incurred by them due to the negligence, wilful

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default, fraud, bad faith or breach of the Investment Advisory Agreement on the part of the Investment

Adviser or its members, officers, employees, agents or delegates.

For the period of the Investment Advisory Agreement, the Investment Adviser is obliged to offer to

the Company all investment opportunities that it believes (having undertaken satisfactory due

diligence) would satisfy the criteria set out in the Investment Policy contained in this Prospectus. To

the extent that the Company does not wish to pursue any such offered investment opportunity, the

Investment Adviser is free to pursue such investment opportunity either in its own right or with any

other party and on such terms as it may agree with the relevant vendor.

The Investment Advisory Agreement also contains provisions pursuant to which the Senior Managers

are obliged to devote such time and efforts to the Company and the performance of the investment

advisory services as is reasonably required to conduct such services in accordance with the terms of

the Investment Advisory Agreement.

The Investment Advisory Agreement is governed by the laws of England and Wales.

7.4 Property Management Agreement

The Company has entered into a property management agreement dated 6 September 2018 pursuant

to which the Property Manager is appointed to act as the property manager in respect of the

Company’s portfolio of PRS Homes.

The Property Manager’s duties under the Property Management Agreement with regard to property

management include, inter alia: (i) agreeing, with the Investment Adviser, operational budgets prior

to completion of acquisitions of Portfolio Assets which require the Property Manager to work within

defined parameters, and attend regular meetings with the Investment Adviser at which budgets and

performance will be reviewed; (ii) making payments of agreed and approved operational costs from

rent funds collected; (iii) remitting net cash to the Company; (iv) monitoring of costs against agreed

targets through regular reporting and management meetings with the Investment Adviser;

(v) co-ordinating new lettings and tenancy renewals; (vi) agreeing Market Rental Values with the

Investment Adviser on acquisition of Portfolio Assets. and (vii) ensuring all properties comply with

all relevant landlord and tenant, health and safety and other relevant legislation.

Fees are payable in respect of both the tenancy and block management services to be provided by the

Property Manager. A management fee of £150 per residential unit is payable for the provision of all

ongoing block management services to be provided by the Property Manager. Tenancy management

fees are based on a fee of 8 per cent. of rental income collected for the Seed Portfolio (with the

potential to reduce the fee as the pipeline is invested and the Company’s portfolio gains greater scale)

with additional letting fees where appropriate.

The Company can terminate the Property Management Agreement if the Property Manager is in

breach of its obligations and the breach is not remedied within 30 days’ notice, if the financial

performance of the properties is 10 per cent. less than an agreed budget for a period of four months,

insolvency of the Property Manager, any illegal act which has a material adverse effect on value, or

which causes the Company to be subject to any regulatory or disciplinary action or fine.

The Property Manager may terminate the Property Management Agreement if any fees are not paid

within one month of notice being given that they are outstanding.

Although the initial term of the appointment of the Property Manager is three years, either party may

terminate the appointment at anytime following the later of (i) the first anniversary of the date of the

agreement or (ii) the last handover date of the Portfolio Assets handed over to the Property Manager

(the Company being entitled, but not obliged to require, the Property Manager to take on management

of the new Portfolio Assets in terms of the Property Management Agreement) and that in either case

on four months’ notice.

The Property Management Agreement is governed by the laws of England.

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7.5 Depositary Agreement

Ocorian (UK) Limited has been appointed as the Company’s depositary for the purposes of the

AIFMD. The Depositary shall provide its services with the skill and care to be expected of a

professional supplier of depositary services. The Depositary, in performing the services, shall act

honestly, fairly, professionally, independently and in the interests of the Company and the investors.

The Depositary’s regulatory status is that of a “PE AIF Depositary”, meaning broadly that it is able to

be a depositary of an AIF which has no redemption rights exercisable during a period of five years

from the date of initial investments and it either does not generally invest in custodial assets or

generally invests to acquire control over issuers or non-listed companies (as set out in FUND 3.11.12

and 3.11.14 in the FCA Handbook).

The Depositary Agreement provides that the Company will only hold non-custody assets (being for

example real property) meaning that the Depositary’s duties and obligations shall in the main not

extent to custody obligations which apply in the case of custody assets.

Under the terms of the Depositary Agreement, the Depositary is entitled to be paid £27,000 in

aggregate per annum.

In addition to the periodic charge, the Depositary shall be entitled to be reimbursed by the Company

for all costs and expenses properly and reasonably incurred in the performance or arranging for the

performance of duties in its role as depositary. The amount and rate of the expenses shall be

determined from time to time between the Depositary and the AIFM.

The Depositary may terminate the Depositary Agreement by six months’ prior written notice to the

AIFM, but the Depositary may only retire once the AIFM (using all reasonable endeavours) has

appointed a successor depositary. The AIFM may terminate the Depositary Agreement by

three months’ prior written notice to the Depositary.

The Company and/or the AIFM may terminate the Depositary Agreement at any time if the

Depositary is the subject of insolvency proceedings, is no longer qualified to be a depositary of the

Company, or has committed an ongoing material breach of the Depositary Agreement. The Depositary

may terminate the Depositary Agreement at any time if the Company or the AIFM is the subject of

insolvency proceedings, the AIFM ceases to be the alternative investment fund manager of the

Company without the Depositary’s consent, or the Company or AIFM has committed an ongoing

material breach of the Depositary Agreement.

Under the Depositary Agreement the Company shall indemnify the Depositary and any of its affiliates,

members, directors, officers, agents, delegates, employees, partners or shareholders against all losses

suffered or incurred by them in the proper performance of their duties under the Depositary Agreement.

The Depositary Agreement provides that the Company shall indemnify the Depositary (including its

officers, agents and employees against any liability or loss suffered or incurred by an Indemnified

Person as a result of or in connection with the proper provision of services under this Agreement.

The Depositary Agreement is governed by the laws of England and Wales.

7.6 Administration Agreement

The Company is party to an administration agreement with the Administrator dated 4 September

2018, pursuant to which the Administrator agrees to provide day-to-day administration services to the

Company including, but not limited to, the development and production of statutory annual reports

and accounts and interim accounts to Shareholders in accordance with IFRS and EPRA, payroll

services and the calculation of Net Asset Value of the Ordinary Shares.

The fees payable by the Company to the Administrator are £72,000 plus VAT per annum, payable

monthly in arrears plus a charge equal to 0.01 per cent. of the value of the assets of the Company in

excess of £250 million. The Administrator is also entitled to additional fees where it provides desktop

publishing and tax services.

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The Company will also reimburse the Administrator for disbursements and reasonable out of pocket

expenses incurred by the Administrator on behalf of the Company.

The Administrator may delegate the whole or any part of its duties and responsibilities to an affiliate;

however such delegation does not affect the liability of the Administrator who shall remain at all times

liable for the acts or omissions of its delegate as if such acts or omissions were its own.

The Administration Agreement can be terminated by the Company or the Administrator on not less

than 6 months’ notice, provided that any such period of notice given shall not expire earlier than

12 months from the commencement date of the Administration Agreement.

The Administration Agreement is governed by the laws of England.

7.7 Registrar’s Agreement

The Company is a party to a registrar’s agreement with the Registrar dated 4 September 2018 pursuant

to which the Registrar agrees to provides share registrar services to the Company.

Under the terms of the Registrar’s Agreement, the Registrar is entitled to a market standard fee for

creation and maintenance of the share register.

The Registrar is also entitled to reimbursement of all out of pocket costs, expenses and charges

properly incurred on behalf of the Company. The Company will be charged separately for certain

services including, but not limited to, the registration of transfers of shares, PID distribution and

CRS/FACTA reporting.

The Company has given certain market standard indemnities in favour of the Registrar in respect of

the Registrar’s potential losses in carrying on its responsibilities under the Registrar’s Agreement. The

Registrar’s liabilities under the Registrar’s Agreement are subject to a cap.

The Registrar’s Agreement may be terminated by either party (i) by service of three months’ written

notice if the parties cannot reach agreement on fees, (ii) upon service of written notice if the other

party commits a material breach of its obligations which have not been remedied within 45 days of

notice to do so or (iii) upon service of written notice if a resolution is passed or an order made for the

winding-up, dissolution or administration of the other party.

The Registrar’s Agreement is governed by the laws of England.

7.8 Receiving Agent’s Agreement

By a receiving agent’s agreement dated 31 August 2018, between the Company and the Receiving

Agent, the Receiving Agent has agreed to act as receiving agent in connection with the Offer for

Subscription.

Under the terms of the Receiving Agent’s Agreement, the Receiving Agent is entitled to a market

standard fee and reimbursement of all out-of-pocket expenses reasonably incurred by it in connection

with its duties.

The Company has given certain market standard indemnities in favour of the Receiving Agent in

respect of the Receiving Agent’s potential losses in carrying out its responsibilities under the

Receiving Agent’s Agreement. The Receiving Agent’s liability under the Receiving Agent’s

Agreement is subject to a cap.

The Receiving Agent’s Agreement can be terminated by either party on written notice if (i) the other

party commits a material breach of its obligations which have not been remedied within 14 days of

notice to do so, (ii) if a resolution is passed or an order made for the winding-up, dissolution or

administration of the other party or (iii) if the Company’s directors determine to withdraw or

otherwise decide not to proceed with the Issue.

The Receiving Agent’s Agreement is governed by the laws of England.

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7.9 Company Secretarial Agreement

The Company is a party to a Company Secretarial Agreement with the Company dated 17 August

2018 pursuant to which the Company Secretary provides certain company secretarial services to the

Company prior to Admission (“Pre-Admission Services”) and on an ongoing basis post-Admission

(“Post-Admission Services”).

Under the terms of the Company Secretarial Agreement, the Company Secretary is entitled to the

following fees in connection with the Pre-Admission Services:

(a) a one-off fee of £10,000 for the company secretarial set up; and

(b) fees calculated on a time spent basis for the services provided up to a cap of £15,000.

In connection with the provision of the Post-Admission Services, the Company Secretary is entitled

to the following fees:

(a) an annual fee of £60,000 plus VAT and disbursement, payable quarterly in advance; and

(b) a setup fee of £250 for each UK incorporated subsidiary plus an annual fee of £1,500 plus VAT

and disbursements for each subsidiary company.

The Company has given certain market standard indemnities in favour of the Company Secretary in

respect of the Company Secretary’s potential losses in carrying out its responsibilities under the

Company Secretarial Agreement. The Company Secretary’s liability under the Company Secretarial

Agreement is subject to a cap.

The Company Secretarial Agreement can be terminated by the Company or the Administrator on not

less than 6 months’ notice, provided that any such period of notice given shall not expire earlier than

12 months from the commencement date of the Company Secretarial Agreement.

The Company Secretarial Agreement is governed by the laws of England.

7.10 Placing and Sponsor’s Agreement

Under the Placing and Sponsor’s Agreement dated 12 September 2018 between the Company, the

Investment Adviser, the Directors and Peel Hunt, Peel Hunt has agreed to act as sponsor in connection

with the applications for Admission and has agreed, as agent for the Company, to use its reasonable

endeavours to procure subscribers for Ordinary Shares at the Issue Price. The Placing and Sponsor’s

Agreement confers on Peel Hunt the power to appoint sub-agents or to delegate the exercise of any

of its powers, authorities or discretions to third parties and the Company agrees to ratify and confirm

all actions which Peel Hunt or any such sub-agents or delegates lawfully take in the exercise of such

appointment, powers, authorities or discretions.

The Placing and Sponsor’s Agreement is subject to customary conditions including, inter alia,

Admission occurring not later than 8.00 a.m. on 28 September 2018 (or such later date, not being later

than 12 October 2018, as the Company and Peel Hunt may agree).

Peel Hunt may be terminate the Placing and Sponsor’s Agreement in certain circumstances prior to

Admission, principally in the event of a material breach of the Placing and Sponsor’s Agreement, any

of the warranties contained in it being untrue, inaccurate or misleading, the Minimum Net Proceeds

being raised, or a material adverse change in the Group or where any change in national or

international, financial, monetary, economic, political or market conditions is such as to make it, in

the opinion of Peel Hunt acting in good faith, impracticable or inadvisable to proceed with the Issue

or the delivery of Ordinary Shares pursuant to the Placing and Sponsor’s Agreement or as

contemplated by this Prospectus.

The Placing and Sponsor’s Agreement contains certain customary warranties given by the Company,

the Directors and the Investment Adviser in favour of Peel Hunt, including as to the accuracy of

information contained in this Prospectus, and an indemnity from the Company and the Investment

Adviser in favour of Peel Hunt.

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Subject to the conditions of the Placing and Sponsor’s Agreement having been satisfied or waived and

the Placing and Sponsor’s Agreement not having been terminated in accordance with its terms and in

consideration for its services in relation to the Issue, Peel Hunt will be paid a commission equal to

equal to 2 per cent. of the product of the Offer Price and the number of New Shares less the other

Issue Costs (including for the avoidance of doubt any irrecoverable VAT on such costs) provided that

such commission shall not be less than, and, if necessary shall be increased such that it is equal to,

1.5 per cent. of the product of the Offer Price and the number of New Shares, together with all costs

and expenses and VAT thereon where appropriate, by the Company in consideration for its services in

relation to the Issue.

For a period from and including the date of the Placing and Sponsor’s Agreement until 730 days after

Admission, the Directors have agreed that they will not (and in the case of Nick Jopling, will procure

that his wife will not) without the prior written consent of Peel Hunt offer, sell, contract to sell, or

grant or sell any option or contract to purchase; or purchase any option or contract to sell; or transfer,

mortgage, assign, charge or pledge; or grant any option, right or warrant to purchase, or otherwise

transfer, lend, or dispose of, directly or indirectly, any Ordinary Shares or any interest in Ordinary

Shares or any securities convertible or exchangeable for Ordinary Shares, (in each case in respect of

Ordinary Shares held by them as at Admission) or enter into any swap or other agreement that

transfers, in whole or in part, any of the economic consequences of ownership of Ordinary Shares, or

announce or otherwise publicise the intention to do any of the foregoing. The lock-up arrangements

summarised above are subject to certain customary exceptions. Peel Hunt may, in its sole discretion,

waive all or part of any of these lock-up arrangements.

The Company has also agreed that, subject to certain customary exceptions, during the period from

the date of the Placing and Sponsor’s Agreement until 365 days after Admission, it will not, without

the prior written consent of Peel Hunt, issue, offer, lend, mortgage, pledge, assign, charge, sell,

contract to sell or issue, sell any option or contract to purchase, purchase any option or contract to sell

or issue, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of,

directly or indirectly, any Ordinary Shares or any interest in Ordinary Shares or any securities

convertible into or exercisable or exchangeable for, or substantially similar to, Ordinary Shares or any

interest in Ordinary Shares, or file any registration statement under the Securities Act or file or publish

any prospectus with respect to any of the foregoing, or enter into any swap or other agreement or

transaction that transfers, in whole or in part, any of the economic consequences of ownership of

Ordinary Shares.

The Placing and Sponsor’s Agreement is governed by the laws of England.

7.11 Valuer’s engagement letter

The Company has entered into an engagement letter with Savills Advisory Services Limited dated

30 July 2018, pursuant to which Savills has been appointed as the Company’s Valuer to carry out

desktop biannual Red Book valuations in respect of the Portfolio Assets. The Valuer’s appointment is

for a term of three years from the date of the first valuation which is terminable by either party on not

less than six months’ notice. The Valuer will be entitled to a fee of £3,500 plus VAT for each property

forming part of the Portfolio Assets valued (up to a maximum of 100 units or £10 million, after which

point the Valuer can charge an additional reasonable amount).

7.12 Reinvestment Subscription Letters

On 10 September 2018, the Company and each of the Reinvestment Subscribers entered into a

separate Reinvestment Subscription Letters, under which each Reinvestment Subscriber has agreed to

subscribe for the number of Ordinary Shares as set out against its name in paragraph 9.4 of Part 2 of

this Prospectus at the Issue Price, conditional on satisfaction of the condition set out in each of the

Share Purchase Agreements in relation to which the relevant Reinvestment Subscriber is the seller.

Each Share Purchase Agreement is conditional on Admission. The Reinvestment Subscription Shares

will be issued on the basis of an undertaking from the relevant Reinvestment Subscriber to pay the

173

relevant subscription price in cash within three business days after Admission. Under the

Reinvestment Subscription Letter:

• NASCIT and HCN have also agreed, that they will not, without the prior written consent of

Peel Hunt offer, sell, contract to sell, or grant or sell any option or contract to purchase; or

purchase any option or contract to sell; or transfer, mortgage, assign, charge or pledge; or grant

any option, right or warrant to purchase, or otherwise transfer, lend, or dispose of, directly or

indirectly, any Ordinary Shares (or interests therein) subscribed for pursuant to the relevant

Reinvestment Subscription Letter, for a period of 365 days following the date of Admission;

and

• HRE has also agreed, that it will not, without the prior written consent of Peel Hunt offer, sell,

contract to sell, or grant or sell any option or contract to purchase; or purchase any option or

contract to sell; or transfer, mortgage, assign, charge or pledge; or grant any option, right or

warrant to purchase, or otherwise transfer, lend, or dispose of, directly or indirectly, any

Ordinary Shares (or interests therein) subscribed for pursuant to the relevant Reinvestment

Subscription Letter, for a period of 365 days following the date of Admission or for a period

of 730 days following the date of Admission if the relevant Reinvestment Shares are

transferred by HRE to a Senior Manager.

The Reinvestment Subscription Letters contain a number of carve-outs customary for agreements of

this nature (for example, transfers to connected parties, and sales of Ordinary Shares arising as the

result of a takeover of the Company). These lock-up provisions are very similar in nature to

those agreed to by the Directors in the Placing and Sponsor’s Agreement. Peel Hunt may, in its sole

discretion, waive all or any part of these lock-up arrangements.

Each Reinvestment Subscription Letter is governed by English law.

7.13 Cost Coverage Agreement

On 6 September 2018, the Company and the Investment Adviser entered into an agreement pursuant

to which the Investment Adviser has undertaken to reimburse the Company for:

(i) in the event that the Target Gross Proceeds or greater are raised, such amount by which the

Issue Costs exceed 2 per cent. of the Gross Proceeds; or

(ii) in the event that the Gross Proceeds raised are less than Target Gross Proceeds, such amount

by which the Issue Costs exceed 2 per cent. of the Gross Proceeds capped at the amount which

the Investment Adviser would have had to reimburse in accordance with (i) above had the

Target Gross Proceeds (but no more) been raised.

All remaining Issue Costs will be borne by the Company.

The Cost Coverage Agreement is governed by English law.

8. EMPLOYEES AND PROPERTIES

As at the date of this Prospectus, the Company does not have any employees, nor does the Company own

any properties.

9. INVESTMENT RESTRICTIONS

The Company (and each member of the Group) will comply with the investment restrictions set out below:

9.1 the Company will only invest in private market rented homes in the UK (predominantly in England,

but not in Greater London);

9.2 no investment in any Block of Apartments or Collection of Houses shall exceed 20 per cent. of Gross

Asset Value;

174

9.3 committed and uncommitted expenditure on all development activity not exceeding 10 per cent. of

the Company’s Gross Asset Value may be used for forward funding, the acquisition of sites for

development or material conversion or the development of sites owned by the Group where

opportunity exists; and

9.4 the Company will not invest in other alternative investment funds or closed-ended investment

companies.

In the event of any material breach of the Company’s investment policy or of the investment restrictions

applicable to the Company, Shareholders will be informed of the actions to be taken by the Company and/or

the AIFM (at the time of such breach) through an announcement via a Regulatory Information Service.

Any material change to the investment policy will require the prior approval of Shareholders, by way of an

ordinary resolution at a general meeting.

10. FINANCIAL INFORMATION

10.1 KPMG LLP, of 15 Canada Square, London E14 5GL which is registered to carry out audit work by

the Institute of Chartered Accountants of England and Wales has been the only auditor of the

Company since its incorporation. The annual report and accounts of the Company will be prepared in

pounds sterling according to IFRS and EPRA.

10.2 The Company’s accounting period will terminate on 31 March of each year, with the first period

ending on 31 March 2019.

10.3 The Company has not commenced operations since its incorporation on 25 May 2018 and no financial

statements of the Company have been made as at the date of this Prospectus.

10.4 As at the date of this Prospectus, the Company does not have any interest in any fixed assets.

11. WORKING CAPITAL

The Company is of the opinion, taking into account the Minimum Net Proceeds, that the working capital

available to the Group is sufficient for its present requirements, that is for at least the next 12 months from

the date of this Prospectus.

12. CAPITALISATION AND INDEBTEDNESS

12.1 As at the date of this Prospectus, the Company:

(a) does not have any secured, unsecured, guaranteed or unguaranteed debt and no indirect or

indirect indebtedness;

(b) has not granted any mortgage or charge over any of its assets;

(c) does not have any contingent liabilities; and

(d) has an issued share capital consisting of 1,724,000 Redeemable Preference Shares of £1.00

each and one Ordinary Share of £0.01 each, all of which are fully paid up.

13. NO SIGNIFICANT CHANGE

Save for entering into material contracts as set out in paragraph 7 of this Part 11, there has been no significant

change in the trading or financial position of the Company since its incorporation.

14. DISCLOSURES REQUIRED UNDER ARTICLE 23 OF AIFMD

The Company is an AIF for the purposes of the AIFMD and has appointed G10 Capital Limited as its AIFM.

This Prospectus contains, to the extent applicable, the information required by Article 23 of the AIFMD to

be made available to investors before they invest in the Company. The table below has been included to set

175

out the relevant information and where applicable indicate to investors the relevant parts of the Prospectus

which contain this information.

References to the Fund in this paragraph should be taken to refer to the Company. References to FUND mean

the Investment Funds sourcebook which forms part of the FCA Handbook.

AIFMD REFERENCE CROSS REFERENCE TO THE PROSPECTUS

Article 23(1)(a) and (b): INVESTMENT STRATEGY AND POLICY

A description of the investment strategy and

objectives of the Fund.

Pages 7 to 9 (Summary, B.34 “Investment Policy”)

Pages 59 to 61 (Part 2, paragraph 4 “Investment

Objective and Policy”)

A description of the types of assets in which the

Fund may invest, the techniques it may employ and

all associated risks.


Pages 19 to 22 (Summary, D.2. “Key information

on the risks specific to the issuer or the industry”)

Pages 28 to 42 (Risk factors)

Page 53 to 56 (Part 1 “Investment Highlights”)




Process”)

Pages 85 to 97 (Part 5 “Seed Portfolio and

Identified Pipeline”)

A description of any applicable investment

restrictions.


Pages 60 to 61 (Part 2, paragraph 4.3 “Investment

Restrictions”)

A description of the procedures by which the Fund

may change its investment strategy or investment

policy or both.





Restrictions”)

Article 23(1)(a): INFORMATION ABOUT MASTER FUNDS/UNDERLYING FUNDS

Information on where any master fund is

established and where the underlying funds are

established if the Fund is a fund of funds.

N/A

Article 23(1)(a): LEVERAGE

A description of the circumstances in which the

Fund may use leverage, the types and sources of

leverage permitted and the associated risks, any

restrictions on the use of leverage and any

collateral and asset reuse arrangements, and the

maximum level of leverage which the AIFM is

entitled to employ on behalf of the Fund.*

Pages 9 to 10 (Summary, B.35. “Borrowing

limits”)

Pages 61 to 62 (Part 2, paragraph 5 “Anticipated

Borrowing”)

Pages 19 to 22 (Summary, D.2 “Key information

on the risks specific to the issuer or the industry”)

176


Pages 31 to 32 (Risk Factors, section 1.8

“Borrowing can enhance as well as diminish the

Net Asset Value of the Ordinary Shares” and

section 1.9 “The Company may be required to

grant security over its assets which will rank ahead

of Shareholders’ entitlements”)

Article 23(1)(c): LEGAL IMPLICATIONS

A description of the main legal implications of the

contractual relationship entered into for the

purpose of investment, providing the following

information:

• information on jurisdiction;

• information on the applicable law; and

• information on the existence or not of any

legal instruments providing for the

recognition and enforcement of judgments in

the territory where the Fund is established.

Page 5 (Summary, B.2 “Domicile and Legal

Form”)

Pages 38 to 39 (Risk Factors, section 4.6 “Changes

in law and regulation may adversely affect the

Company”)

Article 23(1)(d): INFORMATION ABOUT THE IDENTITY OF THE AIFM AND OF OTHER

SERVICE PROVIDERS

Identity of the AIFM, and description of its duties. Pages 11 to 14 (Summary, B.40 “Service

Providers”)

Pages 51 to 52 (Directors, AIFM, Investment

Adviser and other advisers)

Page 59 (Part 2, paragraph 3 “AIFM”)

Pages 166 to 167 (Part 12, paragraph 7.2 “AIFM

agreement”)

Identity of the depositary and description of its

duties.

Pages 11 to 14 (Summary, B.40 “Service

Providers”)



Page 104 (Part 6, paragraph 3.4 “Depositary

Agreement”)

Page 170 (Part 11, paragraph 7.5 “Depositary

Agreement”)

Identity of the auditor and description of its duties. Pages 11 to 14 (Summary, B.40 “Service

Providers”)



Page 175 (Part 11, paragraph 10 “Financial

Information”)

177


Identity of any other service providers and

description of their duties.

Pages 11 to 14 (Summary, B.40 “Service

Providers”)

Pages 166 to 174 (Part 11, paragraph 7 “Material

Contracts of the Company”)

A description of the investors’ rights. Pages 35 to 37 (Risk Factors, paragraph 3 “Risks

relating to Service Providers”)

Article 23(1)(e): COMPLIANCE OF THE AIFM WITH PROFESSIONAL RISK

A description of how the AIFM is complying with

the requirements relating to professional liability

risk by either:

• having additional own funds which are

appropriate to cover potential liability risks

arising from professional negligence; or

• holding a professional indemnity insurance

against liability arising from professional

negligence which is appropriate to the risks

covered.

The AIFM complies with the requirements relating

to professional liability risks by holding a

professional liability insurance policy

Article 23(1)(f): DELEGATION BY THE AIFM AND BY THE DEPOSITARY

A description of any delegation of management

function by the AIFM (as referred to in Annex I),

including the identity of the delegate and any

conflicts of interest that may arise from such

delegation.

Page 105 (Part 6, paragraph 4.1 “Administrator”)

A description of any safekeeping function

delegated by the depositary, including the identity

of the delegate and any conflicts of interest that

may arise from such delegation.

N/A

Article 23(1)(g): VALUATION

A description of the Fund’s:

• valuation procedure; and

• pricing methodology for valuing assets,

including the methods used in valuing hard-

to-value assets.

Pages 14 to 15 (Summary, B.42 “Net Asset Value”)

Page 67 (Part 2, paragraph 12 “NAV Publication

and Calculation”)

Article 23(1)(h): LIQUIDITY RISK MANAGEMENT

A description of the Fund’s liquidity risk

management, including:

• the redemption rights both in normal and in

exceptional circumstances; and

• the existing redemption arrangements with

investors.

The Company is a closed-ended investment company.

Shareholders are entitled to participate in the assets of

the Company attributable to their Shares in a winding-

up of the Company or other return of capital, but they

have no rights of redemption. In the event of a

winding-up of the Company, Shareholders will rank

behind any creditors of the Company and, therefore,

any positive return for Shareholders will depend on the

Company’s assets being sufficient to meet the prior

entitlements of any creditors.

178


Liquidity risk is defined as the risk that the

Company will encounter difficulty in meeting

obligations associated with financial liabilities that

are settled by delivering cash or another financial

asset. Exposure to liquidity risk arises because of

the possibility that the Company could be required

to pay its liabilities earlier than expected. The

Company mitigates this risk by maintaining a

balance between continuity of funding and

flexibility through the use of bank deposits and

loans (if any).

Article 23(1)(i): FEES, CHARGES AND EXPENSES

A description of all fees, charges and expenses and

of the maximum amounts thereof which are

directly or indirectly borne by investors.

Page 23 (Summary, E.1 “Net proceeds and costs of

the Issue”)

Page 27 (Summary, E.7 “Expenses”)

Pages 106 to 107 (Part 6, paragraph 5 “Fees and

Expenses)

Article 23(1)(j): FAIR TREATMENT OF INVESTORS

A description of how the AIFM ensures a fair

treatment of investors and, in case an investor

obtains preferential treatment or the right to obtain

preferential treatment:

• a description of that preferential treatment;

• a description of the type of investors with

such preferential treatment; and

• a description of the legal or economic links of

investors with preferential treatment to the

Fund or AIFM.

Page 100 (Part 6, paragraph 2.8 “Fair treatment of

investors”)

Article 23(1)(k): FINANCIAL INFORMATION

Latest annual report. N/A

Article 23(1)(l): INFORMATION ABOUT THE ISSUE AND THE SALE OF SHARES

Procedure and conditions for the issue and sale of

shares.

Pages 108 to 114 (Part 7 “The Issue”)

Article 23(1)(m): NET ASSET VALUE OF THE FUND

Latest net asset value of the Fund or the latest

market price of the shares of the Fund.

N/A

Article 23(1)(n): PERFORMANCE OF THE FUND

Historical performance of the Fund. N/A

179


Article 23(1)(o): INFORMATION ABOUT THE PRIME BROKER

Identity of the prime broker. N/A

A description of any material arrangements of the

Fund with its prime brokers and the way any

conflicts of interest in relation thereto are managed.

N/A

A description of any provisions in the contract with

the depositary on the possibility of transfer and

reuse of Fund assets.

N/A

Information about any transfer of liability to the

prime broker that may exist.

N/A

Article 23(1)(p): ADDITIONAL AIFM DISCLOSURES

A description of manner and frequency of specific

disclosures relating to the following:

The information shall be disclosed as part of the

Company’s periodic reporting to investors, as

required by the Articles or at the same time as any

prospectus and offering document and at a

minimum at the same time as the Company’s

annual report is made available.

• percentage of the Fund’s assets which are

subject to special arrangements arising from

their illiquid nature;

• new arrangements for managing the liquidity

of the Fund; and

• current risk profile of the Fund and the risk

management systems employed by the AIFM

to manage the above risks.

A description of manner and frequency, if the Fund

employs leverage, of disclosure of:

Information on changes to the maximum level of

leverage and any right of re-use of collateral or any

guarantee under the leveraging arrangements shall

be provided without undue delay.

Information on the total amount of leverage

employed by the Company shall be disclosed as

part of the Company’s periodic reporting to

investors, as required by the Articles, or at the same

time as any prospectus and offering document and

at least at the same time as the Company’s annual

report is made available.

Without limitation to the generality of the

foregoing, any information required under

Article 23(4) of the AIFM Directive and FUND

3.2.5 R and, Article 23(4) of the AIFM Directive

and FUND 3.2.6 R, may be disclosed: (a) in the

Company’s annual report or half-yearly report;

(b) by the Company issuing an announcement via a

RIS; (c) a subsequent prospectus; and/or (d) by the

Company publishing the relevant information on

the Company’s website.

• changes to the maximum level of leverage

which the AIFM may employ on behalf of the

Fund as well as any right of the reuse of

collateral or any guarantee granted under the

leveraging arrangement; and

• total amount of leverage employed by the

Fund.

180

For the purposes of Article 23(1)(a) of the AIFMD as cited above, leverage is required to be calculated using

two prescribed methods: (i) the gross method; and (ii) the commitment method, and expressed as the ratio

between a fund’s total exposure and its net asset value.

As measured using the gross method, the level of leverage to be incurred by the Investment Adviser on

behalf of the Company is not to exceed 175 per cent. of NAV (which is the equivalent of a ratio of 0.45).

As measured using the commitment method, the level of leverage to be incurred by the Investment Adviser

on behalf of the Company is not to exceed 190 per cent. of NAV (which is the equivalent of a ratio of 0.45).

15. ELIGIBILITY FOR INVESTMENT BY UCITS SCHEMES OR NURS

The Company has been advised that the Ordinary Shares should be “transferable securities” and, therefore,

should be eligible for investment by UCITS schemes or NURS on the basis that: (i) the Company is a

closed-ended investment company incorporated in England and Wales as a public limited company; (ii) the

Ordinary Shares are proposed to be admitted to trading on the Main Market for listed securities of the

London Stock Exchange; (iii) the Ordinary Shares have equal voting rights; and (iv) the AIFM is authorised

and regulated as an AIFM by the FCA and, as such, is subject to its rules in the conduct of its investment

business. However, the manager of the relevant UCITS schemes or NURS should satisfy itself that the

Ordinary Shares are eligible for investment by the relevant UCITS schemes or NURS, including the factors

relating to the relevant UCITS schemes or NURS itself, specified in the Collective Investment Scheme

Sourcebook of the FCA Handbook.

16. VALUATION

The Company confirms that there has been no material change to the properties forming the Portfolio Assets

since the date of their valuations by the Valuer as set out in paragraph 10 of Part 8 of this Prospectus.

17. RELATED PARTY TRANSACTIONS

Save for the Investment Advisory Agreement, the Share Purchase Agreements listed in paragraphs 7.1(a) and

7.1(b) of this Part 11 and the Reinvestment Subscription Letters entered into with HCN and HRE (as further

described above), the Company is not a party to, nor had any interest in, any related party transaction (as

defined in the standards adopted according to the Regulation (EC) No 1606/2002) at any time since its

incorporation on 25 May 2018.

18. LITIGATION

There are no governmental, legal or arbitration proceedings (including in so far as the Company is aware any

governmental, legal or arbitration proceedings which are pending or threatened) during the period covering

at least the previous 12 months prior to the date of this Prospectus which may have, or have had in the recent

past, a significant effect on the Company or the Company’s financial position or profitability.


Article 23(2): INFORMATION ON DISCHARGE OF LIABILITY

A description of any arrangement made by the

depositary to contractually discharge itself of

liability in accordance with Article 21(13).

The Depositary Agreement provides that such

arrangements may be made in relation to custodial

assets. Custodial assets do not include real property.

A description of any changes with respect to

depositary liability.

N/A

181

19. CONSENTS

19.1 The Investment Adviser, the AIFM, the Intermediaries and the Valuer have each given and has not

withdrawn their written consent to the issue of this Prospectus with the inclusion herein of their names

and the references to them in the form and context in which they appear.

19.2 The Investment Adviser accepts responsibility for and authorises, and consents to, the inclusion of (in

the form and context in which it is included) the information on itself or attributable to it contained

in this Prospectus for the purposes of Rule 5.5.3R(2)(f) of the Prospectus Rules, and having taken all

reasonable care to ensure that such is the case, such information contained in this Prospectus is, to the

best of its knowledge, in accordance with the facts and contains no omission likely to affect its import.

19.3 Savills Advisory Services Limited accepts responsibility for and has authorised the inclusion (in the

form and context in which it is included) the reports contained in Part 4 and Part 8 of this Prospectus

for the purposes of Rule 5.5.3R(2)(f) of the Prospectus Rules, and having taken all reasonable care to

ensure that such is the case, the reports contained in Part 4 and Part 8 of this Prospectus are, to the

best of its knowledge, in accordance with the facts and contain no omission likely to affect its import.

20. TAKEOVER BIDS, MANDATORY BIDS, SQUEEZE-OUT AND SELL-OUT RULES

20.1 Takeover bids

As at the Last Practicable Date, there have been no public takeover bids by third parties in respect of

the Company’s share capital since incorporation. As a company incorporated in England and Wales

with shares admitted to trading on the London Stock Exchange, the Company will be subject to the

provisions of the Takeover Code.

20.2 Mandatory bids

As a public company incorporated in England and Wales with shares admitted to trading on the

London Stock Exchange, the Company is subject to the provisions of the Takeover Code.

Under Rule 9 of the Takeover Code, if a person acquires an interest in Ordinary Shares which,

together with that person’s concert parties’ interests in Ordinary Shares, carries 30 per cent. or more

of the voting rights of the Company, that person would normally be required (except with the consent

of the Panel on Takeovers & Mergers) to make a cash offer for the Ordinary Shares not already held

by them at a price not less than the highest price paid for the Ordinary Shares by the person, or its

concert parties, during the previous 12 months.

Under Rule 9 of the Takeover Code, this requirement would also normally be triggered by any

acquisition of an interest in Ordinary Shares by a person (together with its concert parties) interested

in shares carrying between 30 and 50 per cent. of the voting rights in the Company, if the effect of

such acquisition would be to increase those persons’ percentage interest in the total voting rights of

the Company.

“Interests in shares” is defined broadly in the Takeover Code. A person who has long economic

exposure, whether absolute or conditional, to changes in the price of shares will be treated as

interested in those shares. A person who only has a short position in shares will not be treated as

interested in those shares.

“Voting rights” for these purposes means all the voting rights attributable to the share capital of a

company which are currently exercisable at a general meeting.

“Persons acting in concert” (and “concert parties”) comprise persons who, pursuant to an agreement

or understanding (whether formal or informal), co-operate to obtain or consolidate control of a

company or to frustrate the successful outcome of an offer for a company. Certain categories of people

are deemed under the Takeover Code to be acting in concert with each other unless the contrary is

established.

182

Under Rule 37 of the Takeover Code, when a company purchases its own voting shares, a resulting

increase in the percentage of voting rights carried by the shareholdings of any person or group of

persons acting in concert will be treated as an acquisition for the purposes of Rule 9. A shareholder

who is neither a director, nor acting in concert with a director, will not normally incur an obligation

to make an offer under Rule 9. However, under Note 2 to Rule 37, where a shareholder has acquired

shares at a time when it had reason to believe that a purchase by the company of its own voting shares

may take place, an obligation to make a mandatory bid under Rule 9 may arise in certain

circumstances. The buy-back by the Company of Ordinary Shares could, therefore, have implications

pursuant to Rule 9 of the Takeover Code for Shareholders with significant shareholdings.

20.3 Squeeze-out and sell-out rules

Squeeze-out rules

Under the Companies Act, if an offeror were to acquire 90 per cent. of the Ordinary Shares to which

an offer relates, it could then compulsorily acquire the remaining 10 per cent. It would do so by

sending a notice to outstanding Shareholders, no later than three months after the last day on which

the offer is open for acceptance, telling them that it will compulsorily acquire their shares and then,

six weeks later, it would execute a transfer of the outstanding shares in favour of the offeror and pay

the consideration to the Company, which would hold the consideration in trust for outstanding

Shareholders.

The consideration offered to the Shareholders whose shares are compulsorily acquired under the

Companies Act must, in general, be the same as the consideration that was available under the

takeover offer unless the Shareholders can show that the offer value is unfair.

Sell-out rules

The Companies Act also gives minority Shareholders a right to be bought out in certain circumstances

by an offeror who had made a takeover offer. If a takeover offer related to all the Ordinary Shares and

at any time before the end of the period within which the offer could be accepted, the offeror held or

had agreed to acquire not less than 90 per cent. of the Ordinary Shares, any holder of shares to which

the offer relates who has not accepted the offer can, by a written communication to the offeror, require

it to acquire those shares. The offeror would be required to give any Shareholder notice of his right

to be bought out within one month of that right arising.

The offeror may impose a time limit on the rights of minority Shareholders to be bought out, but that

period cannot end less than three months after the end of the acceptance period. If a Shareholder

exercises its rights, the offeror is bound to acquire those shares on the terms of the offer or on such

other terms as may be agreed.

21. DISCLOSURE REQUIREMENTS AND NOTIFICATION OF INTEREST IN SHARES

Under Chapter 5 of the Disclosure Guidance and Transparency Rules, subject to certain limited expectations,

from Admission Shareholders must notify the Company if as a result of an acquisition or disposal of

Ordinary Shares, the Shareholder’s percentage of voting rights of the Company reaches, exceeds or falls

below 3 per cent. of the Company’s voting rights and each 1 per cent. threshold thereafter.

Such notification must be made using the prescribed form TR1 available from the FCA’s website

www.fca.gov.uk. Under the Disclosure Guidance and Transparency Rules, the Company must announce the

notification to the public as soon as possible and in any event by not later than the end of the third trading

day following receipt of a notification in relation to voting rights.

The FCA may take enforcement action against a person holding voting rights who has not complied with

Chapter 5 of the Disclosure Guidance and Transparency Rules.

183

22. RESTRICTIONS ON DISTRIBUTION

22.1 General

The distribution of this Prospectus and offer of Ordinary Shares in certain jurisdictions may be

restricted by law and therefore persons into whose possession this Prospectus comes should inform

themselves about and observe any such restrictions. Any failure to comply with these restrictions may

constitute a violation of the securities laws of any such jurisdiction.

22.2 European Economic Area (other than the UK)

(a) In relation to each Relevant Member State, with effect from and including the date on which

the Prospectus Directive was implemented in that Relevant Member State (the “relevant

implementation date”), no Ordinary Shares have been offered or will be offered pursuant to

an offer to the public in that Relevant Member State, except that with effect from and including

the relevant implementation date, offers of Ordinary Shares may be made to the public in that

Relevant Member State at any time:

(i) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(ii) to fewer than 150, natural or legal persons (other than qualified investors (as defined in

the Prospectus Directive)) in such Relevant Member State, subject to obtaining the prior

consent of Peel Hunt for any such offer; or

(iii) in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of Ordinary Shares shall result in a requirement for the publication

of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing

the Prospectus Directive in a Relevant Member State and each person who initially acquires

any Ordinary Shares or to whom any offer is made under the Offer will be deemed to have

represented, acknowledged and agreed with the Company and Peel Hunt that: (a) it is a

qualified investor (within the meaning of the law of the Relevant Member State implementing

Article 2(1)(e) of the Prospectus Directive) and (b) if that relevant Member State has

implemented the AIFMD, that it is a person to whom Ordinary Shares may lawfully be

marketed under the AIFMD or under the applicable implementing legislation (if any) of that

Member State.

(b) For the purpose of the expression an “offer of any Ordinary Shares to the public” in relation

to any Ordinary Shares in any Relevant Member State means the communication in any form

and by any means of sufficient information on the terms of the Issue and the terms of the Offer

of any Ordinary Shares, so as to enable a potential investor to decide to purchase or subscribe

for the Ordinary Shares, as the same may be varied in that relevant member state by any

measure implementing the Prospectus Directive in that Relevant Member State.

23. INTERMEDIARIES

The Intermediaries authorised as at the date of this Prospectus to use this Prospectus in connection with the

Intermediaries Offer are:

(a) Alliance Trust Savings Limited

(b) Cornhill Capital Limited

(c) EFG Harris Allday

(d) Equiniti Financial Services Limited

(e) iDealing.com LTD

(f) Jarvis Investment Management Ltd

(g) Redmayne-Bentley LLP

184

(h) WH Ireland (Fitel Nominees Ltd)

(i) Walker Crips Stockbrokers Limited

(j) Interactive Investor Services Limited

(k) Hargreaves Lansdown

(l) Barclays Smart Investor

Any new information with respect to Intermediaries unknown at the time of approval of this Prospectus will

be available on the Company’s website at www.multifamilyhousingreit.com.

24. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours on any

weekday (Saturdays, Sundays and public holidays excepted) at the registered office of the Company and at

the offices of Addleshaw Goddard LLP, Milton Gate, 60 Chiswell Street, London EC1Y 4AG from the date

of this Prospectus until Admission:

(a) the Company’s memorandum of association and Articles;

(b) the written consents referred to in paragraph 19 of this Part 11; and

(c) this Prospectus.

25. AVAILABILITY OF THIS DOCUMENT

Copies of this Prospectus can be collected free of charge during normal business hours on any weekday

(Saturdays, Sundays and public holidays excepted) at 51 New North Road, Exeter EX4 4EP. A copy of this

Prospectus is also available for access via the National Storage Mechanism at

www.morningstar.co.uk/uk/NSM.

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PART 12

TERMS AND CONDITIONS OF THE PLACING

1. INTRODUCTION

1.1 Ordinary Shares are available under the Placing at a price of £1.00 per Ordinary Share. The Ordinary

Shares will, when issued and fully paid, include the right to receive all dividends or other distributions

made, paid or declared, if any, by reference to a record date after the date of their issue.

1.2 Each Placee which confirms its agreement to Peel Hunt to subscribe for Ordinary Shares under the

Placing will be bound by these terms and conditions and will be deemed to have accepted them.

1.3 The Company and/or Peel Hunt may require any Placee to agree to such further terms and/or

conditions and/or give such additional warranties and/or representations as they (in their absolute

discretion) see(s) fit.

1.4 The commitment to subscribe for Ordinary Shares under the Placing will be agreed orally with Peel

Hunt as agent for the Company and further evidenced in a contract note (“Contract Note”) or placing

confirmation (“Placing Confirmation”).

2. AGREEMENT TO SUBSCRIBE FOR ORDINARY SHARES AND CONDITIONS

2.1 A Placee agrees to become a member of the Company and agrees to subscribe for those Ordinary

Shares allocated to it by Peel Hunt at the relevant issue price, conditional on:

(a) the Placing and Sponsor’s Agreement becoming unconditional in respect of the Placing (save

for any condition relating to Admission) and not having been terminated on or before the date

of Admission;

(b) Admission of the relevant Ordinary Shares by no later than 8.00 a.m. on 28 September 2018

(or such later date as the Company and Peel Hunt may agree and, in any event, no later than

8.00 a.m. on 12 October 2018); and

(c) the Minimum Net Proceeds being raised.

2.2 In the event that the Company, in consultation with Peel Hunt and the Investment Adviser, wishes to

waive condition 2.1(c) referred to above, the Company will be required to publish a supplementary

prospectus (including a working capital statement based on a revised minimum net proceeds figure).

2.3 To the fullest extent permitted by law, each Placee acknowledges and agrees that it will not be entitled

to exercise any remedy of rescission at any time. This does not affect any other rights the Placee may

have.

3. PAYMENT FOR ORDINARY SHARES

3.1 Each Placee must pay the Issue Price for the Ordinary Shares issued to the Placee in the manner and

by the time directed by Peel Hunt. If any Placee fails to pay as so directed and/or by the time required,

the relevant Placee’s application for Ordinary Shares may, at the discretion of Peel Hunt, either be

rejected or accepted and, in the latter case, paragraph 3.2 of these terms and conditions shall apply.

3.2 Each Placee is deemed to agree that if it does not comply with its obligation to pay the relevant issue

price for the Ordinary Shares allocated to it in accordance with paragraph 3.1 of these terms and

conditions and Peel Hunt elects to accept that Placee’s application, Peel Hunt may sell all or any of

the Ordinary Shares allocated to the Placee on such Placee’s behalf and retain from the proceeds, for

Peel Hunt’s own account and profit, an amount equal to the aggregate amount owed by the Placee plus

any interest due. The Placee will, however, remain liable for any shortfall below the aggregate amount

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owed by such Placee and it may be required to bear any tax or other charges (together with any interest

or penalties) which may arise upon the sale of such Ordinary Shares on such Placee’s behalf.

4. REPRESENTATIONS AND WARRANTIES

4.1 By agreeing to subscribe for Ordinary Shares, each Placee which will (for itself and any person(s)

procured by it to subscribe for Ordinary Shares and any nominee(s) for any such person(s)) be deemed

to represent, warrant and acknowledge to each of the Company, the AIFM, the Investment Adviser,

the Registrar and Peel Hunt that:

(a) in agreeing to subscribe for Ordinary Shares under the Placing, it is relying solely on this

Prospectus and any supplementary prospectus issued by the Company and not on any other

information given, or representation or statement made at any time, by any person concerning

the Company and/or the Placing. It agrees that none of the Company, the AIFM, the Investment

Adviser, Peel Hunt or the Registrar, nor any of their respective officers, agents, or employees,

will have any liability for any other information or representation. It irrevocably and

unconditionally waives any rights it may have in respect of any other information or

representation;

(b) if the laws of any territory or jurisdiction outside the United Kingdom are applicable to its

agreement to subscribe for Ordinary Shares under the Placing, it warrants that it has complied

with all such laws, obtained all governmental and other consents which may be required,

complied with all requisite formalities and paid any issue, transfer or other taxes due in

connection with its application in any territory and that it has not taken any action or omitted

to take any action which will result in the Company, the AIFM, the Investment Adviser, Peel

Hunt or the Registrar or any of their respective officers, agents or employees acting in breach

of the regulatory or legal requirements, directly or indirectly, of any territory or jurisdiction

outside the United Kingdom in connection with the Placing;

(c) it has carefully read and understands this Prospectus in its entirety and acknowledges that it is

acquiring Ordinary Shares on the terms and subject to the conditions set out in this Part 12 and

the Articles as in force at the date of Admission of the relevant Ordinary Shares;

(d) it has not relied on Peel Hunt or any person affiliated with Peel Hunt in connection with any

investigation of the accuracy of any information contained in this Prospectus;

(e) the content of this Prospectus is exclusively the responsibility of the Company and its Directors

and neither Peel Hunt nor any person acting on its behalf nor any of its respective affiliates are

responsible for or shall have any liability for any information, representation or statement

contained in this Prospectus or any information published by or on behalf of the Company and

will not be liable for any decision by a Placee to participate in the Placing based on any

information, representation or statement contained in this Prospectus or otherwise;

(f) it acknowledges that no person is authorised in connection with the Placing to give any

information or make any representation other than as contained in this Prospectus and, if given

or made, any information or representation must not be relied upon as having been authorised

by the Company, the AIFM, the Investment Adviser or Peel Hunt;

(g) it is not applying as, nor is it applying as nominee or agent for, a person who is or may be liable

to notify and account for tax under the Stamp Duty Reserve Tax Regulations 1986 at any of the

increased rates referred to in section 67, 70, 93 or 96 of the Finance Act 1986 (depositary

receipts and clearance services);

(h) if it is within the United Kingdom, it is a person who falls within Articles 49(2)(a) to (d) or

19(5) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 or it

is a person to whom the Ordinary Shares may otherwise lawfully be offered under such Order

and/or is a person who is a “professional client” or an “eligible counterparty” within the

meaning of Chapter 3 of the FCA’s Conduct of Business Sourcebook or, if it is receiving

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the offer in circumstances under which the laws or regulations of a jurisdiction other than the

United Kingdom would apply, it is a person to whom the Ordinary Shares may be lawfully

offered under that other jurisdiction’s laws and regulations;

(i) if it is a resident in the EEA (other than the United Kingdom): (a) it is a qualified investor

within the meaning of the law in the relevant Member State implementing Article 2(1)(e)(i),

(ii) or (iii) of the Prospectus Directive 2003/71/EC; and (b) if that relevant Member State has

implemented the AIFMD, that it is a person to whom the Ordinary Shares may lawfully be

marketed under the AIFMD or under the applicable implementing legislation (if any) of that

relevant Member State;

(j) in the case of any Ordinary Shares acquired by a Placee as a financial intermediary within the

EEA (other than the United Kingdom) as that term is used in Article 3(2) of the Prospectus

Directive: (a) the Ordinary Shares acquired by it in the Placing have not been acquired on

behalf of, nor have they been acquired with a view to their offer or resale to, persons in any

relevant Member State (other than the United Kingdom) other than qualified investors, as that

term is defined in the Prospectus Directive, or in circumstances in which the prior consent of

Peel Hunt has been given to the offer or resale; or (b) where Ordinary Shares have been

acquired by it on behalf of persons in any relevant Member State (other than the United

Kingdom) other than qualified investors, the offer of those Ordinary Shares to it is not treated

under the Prospectus Directive as having been made to such persons;

(k) it does not have a registered address in, and is not a citizen, resident or national of, any

jurisdiction in which it is unlawful to make or accept an offer of the Ordinary Shares and it is

not acting on a nondiscretionary basis for any such person;

(l) if it is outside the United Kingdom, neither this Prospectus nor any other offering, marketing

or other material in connection with the Placing constitutes an invitation, offer or promotion to,

or arrangement with, it or any person whom it is procuring to subscribe for Ordinary Shares

pursuant to the Placing unless, in the relevant territory, such offer, invitation or other course of

conduct could lawfully be made to it or such person and such documents or material could

lawfully be provided to it or such person and Ordinary Shares could lawfully be distributed to

and subscribed and held by it or such person without compliance with any unfulfilled approval,

registration or other regulatory or legal requirements;

(m) it does not have a registered address in, and is not a citizen, resident or national of Canada,

Japan, Australia, the Republic of South Africa or any other jurisdiction in which it is unlawful

to make or accept an offer of the Ordinary Shares and it is not acting on a non-discretionary

basis for any such person;

(n) if the Placee is a natural person, such Placee is not under the age of majority (18 years of age

in the United Kingdom) on the date of such Placee’s agreement to subscribe for Ordinary

Shares under the Placing and will not be any such person on the date any such agreement to

subscribe under the Placing is accepted;

(o) it acknowledges that neither Peel Hunt nor any of its affiliates, nor any person acting on its or

their behalf is making any recommendations to it, advising it regarding the suitability of any

transactions it may enter into in connection with the Placing or providing any advice in relation

to the Placing and participation in the Placing is on the basis that it is not and will not be a client

of Peel Hunt and that Peel Hunt does not have any duties or responsibilities to it for providing

the protections afforded to their clients or for providing advice in relation to the Placing nor in

respect of any representations, warranties, undertakings or indemnities otherwise required to

be given by it in connection with its application under the Placing;

(p) it acknowledges that where it is subscribing for Ordinary Shares for one or more managed,

discretionary or advisory accounts, it is authorised in writing for each such account:

(i) to subscribe for the Ordinary Shares for each such account;

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(ii) to make on each such account’s behalf the representations, warranties and agreements

set out in this Prospectus; and

(iii) to receive on behalf of each such account any documentation relating to the Placing in

the form provided by the Company and/or Peel Hunt;

and it agrees that the provisions of this paragraph shall survive any resale of the Ordinary

Shares by or on behalf of any such account;

(q) it irrevocably appoints any director of the Company and any director of Peel Hunt to be its

agent and on its behalf (without any obligation or duty to do so), to sign, execute and deliver

any documents and do all acts, matters and things as may be necessary for, or incidental to, its

subscription for all or any of the Ordinary Shares for which it has given a commitment under

the Placing, in the event of its own failure to do so;

(r) it accepts that if the Placing does not proceed or the conditions to the Placing and Sponsor’s

Agreement are not satisfied or the Ordinary Shares for which valid applications are received

and accepted are not admitted to the premium listing segment of the Official List and/or to

trading on the Main Market for any reason whatsoever then neither of Peel Hunt nor the

Company, nor persons controlling, controlled by or under common control with any of them

nor any of their respective employees, agents, officers, members, stockholders, partners or

representatives, shall have any liability whatsoever to it or any other person;

(s) in connection with its participation in the Placing it has observed all relevant legislation and

regulations;

(t) it acknowledges that Peel Hunt and the Company are entitled to exercise any of their rights

under the Placing and Sponsor’s Agreement or any other right in their absolute discretion

without any liability whatsoever to it;

(u) the representations, undertakings and warranties contained in this Prospectus are irrevocable.

It acknowledges that Peel Hunt and the Company and their respective affiliates will rely upon

the truth and accuracy of the foregoing representations and warranties and it agrees that if any

of the representations or warranties made or deemed to have been made by its subscription of

the Ordinary Shares are no longer accurate, it shall promptly notify Peel Hunt and the

Company;

(v) where it or any person acting on behalf of it is dealing with Peel Hunt, any money held in an

account with Peel Hunt on behalf of it and/or any person acting on behalf of it will not be

treated as client money within the meaning of the relevant rules and regulations of the FCA

which therefore will not require Peel Hunt to segregate such money, as that money will be held

by Peel Hunt under a banking relationship and not as trustee;

(w) any of its clients, whether or not identified to Peel Hunt, will remain its sole responsibility and

will not become clients of Peel Hunt for the purposes of the rules of the FCA or for the

purposes of any other statutory or regulatory provision;

(x) it accepts that the allocation of Ordinary Shares shall be determined by the Company in

consultation with Peel Hunt;

(y) time shall be of the essence as regards its obligations to settle payment for the Ordinary Shares

and to comply with its other obligations under the Placing;

(z) its commitment to acquire Ordinary Shares will be agreed orally with Peel Hunt as agent for

the Company and that a Contract Note or Placing Confirmation will be issued by Peel Hunt as

soon as possible thereafter. That oral confirmation will constitute an irrevocable, legally

binding commitment upon that person (who at that point will become a Placee) in favour of

the Company and Peel Hunt to subscribe for the number of Ordinary Shares allocated to it at

the Issue Price on the terms and conditions set out in this Part 12 and, as applicable, in the

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Contract Note or Placing Confirmation. Except with the consent of Peel Hunt, such oral

commitment will not be capable of variation or revocation after the time at which it is made;

and

(aa) its allocation of Ordinary Shares under the Placing will be evidenced by the Contract Note or

Placing Confirmation, as applicable, confirming:

(i) the number of Ordinary Shares that such Placee has agreed to subscribe for;

(ii) the aggregate amount that such Placee will be required to pay for such Ordinary Shares;

and

(iii) settlement instructions to pay Peel Hunt as agents for the Company. The terms of this

Part 12 will be deemed to be incorporated into that Contract Note or Placing

Confirmation.

The Company reserves the right to reject all or part of any offer to purchase Ordinary Shares

for any reason. The Company also reserves the right to sell fewer than all of the Ordinary

Shares offered by this Prospectus or to sell to any purchaser fewer than all of the Ordinary

Shares a purchaser has offered to purchase.

5. MONEY LAUNDERING

5.1 Each Placee acknowledges and agrees that:

(a) its application is only made on the basis that it accepts full responsibility for any requirement

to verify the identity of its clients and other persons in respect of whom it has applied. In

addition, it warrants that it is a person:

(i) subject to the Money Laundering Regulations 2017 in force in the United Kingdom;

(ii) subject to the Money Laundering, Terrorist Financing and Transfer of Funds

(Information on Payer) Regulations 2017 in force in the United Kingdom; or

(iii) subject to the Money Laundering Directive (2015/849/EC of the European Parliament

and of the EC Council of 20 May 2015 on the prevention of the use of the financial

system for the purpose of money laundering and terrorist financing) (the “Money

Laundering Directive”); or

(iv) acting in the course of a business in relation to which an overseas regulatory authority

exercises regulatory functions and is based or incorporated in, or formed under the law

of, a country in which there are in force provisions at least equivalent to those required

by the Money Laundering Directive; and

(b) due to anti-money laundering requirements, Peel Hunt and the Company may require proof of

identity and verification of the source of the payment before the application can be processed

and that, in the event of delay or failure by the applicant to produce any information required

for verification purposes, Peel Hunt and the Company may refuse to accept the application and

the subscription moneys relating thereto. It holds harmless and will indemnify Peel Hunt and

the Company against any liability, loss or cost ensuing due to the failure to process such

application, if such information as has been required has not been provided by it.

6. DATA PROTECTION

6.1 Each Placee acknowledges and agrees that, pursuant to the General Data Protection Regulation as

implemented in the United Kingdom by the Data Protection Act 2018 (“GDPR”) the Company and/or

the Registrar, may hold personal data (as defined in the GDPR) relating to past and present

Shareholders. Personal data may be retained on record for a period exceeding six years after it is no

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longer used. The Registrar will only process such information for the purposes set out below

(collectively, the “Purposes”), being to:

(a) process its personal data to the extent and in such manner as is necessary for the performance

of their obligations under their respective service contracts, including as required by or in

connection with its holding of Ordinary Shares, including processing personal data in

connection with credit and money laundering checks on it;

(b) communicate with it as necessary in connection with its affairs and generally in connection

with its holding of Ordinary Shares;

(c) provide personal data to such third parties as the Registrar may consider necessary in

connection with its affairs and generally in connection with its holding of Ordinary Shares or

as the GDPR may require, including to third parties outside the European Economic Area;

(d) without limitation, provide such personal data to their affiliates, the Company or the AIFM or

the Investment Adviser and their respective associates for processing, notwithstanding that any

such party may be outside the European Economic Area; and

(e) process its personal data for the Registrar’s internal administration.

6.2 By becoming registered as a holder of Ordinary Shares it is acknowledged that the processing by the

Company, the Registrar or the Administrator of any personal data relating to them in the manner

described above is undertaken for the purposes of: (a) performance of the contract between them and

(b) to comply with applicable legal obligations. In providing the Registrar with information, it hereby

represents and warrants to the Registrar that it has notified any data subject of the processing of their

personal data (including the details set out above) by the Registrar, and their respective affiliates and

group companies, in relation to the holding and using their personal data for the Purposes. Any

individual whose personal information is held or processed by a data controller: (a) has the right to

ask for a copy of their personal information held; (b) to ask for any inaccuracies to be corrected or for

their personal information to be erased; (c) object to the ways in which their information is used, and

ask for their information to stop being used or otherwise restricted; and (d) ask for their personal

information to be sent to them or to a third party (as permitted by law). A data subject seeking to

enforce these rights should contact the relevant data controller. Individuals also have the right to

complain to the UK Information Commissioner’s Office about how their personal information has

been handled.

7. SUPPLY AND DISCLOSURE OF INFORMATION

If Peel Hunt, the Registrar or the Company or any of their agents request any information about a Placee’s

agreement to subscribe for Ordinary Shares under the Placing, such Placee must promptly disclose it to them.

8. NON UNITED KINGDOM INVESTORS

8.1 If the Placee is outside the United Kingdom, neither this Prospectus nor any other offering, marketing

or other material in connection with the Placing constitutes an invitation, offer or promotion to, or

arrangement with, it or any person whom it is procuring to subscribe for Ordinary Shares pursuant to

the Placing unless, in the relevant territory, such offer, invitation or other course of conduct could

lawfully be made to it or such person and such documents or materials could lawfully be provided to

it or such person and Ordinary Shares could lawfully be distributed to and subscribed and held by it

or such person without compliance with any unfulfilled approval, registration or other regulatory or

legal requirements.

8.2 None of the Ordinary Shares has been or will be registered under the laws of the United States,

Canada, Australia, the Republic of South Africa or Japan. Accordingly, the Ordinary Shares may not

be offered, sold, issued or delivered, directly or indirectly, within any of the United States, Canada,

Australia, the Republic of South Africa or Japan or to any national, resident or citizen of Canada,

Australia, the Republic of South Africa or Japan unless an exemption from any registration

requirement is available.

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8.3 Certain matters related to the United States

Neither the Securities and Exchange Commission, nor any State securities commission has approved

or disapproved of the Ordinary Shares or passed upon the adequacy of this prospectus. Any

representation to the contrary is a criminal offense.

The Ordinary Shares have not been and will not be registered under the US Securities Act or under

any applicable securities laws of any state or other jurisdiction of the United States and may not be

offered, sold delivered or otherwise distributed, directly or indirectly, in or into the United States

except pursuant to an exemption from the registration requirements of the US Securities Act and in

accordance with any applicable securities laws of any state or other jurisdiction of the United States.

The Ordinary Shares are subject to restrictions on transferability. Subject to limited exceptions, the

Ordinary Shares are being offered only outside the United States in reliance on Regulation S under

the US Securities Act.

8.4 Notice to prospective investors in Guernsey

This Prospectus has not been reviewed by the Guernsey Financial Services Commission (the

“Guernsey Commission”) and the Guernsey Commission takes no responsibility for the financial

soundness of the Company or for the correctness of any of the statements made or opinions expressed

with regard to it.

8.5 Notice to prospective investors in Jersey

This Prospectus has not been reviewed by the Jersey Financial Services Commission (“JFSC”) and

the JFSC takes no responsibility for the financial soundness of the Company or for the correctness of

any of the statements made or opinions expressed with regard to it. This Prospectus may be circulated

in Jersey only by persons who are registered by the JFSC in accordance with the Financial Services

(Jersey) Law 1998 (as amended) for the conduct of financial services business and distribution of this

Prospectus or are exempt from such registration in accordance with the Financial Services (Jersey)

Law 1998, as amended.

8.6 Notice to prospective investors in Belgium

The public offering of interests in the Company in Belgium within the meaning of the Belgian Act of

April 19, 2014 on alternative undertakings for collective investment, and the Belgian Act of June 16,

2006 on the public offering of investment instruments and the admission of investment instruments

to listing on a regulated market has not been authorised by the Company. The offering may therefore

not be advertised, and interests in the Company may not be offered, sold, transferred or delivered to,

or subscribed to by, and no memorandum, information circular, brochure or similar document may be

distributed to, directly or indirectly, any individual or legal entity in Belgium, except (i) to “qualified

investors” as referred to in Article 10, § 1 of the aforementioned Act of June 16, 2006, (ii) subject to

the restriction of a minimum investment of €100,000 per investor or (iii) in any other circumstances

in which the present offering does not qualify as a public offering in accordance with the

aforementioned Act of June 16, 2006. This Prospectus has been issued to the intended recipient for

personal use only and exclusively for the purpose of the offering. Therefore, it may not be used for

any other purpose, nor passed on to any other person in Belgium.

8.7 Notice to prospective investors in the Netherlands

This Prospectus has not been approved by and will not be submitted for approval to the Netherlands

Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) for the purposes of

public offering or sale in the Netherlands. Therefore, in connection with any public offering, this

document may only be distributed to “qualified investors” (gekwalificeerde beleggers) as defined in

article 1:1 of the Dutch Financial Supervision Act (Wet op het financieel toezicht). This Prospectus

does not constitute a personal recommendation or an investment recommendation pursuant to

Netherlands law.

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8.8 Notice to prospective investors in the Isle of Man

This Prospectus has not been, and is not required to be, filed or lodged with any regulatory or other

authority in the Isle of Man. The Company is not subject to any regulatory approval in the Isle of Man.

Investors in the Company are not protected by any statutory compensation arrangements in the event

of the Company’s failure and the Isle of Man Financial Services Authority does not vouch for the

financial soundness of the Company or for the correctness of any statements made or opinions

expressed with regard to it.

8.9 Notice to prospective Shareholders in the member states of the European Economic Area other than

the United Kingdom

In relation to each Relevant Member State, an offer to the public of the Ordinary Shares may only be

made once a prospectus has been passported in accordance with the Prospectus Directive as

implemented by that Relevant Member State. This Prospectus has not been passported into any

Relevant Member State and, therefore, an offer of the Ordinary Shares to the public in any Relevant

Member State may only be made pursuant to the following exemptions under the Prospectus

Directive:

(a) to any legal entity which is a qualified Shareholder as defined in the Prospectus Directive;

(b) to fewer than 150, natural or legal persons (other than qualified investors (as defined in the

Prospectus Directive)) in such Relevant Member State, subject to obtaining the prior consent

of Peel Hunt for any such offer; or

(c) in any other circumstances falling within Article 3(2) of the Prospectus Directive,

provided that no such offer of Ordinary Shares shall result in a requirement for the publication by the

Company of a prospectus pursuant to Article 3 of the Prospectus Directive. Each person who initially

acquires Ordinary Shares pursuant to the Issue or to whom any offer of Ordinary Shares is made

pursuant to the Issue in any Relevant Member State other than the United Kingdom will be deemed

to have represented, warranted and agreed with the Company and Peel Hunt that: (a) it is a qualified

investor (within the meaning of the law of the Relevant Member State implementing Article 2(1)(e)

of the Prospectus Directive) and (b) if that relevant Member State has implemented the AIFMD, that

it is a person to whom Ordinary Shares may lawfully be marketed under the AIFMD or under the

applicable implementing legislation (if any) of that Member State.

For the purposes of this section headed “Notice to prospective Shareholders in member states of the

European Economic Area other than the United Kingdom”, the expression an “offer to the public” in

relation to any offer of Ordinary Shares in any Relevant Member State means the communication in

any form and by any means of sufficient information on the terms of the offer and any Ordinary

Shares to be offered so as to enable an investor to decide to purchase or subscribe for the Ordinary

Shares, as the same may be varied in that Relevant Member State by any measure implementing the

Prospectus Directive in that Relevant Member State.

In the case of any Ordinary Shares acquired by a financial intermediary (as that term is used in Article

3(2) of the Prospectus Directive) pursuant to the Issue in any Relevant Member State other than the

United Kingdom, such financial intermediary will be deemed to have represented, warranted and

agreed with the Company and Peel Hunt that such Ordinary Shares acquired by it have not been

acquired on a non-discretionary basis on behalf of, and have not been acquired with a view to their

offer or resale to, persons in circumstances which may give rise to an offer of any Ordinary Shares to

the public other than their offer or resale in any Relevant Member State other than the United

Kingdom to qualified investors (as defined in the Prospectus Directive) or in circumstances in which

the prior consent of Peel Hunt has been obtained to each such proposed offer or resale. The Company,

Peel Hunt, their respective affiliates and others will rely on the truth and accuracy of such deemed

representation, warranty and agreement. Notwithstanding the above, a person who is not a qualified

investor and who has notified Peel Hunt of such fact in writing may, with the consent of Peel Hunt,

be permitted to subscribe for or purchase Ordinary Shares pursuant to the Issue.

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9. MISCELLANEOUS

9.1 The rights and remedies of the Company, the AIFM, the Investment Adviser, Peel Hunt and the

Registrar under these terms and conditions are in addition to any rights and remedies which would

otherwise be available to each of them and the exercise or partial exercise of one will not prevent the

exercise of others.

9.2 On application, if a Placee is a discretionary fund manager, that Placee may be asked to disclose in

writing or orally the jurisdiction in which its funds are managed or owned. All documents provided

in connection with the Placing will be sent at the Placee’s risk. They may be returned by post to such

Placee at the address notified by such Placee.

9.3 Each Placee agrees to be bound by the Articles once the Ordinary Shares, which the Placee has agreed

to subscribe for pursuant to the Placing, have been acquired by the Placee. The contract to subscribe

for Ordinary Shares under the Placing and the appointments and authorities mentioned in this

Prospectus and all disputes and claims arising out of or in connection with its subject matter or

formation (including non-contractual disputes or claims) will be governed by, and construed in

accordance with, the laws of England and Wales. For the exclusive benefit of the Company, the AIFM,

the Investment Adviser, Peel Hunt and the Registrar, each Placee irrevocably submits to the

jurisdiction of the courts of England and Wales and waives any objection to proceedings in any such

court on the ground of venue or on the ground that proceedings have been brought in an inconvenient

forum. This does not prevent an action being taken against the Placee in any other jurisdiction.

9.4 In the case of a joint agreement to subscribe for Ordinary Shares under the Placing, references to a

“Placee” in these terms and conditions are to each of the Placees who are a party to that joint

agreement and their liability is joint and several.

9.5 Peel Hunt and the Company expressly reserve the right to modify the Placing (including, without

limitation, the timetable and settlement) at any time before allocations are determined. The Placing

are subject to the satisfaction of the conditions contained in the Placing and Sponsor’s Agreement and

the Placing and Sponsor’s Agreement not having been terminated. Further details of the terms of the

Placing and Sponsor’s Agreement are contained in paragraph 7.10 of Part 11 of this Prospectus.

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PART 13

TERMS AND CONDITIONS OF THE OFFER FOR SUBSCRIPTION

1. INTRODUCTION

1.1 Ordinary Shares are available under the Offer for Subscription at a price of £1.00 per Ordinary Share.

The Ordinary Shares will, when issued and fully paid, include the right to receive all dividends or

other distributions made, paid or declared, if any, by reference to a record date after the date of their

issue.

1.2 Applications to acquire Ordinary Shares must be made on the Application Form attached as

Appendix 1 to this Prospectus or otherwise published by the Company.

1.3 In addition to completing and returning the Application Form to Link Asset Services, you will also

need to complete and return a Tax Residency Self-Certification Form. The “individual tax residency

self-certification – sole holding” form can be found in Appendix 2 to this Prospectus and further

copies of this form and the relevant form for joint holdings or Corporate Entity holdings can be

requested from Link Asset Services on 0371 664 0321. Calls are charged at the standard geographic

rate and will vary by provider. Calls outside of the United Kingdom will be charged at the applicable

international rate. The helpline is open between 9.00 a.m. and 5.30 p.m., Monday to Friday excluding

public holidays in England and Wales. Please note that Link Asset Services cannot provide any

financial, legal or tax advice and calls may be recorded and monitored for security and training

purposes.

1.4 It is a condition of application that (where applicable) a completed version of that form is provided

with the Application Form before any application can be accepted.

2. OFFER FOR SUBSCRIPTION TO ACQUIRE SHARES

2.1 By completing and delivering an Application Form, you, as the applicant, and, if you sign the

Application Form on behalf of another person or a corporation, that person or corporation:

(a) offer to subscribe for the amount specified in Box 2 on your Application Form, or any smaller

amount for which such application is accepted, on the terms, and subject to the conditions, set

out in this Prospectus, including these terms and conditions of application and the Articles;

(b) agree that, in consideration for the Company agreeing that it will not offer any Ordinary Shares

to any person other than by means of the procedures referred to in this Prospectus, your

application may not be revoked, subject to your statutory right of withdrawal in the event of

publication of a supplementary prospectus by the Company, and that this paragraph shall

constitute a collateral contract between you and the Company which will become binding upon

despatch by post to or, in the case of delivery by hand, on receipt by the Receiving Agent of

your Application Form;

(c) undertake to pay the subscription amount specified in Box 2 on your Application Form in full

on application and warrant that the remittance accompanying your Application Form will be

honoured on first presentation and agree that if such remittance is not so honoured you will not

be entitled to receive a share certificate for the Ordinary Shares applied for in certificated form

or be entitled to commence dealing in Ordinary Shares applied for in uncertificated form or to

enjoy or receive any rights in respect of such Ordinary Shares unless and until you make

payment in cleared funds for such Ordinary Shares and such payment is accepted by the

Receiving Agent (which acceptance shall be in its absolute discretion and on the basis that you

indemnify the Receiving Agent, the Company and Peel Hunt against all costs, damages, losses,

expenses and liabilities arising out of, or in connection with, the failure of your remittance to

be honoured on first presentation) and the Company may (without prejudice to any other rights

it may have) avoid the agreement to allot the Ordinary Shares and may allot them to some other

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person, in which case you will not be entitled to any refund or payment in respect thereof (other

than the refund by a cheque drawn on a branch of a UK clearing bank to the bank account name

from which they were first received at your risk of any proceeds of the remittance which

accompanied your Application Form, without interest);

(d) agree that, where on your Application Form a request is made for Ordinary Shares to be

deposited into a CREST account:

(i) the Receiving Agent may in its absolute discretion amend the form so that such Ordinary

Shares may be issued in certificated form registered in the name(s) of the holder(s)

specified in your Application Form (and recognise that the Receiving Agent will so

amend the form if there is any delay in satisfying the identity of the applicant or the

owner of the CREST account or in receiving your remittance in cleared funds); and

(ii) the Receiving Agent or the Company may authorise your financial adviser or whoever

he or she may direct to send a document of title for or credit your CREST account in

respect of, the number of Ordinary Shares for which your application is accepted, and/or

a crossed cheque for any monies returnable, by post at your risk to your address set out

on your Application Form;

(e) agree, in respect of applications for Ordinary Shares in certificated form (or where the

Receiving Agent exercises its discretion pursuant to paragraph 2.1(d) to issue Ordinary Shares

in certificated form), that any share certificate to which you or, in the case of joint applicants,

any of the persons specified by you in your Application Form may become entitled (and any

monies returnable to you) may be retained by the Receiving Agent:

(i) pending clearance of your remittance;

(ii) pending investigation of any suspected breach of any of the warranties contained in

paragraphs 6.1(a), 6.1(b), 6.1(f), 6.1(j), 6.1(o), 6.1(q) or 6.1(r) below or any other

suspected breach of these terms and conditions of application; or

(iii) pending any verification of identity which is, or which the Receiving Agent considers

may be, required for the purpose of the Money Laundering Regulations and any other

regulations applicable thereto, and any interest accruing on such retained monies shall

accrue to and for the benefit of the Company;

(f) agree, on the request of the Receiving Agent, to disclose promptly in writing to it such

information as the Receiving Agent may request in connection with your application and

authorise the Receiving Agent to disclose any information relating to your application which it

may consider appropriate;

(g) agree that if evidence of identity satisfactory to the Receiving Agent is not provided to the

Receiving Agent within a reasonable time (in the opinion of the Receiving Agent) following a

request therefor, the Receiving Agent or the Company may terminate the agreement with you

to allot Ordinary Shares and, in such case, the Ordinary Shares which would otherwise have

been allotted to you may be re-allotted or sold to some other party and the lesser of your

application monies or such proceeds of sale (as the case may be, with the proceeds of any gain

derived from a sale accruing to the Company) will be returned by a cheque drawn on a branch

of a UK clearing bank to the bank account name on which the payment accompanying the

application was first drawn without interest and at your risk;

(h) agree that you are not applying on behalf of a person engaged in money laundering;

(i) undertake to ensure that, in the case of an Application Form signed by someone else on your

behalf, the original of the relevant power of attorney (or a complete copy certified by a solicitor

or notary) is enclosed with your Application Form together with full identity documents for the

person so signing;

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(j) undertake to pay interest at the rate described in paragraph 3.3 below if the remittance

accompanying your Application Form is not honoured on first presentation;

(k) authorise the Receiving Agent to procure that there be sent to you definitive certificates in

respect of the number of Ordinary Shares for which your application is accepted or if you have

completed section 5 on your Application Form or, subject to paragraph 2.1(d) above, to deliver

the number of Ordinary Shares for which your application is accepted into CREST, and/or to

return any monies returnable by a cheque drawn on a branch of a UK clearing bank to the bank

account name from which such monies were first received without interest and at your risk;

(l) confirm that you have read and complied with paragraph 8 below;

(m) agree that all subscription cheques and payments will be processed through a bank account (the

“Acceptance Account”) in the name of “Link Market Services Re: The Multifamily Housing

REIT Plc OFS A/C” opened by the Receiving Agent;

(n) agree that your Application Form is addressed to the Company and the Receiving Agent; and

(o) agree that any application may be rejected in whole or in part at the sole discretion of the

Company.

3. ACCEPTANCE OF YOUR OFFER

3.1 The Receiving Agent may, on behalf of the Company, accept your offer to subscribe (if your

application is received, valid (or treated as valid), processed and not rejected) by notifying the basis

of allocation through a Regulatory Information Service (in which case the acceptance will be on that

basis).

3.2 The basis of allocation will be determined by the Company in consultation with Peel Hunt. The right

is reserved, notwithstanding the basis as so determined, to reject in whole or in part and/or scale back

any application. The right is reserved to treat as valid any application not complying fully with these

terms and conditions of application or not in all respects completed or delivered in accordance with

the instructions accompanying the Application Form. In particular, but without limitation, the

Company may accept an application made otherwise than by completion of an Application Form

where you have agreed with the Company in some other manner to apply in accordance with these

terms and conditions of application.

3.3 The Receiving Agent will present all cheques and bankers’ drafts for payment on receipt and will

retain documents of title and surplus monies pending clearance of successful applicants’ payment. The

right is also reserved to reject in whole or in part, or to scale down or limit, any application. The

Receiving Agent may, as agent of the Company, require you to pay interest or its other resulting costs

(or both) if the payment accompanying your application is not honoured on first presentation. If you

are required to pay interest you will be obliged to pay the amount determined by the Receiving Agent

to be the interest on the amount of the payment from the date on which all payments in cleared funds

are due to be received until the date of receipt of cleared funds. The rate of interest will be the then

published bank base rate of a clearing bank selected by the Receiving Agent plus 4 per cent. per

annum.

3.4 Payments must be made by cheque or banker’s draft in pounds sterling drawn on a branch in the

United Kingdom or the Channel Islands or the Isle of Man of a bank or building society that is either

a member of the Cheque and Credit Clearing Company Limited or the CHAPS Clearing Company

Limited or that has arranged for its cheques or bankers’ drafts to be cleared through the facilities

provided for members of either of those companies. Such cheques or bankers’ drafts must bear the

appropriate sort code in the top right hand corner. Cheques, which must be drawn on the personal

account of an individual applicant where they have sole or joint title to the funds, should be made

payable to “Link Market Services Re: The Multifamily Housing REIT Plc OFS A/C” and crossed

“A/C payee only”. Third party cheques will not be accepted with the exception of building society

cheques or bankers’ drafts where the building society or bank has inserted the full name of the

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building society or bank account holder and has added the building society or bank branch stamp. The

name of the building society or bank account holder must be the same as that shown on the

Application Form.

4. CONDITIONS

4.1 The contracts created by the acceptance of applications (in whole or in part) under the Offer for

Subscription will be conditional upon:

(a) Admission occurring by 8.00 a.m. on 28 September 2018 (or such later time or date as the

Company and Peel Hunt may agree (not being later than 8.00 a.m. on 12 October 2018)); and

(b) the Placing and Sponsor’s Agreement becoming otherwise unconditional in all respects, and

not being terminated in accordance with its terms before Admission; and

(c) the Minimum Net Proceeds being raised.

4.2 In the event that the Company, in consultation with the Investment Adviser and Peel Hunt, wishes to

waive condition 4.1(c) referred to above, the Company will be required to publish a supplementary

prospectus (including a working capital statement based on a revised minimum net proceeds figure).

4.3 You will not be entitled to exercise any remedy of rescission for innocent misrepresentation (including

pre-contractual representations) at any time after acceptance. This does not affect any other right you

may have.

5. RETURN OF APPLICATION MONIES

Where application monies have been banked and/or received, if any application is not accepted in whole, or

is accepted in part only, or if any contract created by acceptance does not become unconditional, the

application monies or, as the case may be, the balance of the amount paid on application will be returned

without interest by returning your cheque, or by crossed cheque in your favour, by post at the risk of the

person(s) entitled thereto, without interest. In the meantime, application monies will be retained by the

Receiving Agent in a separate account.

6. WARRANTIES

6.1 By completing an Application Form, you:

(a) undertake and warrant that, if you sign the Application Form on behalf of somebody else or on

behalf of a corporation, you have due authority to do so on behalf of that other person and that

such other person will be bound accordingly and will be deemed also to have given the

confirmations, warranties and undertakings contained in these terms and conditions of

application and undertake to enclose your power of attorney or other authority or a complete

copy thereof duly certified by a solicitor or notary;

(b) warrant that you have complied with all laws, obtained all governmental and other consents

which may be required, complied with all requisite formalities and paid any issue, transfer or

other taxes due in connection with your application in any territory and that you have not taken

any action or omitted to take any action which will result in the Company or the Receiving

Agent or any of their respective officers, agents or employees acting in breach of the regulatory

or legal requirements, directly or indirectly, of any territory or jurisdiction in connection with

the Offer for Subscription in respect of your application;

(c) confirm that in making an application you are not relying on any information or representations

in relation to the Company other than those contained in this Prospectus (on the basis of which

alone your application is made) and accordingly you agree that no person responsible solely or

jointly for this Prospectus or any part thereof shall have any liability for any such other

information or representation;

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(d) agree that, having had the opportunity to read this Prospectus, you shall be deemed to have had

notice of all information and representations contained therein;

(e) acknowledge that no person is authorised in connection with the Offer for Subscription to give

any information or make any representation other than as contained in this Prospectus and, if

given or made, any information or representation must not be relied upon as having been

authorised by the Company, Peel Hunt, the AIFM, the Investment Adviser or the Receiving

Agent;

(f) it does not have a registered address in, and is not a citizen, resident or national of Canada,

Japan, Australia, the Republic of South Africa or any jurisdiction other than the UK, Channel

Islands and the Isle of Man and it is not acting on a non-discretionary basis for any such person;

(g) warrant that you are not under the age of 18 on the date of your application;

(h) agree that all documents and monies sent by post to, by or on behalf of the Company or the

Receiving Agent, will be sent at your risk and, in the case of documents and returned

application cheques and payments to be sent to you, may be sent to you at your address (or, in

the case of joint holders, the address of the first-named holder) as set out in your Application

Form;

(i) confirm that you have reviewed the restrictions contained in paragraph 8 below and warrant,

to the extent relevant, that you (and any person on whose behalf you apply) comply or

complied with the provisions therein;

(j) agree that, in respect of those Ordinary Shares for which your Application Form has been

received and processed and not rejected, acceptance of your Application Form shall be

constituted by the Company instructing the Registrar to enter your name on the Register;

(k) agree that all applications, acceptances of applications and contracts resulting therefrom under

the Offer for Subscription and any non-contractual obligations existing under or in connection

therewith shall be governed by and construed in accordance with the laws of England and

Wales and that you submit to the jurisdiction of the English Courts and agree that nothing shall

limit the right of the Company to bring any action, suit or proceedings arising out of or in

connection with any such applications, acceptances of applications and contracts in any other

manner permitted by law or in any court of competent jurisdiction;

(l) irrevocably authorise the Company or the Receiving Agent or any other person authorised by

any of them, as your agent, to do all things necessary to effect registration of any Ordinary

Shares subscribed by or issued to you into your name and authorise any representatives of the

Company and/or Peel Hunt and/or the Receiving Agent to execute any documents required

therefor and to enter your name on the Register;

(m) agree to provide the Company with any information which it or the Receiving Agent may

request in connection with your application or to comply with any other relevant legislation (as

the same may be amended from time to time) including without limitation satisfactory

evidence of identity to ensure compliance with the Money Laundering Regulations;

(n) warrant that, in connection with your application, you have observed the laws of all requisite

territories, obtained any requisite governmental or other consents, complied with all requisite

formalities and paid any issue, transfer or other taxes due in connection with your application

in any territory and that you have not taken any action which will or may result in the

Company, Peel Hunt, the AIFM, the Investment Adviser or the Receiving Agent acting in

breach of the regulatory or legal requirements of any territory in connection with the Offer for

Subscription or your application;

(o) agree that the Receiving Agent is acting for the Company in connection with the Offer for

Subscription and for no-one else and that they will not treat you as their customer by virtue of

such application being accepted or owe you any duties or responsibilities concerning the price

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of the Ordinary Shares or concerning the suitability of the Ordinary Shares for you or be

responsible to you for the protections afforded to their customers;

(p) warrant that the information contained in the Application Form is true and accurate;

(q) agree that if you request that Ordinary Shares are issued to you on a date other than Admission

and such Ordinary Shares are not issued on such date that the Company and its agents and

Directors will have no liability to you arising from the issue of such Ordinary Shares on a

different date; and

(r) acknowledge that the key information document prepared by the AIFM pursuant to the PRIIPs

Regulation can be provided to you in paper or by means of a website, but that where you are

applying under the Offer for Subscription directly and not through an adviser or other

intermediary, unless requested in writing otherwise, the lodging of an Application Form

represents your consent to being provided the key information document via the website at

www.multifamilyhousingreit.com, or on such other website as has been notified to you. Where

your application is made on advised basis or through another intermediary, the terms of your

engagement should address the means by which the key information document will be

provided to you.

7. MONEY LAUNDERING

7.1 You agree that, in order to ensure compliance with the Money Laundering Regulations, the Receiving

Agent may at its absolute discretion require verification of identity of you as the applicant lodging an

Application Form and further may request from you and you will assist in providing identification of:

(a) the owner(s) and/or controller(s) (the “payor”) of any bank account not in the name of the

holder(s) on which is drawn a payment by way of banker’s draft or cheque; or

(b) where it appears to the Receiving Agent that a holder or the payor is acting on behalf of some

other person or persons, such person or persons.

7.2 Failure to provide the necessary evidence of identity may result in your application being rejected or

delays in the despatch of documents or CREST account being credited.

7.3 Without prejudice to the generality of this paragraph 7, verification of the identity of holders and

payors will be required if the value of the Ordinary Shares applied for, whether in one or more

applications considered to be connected, exceeds €15,000 (approximately £13,433). If, in such

circumstances, you use a building society cheque or banker’s draft you should ensure that the bank or

building society issuing the payment enters the name, address and account number of the person

whose account is being debited on the reverse of the cheque or banker’s draft and adds its stamp. If,

in such circumstances, the person whose account is being debited is not a holder you will be required

to provide for both the holder and payor an original or copy of that person’s passport or driving licence

certified by a solicitor and an original or certified copy of two of the following documents, no more

than three months old, a gas, electricity, water or telephone (not mobile) bill, a recent bank statement

or a council tax bill, in their name and showing their current address (which originals will be returned

by post at the addressee’s risk) together with a signed declaration as to the relationship between the

payor and you, the applicant.

7.4 For the purpose of the UK’s Money Laundering Regulations, a person making an application for

Ordinary Shares will not be considered as forming a business relationship with either the Company

or with the Receiving Agent but will be considered as effecting a one-off transaction with either the

Company or with the Receiving Agent.

7.5 The person(s) submitting an application for Ordinary Shares will ordinarily be considered to be acting

as principal in the transaction unless the Receiving Agent determines otherwise, whereupon you may

be required to provide the necessary evidence of identity of the underlying beneficial owner(s).

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7.6 If the amount being subscribed exceeds €15,000 (approximately £13,433) you should endeavour to

have the declaration contained in Section 6 of the Application Form signed by an appropriate firm as

described in that box.

8. OVERSEAS INVESTORS

8.1 If you receive a copy of this Prospectus or an Application Form in any territory other than the United

Kingdom, the Channel Islands or the Isle of Man, you may not treat it as constituting an invitation or

offer to you, nor should you, in any event, use an Application Form. It is your responsibility, if you

wish to make an application for Ordinary Shares under the Offer for Subscription, to satisfy yourself

as to full observance of the laws of any relevant territory or jurisdiction in connection with your

application, including obtaining any requisite governmental or other consents, observing any other

formalities requiring to be observed in such territory and paying any issue, transfer or other taxes

required to be paid in such territory.

8.2 None of the Ordinary Shares has been or will be registered under the laws of Canada, Japan, the

Republic of South Africa, Australia or under the US Securities Act or with any securities regulatory

authority of any state or other political subdivision of the United States, Canada, Japan, the Republic

of South Africa or Australia. Accordingly, unless an exemption under such act or laws is applicable,

the Ordinary Shares may not be offered, sold or delivered, directly or indirectly, within Canada, Japan,

the Republic of South Africa, Australia or the United States (as the case may be). If you subscribe for

Ordinary Shares you will, unless the Company and the Registrar agree otherwise in writing, be

deemed to represent and warrant to the Company that you are not a resident of Canada, Japan, the

Republic of South Africa, Australia or a corporation, partnership or other entity organised under the

laws of the US or Canada (or any political subdivision of either) or Japan, the Republic of South

Africa or Australia and that you are not subscribing for such Ordinary Shares for the account of any

resident of Canada, Japan, the Republic of South Africa or Australia and will not offer, sell, renounce,

transfer or deliver, directly or indirectly, any of the Ordinary Shares in or into Canada, Japan, the

Republic of South Africa or Australia or to any resident of Canada, Japan, the Republic of South

Africa or Australia. No application will be accepted if it shows the applicant or a payor having an

address in Canada, Japan, the Republic of South Africa or Australia.

8.3 Notice to prospective investors in Guernsey

This Prospectus has not been reviewed by the Guernsey Financial Services Commission (the

“Guernsey Commission”) and the Guernsey Commission takes no responsibility for the financial

soundness of the Company or for the correctness of any of the statements made or opinions expressed

with regard to it.

8.4 Notice to prospective investors in Jersey

This Prospectus has not been reviewed by the Jersey Financial Services Commission (“JFSC”) and

the JFSC takes no responsibility for the financial soundness of the Company or for the correctness of

any of the statements made or opinions expressed with regard to it. This Prospectus may be circulated

in Jersey only by persons who are registered by the JFSC in accordance with the Financial Services

(Jersey) Law 1998 (as amended) for the conduct of financial services business and distribution of this

Prospectus or are exempt from such registration in accordance with the Financial Services (Jersey)

Law 1998, as amended.

8.5 Notice to prospective investors in the Isle of Man

This Prospectus has not been, and is not required to be, filed or lodged with any regulatory or other

authority in the Isle of Man. The Company is not subject to any regulatory approval in the Isle of Man.

Investors in the Company are not protected by any statutory compensation arrangements in the event

of the Company’s failure and the Isle of Man Financial Services Authority does not vouch for the

financial soundness of the Company or for the correctness of any statements made or opinions

expressed with regard to it.

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9. DATA PROTECTION

9.1 Each applicant acknowledges and agrees that, pursuant to the General Data Protection Regulation as

implemented in the UK by the Data Protection Act 2018 (the “GDPR”) the Company and/or the

Registrar, may hold personal data (as defined in the GDPR) relating to past and present Shareholders.

Personal data may be retained on record for a period exceeding six years after it is no longer used.

The Registrar will only process such information for the purposes set out below (collectively, the

“Purposes”), being to:

(a) process its personal data to the extent and in such manner as is necessary for the performance

of their obligations under their respective service contracts, including as required by or in

connection with its holding of Ordinary Shares, including processing personal data in

connection with credit and money laundering checks on it;

(b) communicate with it as necessary in connection with its affairs and generally in connection

with its holding of Ordinary Shares;

(c) provide personal data to such third parties as the Registrar may consider necessary in

connection with its affairs and generally in connection with its holding of Ordinary Shares or

as the GDPR may require, including to third parties outside the European Economic Area;

(d) without limitation, provide such personal data to their affiliates, the Company, the AIFM or the

Investment Adviser and their respective associates for processing, notwithstanding that any

such party may be outside the European Economic Area; and

(e) process its personal data for the Registrar’s internal administration.

9.2 By becoming registered as a holder of Ordinary Shares it is acknowledged that the processing by the

Company, the Registrar or the Administrator of any personal data relating to them in the manner

described above is undertaken for the purposes of: (a) performance of the contract between them and

(b) to comply with applicable legal obligations. In providing the Registrar with information, it hereby

represents and warrants to the Registrar that it has notified any data subject of the processing of their

personal data (including the details of processing set out above) by the Registrar, and their respective

affiliates and group companies, in relation to the holding and using their personal data for the

Purposes (including the explicit consent of the data subjects for the processing of any sensitive

personal data for the Purposes set out above in this paragraph 9). Any individual whose personal

information is held or processed by a data controller: (a) has the right to ask for a copy of their

personal information held; (b) to ask for any inaccuracies to be corrected or for their personal

information to be erased; (c) object to the ways in which their information is used, and ask for their

information to stop being used or otherwise restricted; and (d) ask for their personal information to be

sent to them or to a third party (as permitted by law). A data subject seeking to enforce these rights

should contact the relevant data controller. Individuals also have the right to complain to the UK

Information Commissioner’s Office about how their personal information has been handled.

9.3 The Company, the AIFM, the Investment Adviser, the Registrar and their respective members,

directors, officers, agents, employees, advisers and others will rely upon the truth and accuracy of the

foregoing representations, warranties, acknowledgments and agreements.

9.4 If any of the representations, warranties, acknowledgments or agreements made by the applicant are

no longer accurate or have not been complied with, the applicant will immediately notify the

Company.

10. MISCELLANEOUS

10.1 To the extent permitted by law, all representations, warranties and conditions, express or implied and

whether statutory or otherwise (including, without limitation, pre-contractual representations but

excluding any fraudulent representations), are expressly excluded in relation to the Ordinary Shares

and the Offer for Subscription.

10.2 The rights and remedies of the Company and the Receiving Agent under these terms and conditions

of application are in addition to any rights and remedies which would otherwise be available to any

of them and the exercise or partial exercise of one will not prevent the exercise of others.

10.3 The Company reserves the right to extend the closing time and/or date of the Offer for Subscription

from 1.00 p.m. on 24 September 2018. In that event, the new closing time and/or date will be notified

through a Regulatory Information Service.

10.4 The Company may terminate the Offer for Subscription in its absolute discretion at any time prior to

Admission. If such right is exercised, the Offer for Subscription will lapse and any monies will be

returned as indicated without interest at the risk of the applicant.

10.5 You agree that Peel Hunt and the Receiving Agent are acting for the Company in connection with the

Issue and no-one else and that none of Peel Hunt and the Receiving Agent will treat you as its

customer by virtue of such application being accepted or owe you any duties concerning the price of

the Ordinary Shares or concerning the suitability of the Ordinary Shares for you or otherwise in

relation to the Offer for Subscription or for providing the protections afforded to their customers.

10.6 Save where the context requires otherwise, terms used in these terms and conditions of application

bear the same meaning as where used elsewhere in this Prospectus.

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PART 14

DEFINITIONS AND GLOSSARY

The following definitions apply throughout this Prospectus unless the context requires otherwise:

“Acquisition” the acquisition, conditional on Admission, of the Seed Portfolio as

more fully described in Part 5 of this Prospectus

“Acquisition Costs” the costs and expenses incurred by the Company in respect of

acquiring the Seed Portfolio as set out in paragraph 11 of Part 2

“Administration Agreement” the administration agreement between the Company and the

Administrator, a summary of which is set out in paragraph 7.6 of

Part 11 of this Prospectus

“Administrator” Link Alternative Fund Administrators Limited, a company

incorporated in England and Wales with registered number 2056193

“Admission” admission of the Ordinary Shares issued and to be issued pursuant

to the Issue to the premium listing segment of the Official List and

to trading on the Main Market becoming effective in accordance

with the Admission and Disclosure Standards

the London Stock Exchange Admission and Disclosure Standards

effective from 3 July 2016, as amended from time to time

“AIF” an alternative investment fund for the purposes of AIFMD

“AIFM” the Company’s alternative investment fund manager, G10 Capital

Limited, a private limited company incorporated in England and

Wales with company number 09224491 authorised and regulated by

the FCA with registration number 648953

“AIFM Agreement” the management agreement between the Company and the AIFM, a

summary of which is set out in paragraph 7.2 of Part 11 of this

Prospectus

“AIFMD” the Directive 2011/61/EU of the European Parliament and of the

Council of 8 June 2011 on Alternative Investment Fund Managers

and amending Directives 2003/41/EC and 2009/65/EC and

Regulations (EC) No 1060/2009 and (EU) No. 1095/2010; the

Commission Delegated Regulation (EU) No 231/2013 of

19 December 2012 supplementing Directive 2011/61/EU of the

European Parliament and of the Council with regard to exemptions,

general operating conditions, depositaries, leverage, transparency

and supervision; the UK AIFM Regulations and any other

applicable national implementing measures, including the FCA

Handbook

“Application Form” the application form attached as Appendix 1 to this Prospectus for

use in connection with the Offer for Subscription

“Articles” the articles of association of the Company, a summary of which is

set out in paragraph 4 of Part 11 of this Prospectus

“AST” assured shorthold tenancy

“Admission and Disclosure

Standards”

204

“Block” and “Block of Apartments” a single building structure consisting of two or more PRS Homes

over multiple storeys

“Board” or “Directors” the board of directors of the Company (or, where the context

permits, any one of them)

“BTR” Build to Rent

“Code” the UK Corporate Governance Code as published by the Financial

Reporting Council from time to time

“Collection of Houses” two or more Houses in a common geographical location

“Companies Act” the UK Companies Act 2006 (and the regulations from time to time

made thereunder), as amended

“Company” The Multifamily Housing REIT plc, a company incorporated in

England and Wales with registered number 11383471

“Contract Note” has the meaning given to it in paragraph 1.4 of Part 12 of this

Prospectus

“Cost Coverage Agreement” an agreement regarding the apportionment of the Issue Costs

entered into between the Company and the Investment Adviser, a


Prospectus

“CREST” the system for the paperless settlement of trades in securities and the

holding of uncertificated securities operated by Euroclear UK &

Ireland Limited in accordance with the CREST Regulations

“CREST Regulations” the Uncertificated Securities Regulations 2001 (SI 2001/3755), as

amended

“Company Secretary” Link Company Matters Limited incorporated in England and Wales

with company number 05306796

“Company Secretarial Agreement” an agreement entered into between the Company and the Company

Secretary dated 17 August 2018, a summary of which is set out in

paragraph 7.9 of Part 11 of this Prospectus

“CTA 2010” the UK Corporation Tax Act 2010, (and the regulations made

thereunder) as amended

the disclosure guidance and transparency rules contained within the

FCA Handbook, as amended from time to time,

“Depositary” Ocorian (UK) Limited, a private limited company incorporated in

England and Wales with company number 05534412 authorised and

regulated by the FCA with registration number 448652

“Distribution” any dividend or other distribution by the Company (“distribution”

being construed in accordance with Part 23 of the CTA 2010)

“DLGC” Department for Communities and Local Government

“EEA States” the member states of the European Economic Area

“EPRA” European Public Real Estate Association, the Industry body for

European REITs

“ERV” estimated rental value

“Disclosure Guidance and

Transparency Rules”

205

“EU” the member states of the European Union

“Excess Charge” in relation to a Distribution which is paid or payable to a person, all

tax or other amounts which the Board considers may become

payable by the Company or any other member of its group under

section 551 CTA 2010 (as amended) and any interest, penalties,

fines or surcharge attributable to such tax as a result of such

Distribution

“FATCA” the US Foreign Account Tax Compliance Act, as amended

“FCA” the UK Financial Conduct Authority

“FCA Handbook” the FCA Handbook of rules and guidance issued by the FCA, as

amended

“FSMA” the UK Financial Services and Markets Act 2000, as amended

“Greater London” the administrative area of London, consisting of the City of London

and 32 boroughs as created by the London Government Act 1963

“Gross Asset Value” the aggregate value of the total assets of the Company at the time of

commitment as determined in accordance with the accounting

principles adopted by the Company from time to time

“Gross Proceeds” the gross proceeds of the Issue

“Group” the Company and its subsidiaries from time to time including,

Holdco and following completion of the Acquisition, the SPVs

“Harwood Capital LLP” Harwood Capital LLP, a limited liability partnership registered in

England with registered number OC304213 authorised and

regulated by the FCA with registration number 224915

“HCM” Harwood Capital Management Limited a private limited company

incorporated in England and Wales with company number

07667924

“HCN” Harwood Capital Nominees Limited a private limited company


08370052

“HMRC” HM Revenue & Customs

“HMO” house in multiple occupation

“Holdco” Multifamily Asset 1 Limited a private limited company


11384661 whose registered office is at Beaufort House, 51 New

North Road, Exeter EX4 4EP

“House” a standalone single structure of one or more storeys forming no

more than one PRS Home

“HRE” Harwood Real Estate Limited a private limited company


06935534

“HRE Group” HCM and its subsidiaries from time to time including, the

Investment Adviser and HRE

206

“Hubs” a bespoke management model with concentrations of properties

located in close geographical proximity permitting operational

efficiencies

“IFRS” International financial reporting standards as adopted by the

European Union

“Identified Pipeline” a pipeline of PRS properties identified by the Investment Adviser

with an aggregate value of approximately £422 million available as

further described in Part B of Part 5 of this Prospectus

“Intermediaries” the entities listed in paragraph 23 of Part 11 of this Prospectus,

together with any intermediary that is appointed by the Company in

connection with the Intermediaries Offer after the date of this

Prospectus and “Intermediary” shall mean any one of them

“Intermediaries Booklet” the booklet entitled “The Multifamily Housing REIT plc:

Information for Intermediaries” and containing, among other

things, the Intermediaries Terms and Conditions

“Intermediaries Offer” the offer of Ordinary Shares by the Intermediaries on the terms and

subject to the conditions set out in the Intermediaries Booklet to

certain of their investor clients (including, potentially, retail

investor clients)

the terms and conditions agreed between the Company, the AIFM,

the Investment Adviser and the Intermediaries in relation to the

Intermediaries Offer and contained in the Intermediaries Booklet

“Investment Adviser” Harwood Real Estate Asset Management Limited, a private limited

company incorporated in England and Wales with company number

11521260 whose registered office is at 6 Stratton Street, London

W1J 8LD

“Investment Advisory Agreement” the investment advisory agreement dated 6 September 2018

between the Company, the AIFM and the Investment Adviser a


Prospectus

“ISA” Individual Savings Account for the purposes of section 694 Income

Tax (Trading and Other Income) Act 2005

“Issue” together, the Offering and the issue of the Reinvestment Shares

“Issue Costs” the costs and expenses incurred by the Company in respect of the

Issue as set out in paragraph 5.1 of Part 6 of this Prospectus

“Issue Price” £1.00 per Ordinary Share

“Last Practicable Date” 11 September 2018, being the latest practicable date prior to the

date of this Prospectus

“Listing Rules” the listing rules made by the FCA under Part VI of FSMA, as

amended

“London Stock Exchange” London Stock Exchange plc

“Main Market” the main market for listed securities of the London Stock Exchange

“Management fee” together the NAV Fee and the Net Rent Fee

“Intermediaries Terms and

Conditions”

207

“Market Abuse Regulation” regulation (EU) No. 596/2014 of the European Parliament and of

the council of 16 April 2014 on market abuse, as implemented in the

United Kingdom

“Market Value” has the meaning given to that term in the Red Book from time to

time

rental levels which are affordable for a broad spectrum of the local

population

“Minimum Gross Proceeds” the minimum Gross Proceeds of the Issue, being £125 million (or

such lesser amount as the Company and Peel Hunt may determine

and notify to investors via a RIS announcement and a

supplementary prospectus)

“Minimum Net Proceeds” the minimum Net Proceeds of the Issue, being £122.25 million (or

such lesser amount as the Company and Peel Hunt may determine

and notify to investors via a RIS announcement and a

supplementary prospectus)

“NASCIT” North Atlantic Smaller Companies Investment Trust Plc, a public

limited company registered in England and Wales with company

number 01091347

“Net Asset Value” or “NAV” the net asset value of the Company calculated in accordance with

the Company’s normal accounting policies, and, where the context

requires, the Net Asset Value per Ordinary Share

“NAV Fee” has the meaning given to it in paragraph 3.4 of Part 6 of this

Prospectus

“Net Proceeds” the Gross Proceeds less applicable fees and expenses of the Issue

“Net Rent Fee” has the meaning given to it in paragraph 3.4 of Part 6 of this

Prospectus

“Non-PID Dividend” a dividend paid by the Company that is not a PID

“Non-Qualified Holder(s)” has the meaning given to it in paragraph 4.7 of Part 11 of this

Prospectus

“NURS” a non-UCITS retail scheme, an authorised fund that is neither a

UCITS scheme or a qualified investor scheme

“Offer for Subscription” the offer by the Company to certain investors in the United

Kingdom, the Channel Islands and the Isle of Man for subscription

of Ordinary Shares at the Issue Price as described in this Prospectus

“Offering” together the Placing, the Offer for Subscription and the

Intermediaries Offer

“Official List” the Official List maintained by the UK Listing Authority

“Ordinary Shares” ordinary shares of £0.01 each in the capital of the Company and

having the rights and being subject to the restrictions specified in

the Articles

“ONS” Office For National Statistics

“pcm” per calendar month

“Peel Hunt” Peel Hunt LLP, a limited liability partnership incorporated in

England and Wales with number OC357088 and its registered office

at Moor House, 120 London Wall, London EC2Y 5ET

“mid-market rents” or

“mid-market rental levels”

208

“PID” a distribution referred to in section 548(1) or 548(3) of the CTA

2010, being a dividend or distribution paid by the Company in

respect of profits or gains of the Property Rental Business of the

Group arising at a time when the Group is a REIT insofar as they

derive from the Group’s Property Rental Business

“Placee” a person subscribing for Ordinary Shares under the Placing

“Placing” the placing of Ordinary Shares by Peel Hunt at the Issue Price on

the terms and subject to the conditions referred to in the Placing and

Sponsor’s Agreement

“Placing and Sponsor’s Agreement” the placing and sponsor’s agreement between the Company, the

Directors, the Investment Adviser and Peel Hunt, a summary of

which is set out in paragraph 7.10 of Part 11 of this Prospectus

“Placing Confirmation” has the meaning given to it in paragraph 1.4 of Part 12 of this

Prospectus

“Portfolio Assets” the Group’s portfolio of investment assets from time to time,

including, following completion of the Acquisition, the assets

comprising the Seed Portfolio

“pounds sterling” or “£” pounds sterling, the lawful currency of the United Kingdom

“PRIIPs” packaged retail and insurance-based investment products

“PRIIPs Regulation” Regulation (EU) No 1286/2014 of the European Parliament and of

the Council of 26 November 2014 on key information documents

for PRIIPs and its implementing and delegated acts

“Property Assets” PRS Homes that form a single Block of Apartments and/or

Collection of Houses in either:

(i) a single location; or

(ii) in separate locations where there is a common interest

“Property Management Agreement” the property management agreement between the Company and the

Property Manager, a summary of which is set out in paragraph 7.4

of Part 11 of this Prospectus

“Property Manager” or “Centrick” Centrick Property Sales Limited a private limited company

registered in England and Wales with company number 06438367

“Property Rental Business” a property rental business within the meaning of section 519 of the

CTA 2010 fulfilling the conditions in section 529 of the CTA 2010

“Prospectus” this Prospectus, including its Appendix

“Prospectus Directive” Prospectus Directive 2003/71/EC as amended from time to time and

any successor or replacement regulations

“Prospectus Rules” the prospectus rules made by the FCA under Part VI of FSMA, as

amended

“PRS Homes” existing built private market rented residential units

“Portfolio Assets” the Company’s portfolio of PRS Homes from time to time

“Receiving Agent” Link Asset Services, the trading name of Link Market Services

Limited, incorporated in England and Wales with company number

2605568

209

“Receiving Agent’s Agreement” the receiving agent agreement dated 31 August 2018 between the

Company and the Receiving Agent, a summary of which is set out

in paragraph 7.8 of Part 11 of this Prospectus

“Red Book” RICS Valuation – (professional Standards (January 2014))

“Redeemable Preference Shares” the redeemable preference shares of £1.00 each in the capital of the

Company held, as at the date of this Prospectus, by HRE

“Registrar” Link Market Services Limited trading as Link Asset Services,

incorporated in England and Wales with company number 2605568

“Registrar’s Agreement” the registrar agreement dated 4 September 2018 between the

Company and the Registrar, a summary of which is set out in

paragraph 7.7 of Part 11 of this Prospectus

“Regulation S” Regulation S under the US Securities Act

a regulatory information service that is on the list of regulatory

information services maintained by the FCA

“Reinvestment Subscribers” HRE, HCN and NASCIT

“Reinvestment Shares” the 19,528,639 Ordinary Shares, in aggregate, to be issued to the

Reinvestment Subscribers at the Issue Price under the terms of the

Reinvestment Subscription Letters

“Reinvestment Subscription Letters” the letters entered into between the Company and each of the

Reinvestment Subscribers pursuant to which the Reinvestment

Subscribers agree to subscribe for and the Company agrees to issue

and allot an aggregate of 19,528,639 Ordinary Shares, a summary

of each is set out in paragraph 7.12 of Part 11 of this Prospectus

“REIT” a company or group of companies qualifying as a real estate

investment trust under Part 12 of the CTA 2010

“REIT Regime” Part 12 of the CTA 2010, together with all secondary legislation

made thereunder

“Relevant Member State” each of the EEA States (other than the UK)

“Relevant Registered Shareholder” a Shareholder who holds all or some of the Ordinary Shares that

comprise a Substantial Shareholding (whether or not a Substantial

Shareholder)

“Reporting Accountants” KPMG LLP, a limited liability partnership incorporated in England

and Wales with registered number OC301540

“Residual Business” the business of the Company which is not a Property Rental

Business

“Restricted Jurisdiction” any jurisdiction where local law or regulations may result in a risk

of civil, regulatory or criminal exposure or prosecution if

information or documentation concerning the Issue or this

Prospectus is sent or made available to a person in that jurisdiction

“SDLT” Stamp Duty Land Tax

“SDRT” Stamp Duty Reserve Tax

“Regulatory Information

Service” or “RIS”

210

“Seed Portfolio” 658 PRS Homes (and five commercial units) across 22 properties

with an apportioned purchase price of £105,000 per PRS Home

which the Company has agreed, conditional on Admission, to

acquire pursuant to the Share Purchase Agreements and as more

fully described in Part 5 of this Prospectus

“Senior Managers” the senior managers appointed to the Investment Adviser being

Jonathan Whittingham, Peter McCluskey and Kitty Patmore a

biography of each is set out in paragraph 3.2 of Part 6 of this

Prospectus

“Share Purchase Agreements” each of:

(a) a conditional agreement dated 10 September 2018 entered into

between Holdco and HRE pursuant to which Holdco shall

acquire the entire issued share capital of Harwood Squirrel

Limited, a summary of which is set out in paragraph 7.1(a) of

Part 11 of this Prospectus;

(b) a conditional agreement dated 10 September 2018 entered into

between Holdco and HCN pursuant to which Holdco shall

acquire the entire issued share capital of Harwood Lowestoft

Limited and Harwood (Bristol) Limited, a summary of which is

set out in paragraph 7.1(b) of Part 11 of this Prospectus;

(c) a conditional agreement dated 10 September 2018 entered into

between Holdco and NASCIT pursuant to which Holdco shall

acquire the entire issued share capital of Harwood Gopher

Limited, a summary of which is set out in paragraph 7.1(c) of

Part 11 of this Prospectus; and

(d) a conditional agreement dated 10 September 2018 and entered

into between Holdco and BASS Real Estate Limited, pursuant

to which Holdco shall acquire the entire issued share capital of

Bass Real Estate No.2 Limited, Bass Real Estate No.4 Limited,

Bass Real Estate No.9 Limited and Bass Real Estate No.18

Limited a summary of which is set out in paragraph 7.1(d) of


“Shareholder” a holder of Ordinary Shares

“Specified Shares” has the meaning given to it in paragraph 4.9 of Part 11 of this

Prospectus

“SPVs” the following special purpose vehicles that own the PRS Homes

that, comprise of the Seed Portfolio:

(a) BASS Real Estate No.9 Limited, a company registered in

England and Wales with company number 9779225

(b) BASS Real Estate No.18 Limited, a company registered in


(c) Harwood Lowestoft Limited, a company registered in England

and Wales with company number 10848397

(d) Harwood Gopher Limited, a company registered in England


211

(e) BASS Real Estate No.2 Limited, a company registered in


(f) Harwood (Bristol) Limited, a company registered in England


(g) BASS Real Estate No.4 Limited, a company registered in


(h) Harwood Squirrel Limited, a company registered in England


“Subscriber Share” one Ordinary Share issued to HRE on incorporation of the

Company

“Substantial Shareholder” a company or body corporate that is beneficially entitled, directly or

indirectly, to 10 per cent. or more of the distributions paid by the

Company and/or share capital of the Company, or which controls,

directly or indirectly, 10 per cent. or more of the voting rights of the

Company (referred to in section 553 of the CTA 2010 as a “holder

of excessive rights”)

“Substantial Shareholding” Ordinary Shares in relation to or by virtue of which (in whole or in

part) a person is a Substantial Shareholder

“Takeover Code” the City Code on Takeovers and Mergers

“Target Gross Proceeds” the target Gross Proceeds of the Issue, being £175 million

“Target Net Proceeds” the target Net Proceeds of the Issue, being £171.5 million

“UCITS Directive” Directive 2009/65/EC of the European Parliament and of the

Council of 13 July 2009 on the coordination of laws, regulations

and administrative provisions relating to undertakings for collective

investment in transferable securities, as amended

“UCITS scheme” an authorised fund authorised by the FCA in accordance with the

UCITS Directive

“UK” or “United Kingdom” the United Kingdom of Great Britain and Northern Ireland

“UKLA” or “UK Listing Authority” the Financial Conduct Authority, acting in its capacity as the

competent authority for the purposes of Part VI of FSMA, as

amended

“Underlying Applicants” investors who wish to subscribe for Ordinary Shares under the

Intermediaries Offer who are clients of any Intermediary

“US Exchange Act” the US Exchange Act of 1934, as amended

“US Investment Company Act” the US Investment Company Act of 1940, as amended

“US Securities Act” the US Securities Act of 1933, as amended

“Valuation Report” the valuation report on the Seed Portfolio produced by the Valuer at

the request of the Company and reproduced at Part 8 of this

Prospectus

“Valuer” or “Independent Valuer” Savills Advisory Services Limited and/or such replacement or

additional valuer as the Company considers to have the requisite

skills, qualifications and relevant experience to carry out valuations

of the Portfolio Assets

212

APPENDIX 1

APPLICATION FORM FOR OFFER FOR SUBSCRIPTION

Important – Before completing this form, you should read the accompanying notes.

TO: Link Asset Services, acting as receiving agent for The Multifamily Housing REIT Plc

1. APPLICATION

I/We the person(s) detailed in section 3A below offer to subscribe for the number of Ordinary Shares shown

in Box 1 subject to the Terms and Conditions set out in Part 13 of this Prospectus dated 12 September 2018

and subject to the Articles of Association of the Company.

Box 1 (minimum subscription of 1,000 Ordinary Shares and

then in multiples of 1,000 Ordinary Shares thereafter)

2. AMOUNT PAYABLE

Box 2 (the number in Box 1 multiplied by the Issue Price,

being £1.00 per Ordinary Share)

Payment Method (tick one) Cheque CHAPS CREST

3A. DETAILS OF HOLDER(S) IN WHOSE NAME(S) ORDINARY SHARES WILL BE ISSUED

(BLOCK CAPITALS)

Mr, Mrs, Miss or Title .......................................................................................................................................

Forenames (in full) .............................................................................................................................................

Surname/Company Name ..................................................................................................................................

Address (in Full).................................................................................................................................................

Designation (if any)............................................................................................................................................

Date of Birth (if applicable) ..............................................................................................................................













£

213✂

3B. CREST DETAILS

(Only complete this section if Ordinary Shares allotted are to be deposited in a CREST Account which must

be in the same name as the holder(s) given in section 3A).

CREST Participant ID

CREST Member Account ID

4. SIGNATURE(S) ALL HOLDERS MUST SIGN

Execution by Individuals:

Execution by a Company:

5. SETTLEMENT DETAILS

(a) Cheque/Banker’s draft

If you are subscribing for Ordinary Shares and paying by cheque or banker’s draft pin or staple to this

form your cheque or banker’s draft for the exact amount shown in Box 2 made payable to “Link Market

Services Re: The Multifamily Housing REIT Plc OFS A/C”. Cheques and banker’s drafts must be drawn

on an account at a branch of a bank or building society in the United Kingdom, the Channel Islands or

the Isle of Man and must bear the appropriate sort code in the top right hand corner.

(b) Chaps

For applicants sending subscription monies by electronic bank transfer (CHAPS), payment must be

made for value by 1.00 p.m. on 24 September 2018 directly into the bank account detailed below. The

payment instruction must also include a unique reference comprising your name and a contact

telephone number which should be entered in the reference field on the payment instruction, for

example, MJ SMITH 01234 567 8910.

Bank: Lloyds Bank plc

Sort Code: 30 80 12

A/C No: 16994468

A/C Name: Link Market Services Re: The Multifamily Housing REIT Plc OFS CHAPS A/C

The Receiving Agent cannot take responsibility for correctly identifying payments without a unique

reference nor where a payment has been received but without an accompanying application form.

214

First Applicant Signature Date

Second Applicant Signature Date

Third Applicant Signature Date

Fourth Applicant Signature Date

Executed by (name of

Company):Date

Name of Director: Signature Date

Name of Director/Secretary: Signature Date

If you are affixing a company

seal, please mark a cross here:Affix Company Seal here:

(c) CREsT settlement

If you so choose to settle your application within CREST, that is DVP, you or your settlement

agent/custodian’s CREST account must allow for the delivery and acceptance of Ordinary Shares to

be made against payment of the Issue Price, following the CREST matching criteria set out below:

Trade Date: 24 September 2018

Settlement Date: 28 September 2018

Company: The Multifamily Housing REIT plc

Security Description: Ordinary Shares

SEDOL: BYWLBM7

ISIN: GB00BYWLBM79

Applicants wishing to settle DVP will still need to complete and submit a valid Application Form to

be received by no later than 1.00 p.m. on 24 September 2018. You should tick the relevant box in

section 2.

Applicants will also need to ensure that their settlement instructions have been input to Link Asset

Services’ participant account (RA06) by no later than 1.00 p.m. on 28 September 2018. Note: Link

Asset Services will not take any action until a valid DEL message has been alleged to the Participant

account by the applicant.

No acknowledgement of receipt or input will be provided.

Applicants should also ensure that their settlement agent/custodian has a sufficient “debit cap” within

the CREST system to facilitate settlement in addition to their usual daily trading and settlement

requirements.

In the event of late/non settlement the company reserves the right to deliver shares outside of CREST

in certificated form provided that payment has been made in terms satisfactory to the company and

all other conditions of the Offer have been satisfied.

You must also ensure that you or your settlement agent/custodian has a sufficient “debit cap” within

the CREST system to facilitate settlement in addition to your/its own daily trading and settlement

requirements.

6. RELIABLE INTRODUCER DECLARATION

Completion and signing of this declaration by a suitable person or institution may avoid presentation being

requested of the identity documents detailed in section 6 of the notes on how to complete this Application

Form. The declaration below may only be signed by a person or institution (being a regulated financial

services firm) (the “firm”) which is itself subject in its own country to operation of “customer due

diligence” and anti-money laundering regulations no less stringent than those which prevail in the United

Kingdom. Acceptable countries include Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France,

Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, the

Netherlands, Norway, Portugal, Slovenia, Spain, Sweden and the UK.

215✂

Declaration: To the Company and the Receiving Agent

With reference to the holder(s) detailed in section 3A, all persons signing at section 4 and the payor if not

also the Applicant (collectively the “subjects”) WE HEREBY DECLARE:

(i) we operate in one of the above mentioned countries and our firm is subject to money laundering

regulations under the laws of that country which, to the best of our knowledge, are no less stringent

than those which prevail in the United Kingdom;

(ii) we are regulated in the conduct of our business and in the prevention of money laundering by the

regulatory authority identified below;

(iii) each of the subjects is known to us in a business capacity and we hold valid identity documentation

on each of them and we undertake to immediately provide to you copies thereof on demand;

(iv) we confirm the accuracy of the names and residential/business address(es) of the holder(s) given at

section 3A and if a CREST Account is cited at section 3B that the owner thereof is named in section 3A;

(v) having regard to all local money laundering regulations we are, after enquiry, satisfied as to the source

and legitimacy of the monies being used to subscribe for the Ordinary Shares mentioned; and

(vi) where the payor and holder(s) are different persons we are satisfied as to the relationship between

them and reason for the payor being different to the holder(s).

The above information is given in strict confidence for your own use only and without any guarantee,

responsibility or liability on the part of this firm or its officials.

Signed: ................................................................................................................................................................

Name: .................................................................................................................................................................

Position: .............................................................................................................................................................

having authority to bind the firm: .....................................................................................................................

Name of regulatory authority: ...........................................................................................................................

Firm’s Licence number: .....................................................................................................................................

Website address or telephone number of regulatory authority: .........................................................................

STAMP of firm giving full name and business address

7. CONTACT DETAILS

To ensure the efficient and timely processing of this application please enter below the contact details of a

person the Company (or any of its agents) may contact with all enquiries concerning this application.

Ordinarily this contact person should be the (or one of the) person(s) signing in section 4 on behalf of the

first named holder. If no details are entered here and the Company (or any of its agents) requires further

information, any delay in obtaining that additional information may result in your application being rejected

or revoked.

Contact Name: Email Address:

Address:

Telephone No: Fax No:

216

NOTES ON HOW TO COMPLETE THE APPLICATION FORM

Applications should be returned so as to be received by the Receiving Agent no later than 1.00 p.m. on

24 September 2018.

In addition to completing and returning the Application Form to Link Asset Services, you will also need to

complete and return a Tax Residency Self Certification Form. The “individual tax residency

self- certification – sole holding” form can be found at the end of this Prospectus. Further copies of this

form and the relevant form for joint holdings or corporate entity holdings can be requested from Link Asset

Services on 0371 664 0321. Calls are charged at the standard geographic rate and will vary by provider. Calls

outside of the United Kingdom will be charged at the applicable international rate. The helpline is open

between 9.00 a.m. and 5.30 p.m., Monday to Friday excluding public holidays in England and Wales. Please

note that Link Asset Services cannot provide any financial, legal or tax advice and calls may be recorded and

monitored for security and training purposes. It is a condition of application that (where applicable) a

completed version of the Tax Residency Self Certification Form is provided with the Application Form

before any application can be accepted.

HELPLINE: If you have a query concerning the completion of this Application Form, please telephone

Link Asset Services on 0371 664 0321. Calls are charged at the standard geographic rate and will vary by

provider. Calls outside the United Kingdom will be charged at the applicable international rate. The helpline

is open between 9.00 a.m. and 5.30 p.m., Monday to Friday excluding public holidays in England and Wales.

Please note that Link Asset Services cannot provide any financial, legal or tax advice and calls may be

recorded and monitored for security and training purposes.

1. Application

Fill in (in figures) in Box 1 the number of Ordinary Shares being subscribed for. The number being

subscribed for must be a minimum of 1,000 Ordinary Shares and then in multiples of 1,000 Ordinary Shares

thereafter. Financial intermediaries who are investing on behalf of clients should make separate applications

for each client.

2. Amount payable

Fill in (in figures) the total amount payable for the Ordinary Shares for which your application is made which

is the number inserted in Box 1 of the Application Form, multiplied by the Issue Price, being £1.00 per

Ordinary Share. You should also mark in the relevant box to confirm your payment method, i.e. cheque,

banker’s draft or settlement via CREST.

3A. Holder details

Fill in (in block capitals) the full name(s) and date of birth of each holder and the address of the first named

holder. Applications may only be made by persons aged 18 or over. In the case of joint holders only the first

named may bear a designation reference. A maximum of four joint holders is permitted. All holders named

must sign the Application Form in section 4.

3B. CREST

If you wish your Ordinary Shares to be deposited in a CREST account in the name of the holders given in

section 3A, enter in section 3B the details of that CREST account. Where it is requested that Ordinary Shares

be deposited into a CREST account please note that payment for such Ordinary Shares must be made prior

to the day such Ordinary Shares might be allotted and issued. It is not possible for an applicant to request

that Ordinary Shares be deposited in their CREST account on an against payment basis. Any Application

Form received containing such a request will be rejected.

4. Signature

All holders named in section 3A must sign section 4 and insert the date. The Application Form may be signed

by another person on behalf of each holder if that person is duly authorised to do so under a power of

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attorney. The power of attorney (or a copy duly certified by a solicitor or a bank) must be enclosed for

inspection (which originals will be returned by post at the addressee’s risk). A corporation should sign under

the hand of a duly authorised official whose representative capacity should be stated and a copy of a notice

issued by the corporation authorising such person to sign should accompany the Application Form.

5. Settlement details

(a) Cheque/Banker’s draft

All payments by cheque or banker’s draft must accompany your application and be for the exact

amount inserted in Box 2 of the Application Form. Your cheque or banker’s draft must be made

payable to “Link Market Services Re: The Multifamily Housing REIT Plc OFS A/C” in respect of an

Application and crossed “A/C Payee Only”. Applications accompanied by a post-dated cheque will

not be accepted.

Cheques or banker’s drafts must be drawn on an account where the applicant has sole or joint-title to

the funds and on an account at a branch of a bank or building society in the United Kingdom, the

Channel Islands or the Isle of Man which is either a settlement member of the Cheque and Credit

Clearing Company Limited or the CHAPS Clearing Company Limited or which is a member of either

of the Committees of Scottish or Belfast clearing houses or which has arranged for its cheques and

banker’s drafts to be cleared through the facilities provided by any of those companies or committees

and must bear the appropriate sort code in the top right hand corner.

Third party cheques may not be accepted, with the exception of building society cheques or banker’s

drafts where the building society or bank has inserted the full name of the building society or bank

account holder and have added the building society or bank branch stamp. The name of the building

society or bank account holder must be the same as the name of the current shareholder or prospective

investor. Please do not send cash. Cheques or banker’s drafts will be presented for payment upon

receipt. The Company reserves the right to instruct the Receiving Agent to seek special clearance of

cheques and banker’s drafts to allow the Company to obtain value for remittances at the earliest

opportunity.

(b) Chaps

For applicants sending subscription monies by electronic bank transfer (CHAPS), payment must be

made for value by 1.00 p.m. on 24 September 2018 directly into the bank account detailed below. The

payment instruction must also include a unique reference comprising your name and a contact

telephone number which should be entered in the reference field on the payment instruction, for

example, MJ SMITH 01234 567 8910.

Bank: Lloyds Bank plc

Sort Code: 30 80 12

A/C No: 16994468

A/C Name: Link Market Services Re: The Multifamily Housing REIT Plc OFS CHAPS A/C

The Receiving Agent cannot take responsibility for correctly identifying payments without a unique

reference nor where a payment has been received but without an accompanying application form.

(c) CREsT settlement

The Company will apply for the Ordinary Shares issued pursuant to the Offer for Subscription in

uncertificated form to be enabled for CREST transfer and settlement with effect from Admission

(the “Relevant Settlement Date”). Accordingly, settlement of transactions in the Ordinary Shares

will normally take place within the CREST system.

The Application Form contains details of the information which the Company’s registrars, Link

Market Services Limited trading as Link Asset Services, will require from you in order to settle your

application within CREST, if you so choose. If you do not provide any CREST details or if you

provide insufficient CREST details for Link Asset Services to match to your CREST account, Link

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Asset Services will deliver your Ordinary Shares in certificated form provided payment has been

made in terms satisfactory to the Company.

The right is reserved to issue your Ordinary Shares in certificated form should the Company, having

consulted with Link Asset Services, consider this to be necessary or desirable. This right is only likely

to be exercised in the event of any interruption, failure or breakdown of CREST or any part of CREST

or on the part of the facilities and/or system operated by Euroclear in connection with CREST.

The person named for registration purposes in your Application Form must be:

(i) the person procured by you to subscribe for or acquire the Ordinary Shares; or

(ii) yourself; or

(iii) a nominee of any such person or yourself, as the case may be.

Neither Link Asset Services nor the Company will be responsible for any liability to stamp duty or

SDRT resulting from a failure to observe this requirement. You will need to input the delivery versus

payment (“DVP”) instructions into the CREST system in accordance with your application. The input

returned by Link Asset Services of a matching or acceptance instruction to our CREST input will then

allow the delivery of your Ordinary Shares to your CREST account against payment of the Issue Price

through the CREST system upon the Relevant Settlement Date.

By returning your Application Form you agree that you will do all things necessary to ensure that you

or your settlement agent/custodian’s CREST account allows for the delivery and acceptance of

Ordinary Shares to be made prior to 8.00 a.m. on 28 September 2018 against payment of the Issue

Price. Failure by you to do so will result in you being charged interest at the rate of two percentage

points above the then published bank base rate of a clearing bank selected by Link Asset Services.

To ensure that you fulfil this requirement it is essential that you or your settlement agent/custodian

follow the CREST matching criteria set out below:

Trade Date: 24 September 2018

Settlement Date: 28 September 2018

Company: The Multifamily Housing REIT plc

Security Description: Ordinary Shares

SEDOL: BYWLBM7

ISIN: GB00BYWLBM79

Should you wish to settle DVP, you will need to input your instructions to Link Asset Services’

participant account RA06 by no later than 1.00 p.m. on 28 September 2018.

You must also ensure that you or your settlement agent/custodian has a sufficient “debit cap” within the

CREST system to facilitate settlement in addition to your/its own daily trading and settlement requirements.

In the event of late CREST settlement, the Company, after having consulted with Link Asset Services,

reserves the right to deliver Ordinary Shares outside CREST in certificated form provided payment

has been made in terms satisfactory to the Company and all other conditions in relation to the Offer

for Subscription have been satisfied.

6. Reliable introducer declaration

Applications with a value greater than €15,000 (approximately £13,433) will be subject to verification of

identity requirements. This will involve you providing the verification of identity documents listed below

UNLESS you can have the declaration provided at section 6 of the Application Form given and signed by a

firm acceptable to the Company (or any of its agents). In order to ensure your Application is processed in a

timely and efficient manner all Applicants are strongly advised to have the declaration provided in section 6

of the Application Form completed and signed by a suitable firm.

If the declaration in section 6 cannot be completed and the value of the application is greater than €15,000

(approximately £13,433) the documents listed below must be provided with the completed Application

219

Form, as appropriate, in accordance with internationally recognised standards for the prevention of money

laundering. Notwithstanding that the declaration in section 6 has been completed and signed, the Company

(or any of its agents) reserves the right to request of you the identity documents listed below and/or to seek

verification of identity of each holder and payor (if necessary) from you or their bankers or from another

reputable institution, agency or professional adviser in the applicable country of residence. If satisfactory

evidence of identity has not been obtained within a reasonable time your application may be rejected or

revoked. Where certified copies of documents are requested below, such copy documents should be certified

by a senior signatory of a firm which is either a governmental approved bank, stockbroker or investment

firm, financial services firm or an established law firm or accountancy firm which is itself subject to

regulation in the conduct of its business in its own country of operation and the name of the firm should be

clearly identified on each document certified.

6A. For each holder being an individual enclose:

(a) a certified clear photocopy of one of the following identification documents which bears both a

photograph and the signature of the person: current passport, government or Armed Forces identity

card, or driving licence; and

(b) certified copies of at least two of the following documents which purport to confirm that the address

given in section 3A is that person’s residential address: a recent gas, electricity, water or telephone

(not mobile) bill, a recent bank statement, a council tax bill or similar document issued by a

recognised authority; and

(c) if none of the above documents show the Applicant’s date and place of birth, enclose a note of such

information; and

(d) details of the name and address of the Applicant’s personal bankers from which the Company (or any

of its agents) may request a reference, if necessary.

6B. For each holder being a company (a “holder company”) enclose:

(a) a certified copy of the certificate of incorporation of the holder company; and

(b) the name and address of the holder company’s principal bankers from which the Company (or any of

its agents) may request a reference, if necessary; and

(c) a statement as to the nature of the holder company’s business, signed by a director; and

(d) a list of the names and residential addresses of each director of the holder company; and

(e) for each director provide documents and information similar to that mentioned in 6A above; and

(f) a copy of the authorised signatory list for the holder company; and

(g) a list of the names and residential/registered address of each ultimate beneficial owner interested in

more than 5 per cent. of the issued share capital of the holder company and, where a person is named,

also complete 6C below and, if another company is named (hereinafter a “beneficiary company”),

also complete 6D below. If the beneficial owner(s) named do not directly own the holder company

but do so indirectly via nominee(s) or intermediary entities, provide details of the relationship

between the beneficial owner(s) and the holder company.

6C. For each person named in 6B(g) as a beneficial owner of a holder company enclose for each such

person documents and information similar to that mentioned in 6B(a) to 6B(d).

6D. For each beneficiary company named in 6B(g) as a beneficial owner of a holder company

enclose:

(a) a certified copy of the certificate of incorporation of that beneficiary company; and

(b) a statement as to the nature of that beneficiary company’s business signed by a director; and

220

(c) the name and address of that beneficiary company’s principal bankers from which the Company

(or any of its agents) may request a reference, if necessary; and

(d) enclose a list of the names and residential/registered address of each beneficial owner owning more

than 5 per cent. of the issued share capital of that beneficiary company.

The Company (or any of its agents) reserves the right to ask for additional documents and information.

7. Contact details

To ensure the efficient and timely processing of your Application Form, please provide contact details of a

person the Company (or any of its agents) may contact with all enquiries concerning your Application.

Ordinarily this contact person should be the person signing in section 4 on behalf of the first named holder.

If no details are entered here and the Company (or any of its agents) requires further information, any delay

in obtaining that additional information may result in your application being rejected or revoked.

8. Tax Residency Self-Certification Form

If you are a new investor in the Company, in addition to completing and returning the Application Form to

Link Asset Services you will also need to complete and return a Tax Residency Self-Certification Form. The

form for an individual shareholder can be found at the end of this prospectus, however, if you require a form

for a corporate shareholder you can request this from Link Asset Services by calling 0371 664 0321. Calls

are charged at the standard geographic rate and will vary by provider. Calls outside of the United Kingdom

will be charged at the applicable international rate. The helpline is open between 9.00 a.m. – 5.30 p.m.,

Monday to Friday excluding public holidays in England and Wales. Please note that Link Asset Services

cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and

training purposes.

It is a condition of the Application that (where applicable) a completed version of that form is provided with

the Application Form before any Application can be accepted.

221

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✂

APPENDIX 2

TAX RESIDENCY SELF-CERTIFICATION FORM (INDIVIDUALS)

If signing under a power of attorney, please also attach a certified copy of the power of attorney.

We will only contact you if there is a question around the completion of the self-certification form.

Name of Company in which shares will be held: The Multifamily Housing REIT plc

Part 1 – Identification of Individual Shareholder

A separate form is required for each holder

Name of Holder:

Address of Holder:

A. Please provide your Tax Residence Address for Tax Purposes

Address:

Include your postcode & Country

B. Date of Birth

(DD/MM/YYYY)

Part 2 – Country/Countries of Resident for Tax Purposes

Country of residence for tax purposes Tax Identification Number

In the UK this would be your NI number

1. 1.

2. 2.

3. 3.

4. 4.

Part 3 – Declaration and Signature

I acknowledge that the information contained in this form and information regarding my shares may be

reported to the local tax authority and exchanged with tax authorities of another country or countries in

which I may be tax resident where those countries have entered into Agreements to exchange Financial

Account information.

I undertake to advise the Company within 30 days of any change in circumstances which causes the

information contained herein to become incorrect and to provide the Company with a suitably updated

Declaration within 30 days of such change in circumstances.

I certify that I am the shareholder (or am authorised to sign for the shareholder).

If this relates to a joint holding: I also acknowledge that as a joint holder I may be reported to the relevant

tax authority if all the other holders do not provide a Tax Residency Self-Certification.

I declare that all statements made in this declaration are, to the best of my knowledge and belief, correct

and complete

Signature:

Print Name:

Date:

Daytime telephone number/email address:

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Sterling 171340

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