The Mill Group has launched the UK’s first mainstream REIT vehicle, focused on the (PRS).

The London-based firm said the new vehicle would buy companies with existing portfolios of residential properties and aim to attract investment from “mainstream� investors.

Simon Phillips, chief executive of the new vehicle, told IP Real Estate the Mill Residential REIT would give shareholders the opportunity to invest without the “burdens� of being a residential landlord.

By this time next year, the REIT hopes to have built a portfolio with a gross asset value of around £50m (€62.5m), Phillips said.

“People have questioned why a residential REIT hasn’t been done before, and there’s been a lot of investor interest,� he said. “PRS is a very attractive market, and it’s going to grow.�

With an opportunistic and value-added approach, Mill Group will target the south east of England and West Midlands ­– avoiding prime and central London and focusing on areas of growth.

“We will look to invest where there is a good combination of infrastructure and employment,� Phillips said.

In the greater London area, the choice facing “generation rent� was dominated by commute time as well as quality of stock.

The company has bought an initial portfolio of seven properties “substantially let and generating income, in desirable locations�.

The assets range in value from £180,000 to £430,000. 

With REITs constrained by limits on the “churn� of properties, Phillips said the vehicle was more aimed at investing with a view to “longer-term holds�.

Andrew Smith joined Mill Group as executive director as the company launched its first PRS project in a joint venture with Bovis Homes.

The pair bought 190 new-build homes in the south of the UK for £45m.