Affordable Home Investing

Part
01
of two
Part
01

Affordable Housing Investment

Big Society Capital, The Co-Operative Group Ltd., and Cheyne Capital are three large European players that have made investments to support the development of affordable housing. All three enterprises have made sustainable investments, primarily focusing on the United Kingdom’s social and affordable housing space. The required information has been documented in rows 19-21 of the attached spreadsheet.

Big Society Capital

  • CBRE Global Investors established the United Kingdom Affordable Housing Fund (AHF) in 2019 with initial commitments amounting to £250 million. Over 13 investors contributed to the open-ended fund, including Big Society Capital. This company is one of the largest investors of the fund contributing £10 million towards addressing the country’s affordable housing crisis.
  • Big Society Capital, along with the other 12 investors place significant importance on “the environmental, social, and governance (ESG) impacts on their investment strategies”. According to Hannah Marshall, the head of funds for CBRE Global Investors UK, the main goal in these investments is to offer a positive impact on the households that otherwise, cannot afford to purchase or rent houses in the open market.
  • In partnership with The Good Economy, Big Society Capital is currently working on the development of a social impact infrastructure that would secure the impact considerations of the AHF’s investment process.

The Co-Operative Group Ltd.

  • The Co-Operative Group has been using its pension fund capital to support the affordable housing market in the United Kingdom. According to James Giles, the pension investments and risk manager of the Co-Operative Group, the fund aims at making a social impact in terms of “low-risk, inflation-linked real estate investments”.
  • The Co-Operative Group has invested £50 million of its pension fund into the market of affordable housing with the goal of developing as many as 400 new houses. One of the many housing projects is a high-quality property development in Dunbar, Scotland that will deliver over 50 new dwellings. Once completed, these houses will be offered to market renters at a 20% discount.
  • With this investment, The Co-Operative Group is looking to change the general view of affordable houses being low-quality properties with low rents with its new high-quality dwellings.

Cheyne Capital

  • Cheyne Capital makes its investments in UK’s affordable housing space with the aim of bridging the gap between the demand-supply imbalances of affordable housing and inflation-linked assets. The company makes sustainable investments where “housing will remain affordable through time” since the housing rent will move at the same pace as the rise in wages.
  • Cheyne Capital raised over £220 million in funds to invest in the development of affordable housing in the UK, with £40 million allocated to the construction of a 380-house project in the city of Stoke-on-Trent. The investment will also fund a housing project in Bristol which will provide some homes to key workers, a portion of the homes to market renters, and the rest will be allocated towards the “rent-to-buy” program.

Part
02
of two
Part
02

Affordable Housing Investment (2)

The Council of Europe Development Bank, European Investment Bank, and NRW Bank all provide support for affordable housing in Europe. There were no investments made in the US by these banks. The requested information is summarized in the attached spreadsheet.

General Overview

  • The Council of Europe Development Bank has a focus on vulnerable groups, including immigrants. An investment program, introduced by the government aims to support weak municipalities and those operating refugee centers, after an influx of migrants to Germany.
  • The investment of the Council of Europe Development Bank is directed toward Hesse, where it will fund construction, renovation, refurbishing, and conversion of buildings and related infrastructure for rented social housing.
  • The European Investment Bank has made a €300 million investment in a financial support package that will be used eight residential properties in 5 Swedish cities. Working with the residential company, Heimstaden Bostad AB, around 3,300 affordable homes will become available for rent.
  • Unsecured financial support will be available for three years, with each loan having a term of ten years. This package will increase the feasibility of large scale construction.
  • NRW Bank provides subsidies for investment in the renewal of stock and new investments so that low rents can be made available to households below a defined income level. This includes funding low interest, fixed loans, and additional subsidies.
Sources
Sources