CBRE Global Investors has launched a new affordable housing equity fund, raising around £250m in what it has described as its first step into the impact investment space.
The CBRE UK Affordable Housing Fund (AHF) has attracted investment from 13 institutional investors, including commitments from Big Society Capital.
AHF will invest in housing stock in the UK, focusing on social and affordable rented housing, shared ownership and other tenures such as key worker housing and homelessness hostels.
The fund is looking for a six per cent target total return, which it said meets the investment and income requirement of investors while contributing to social impact.
It will partner with registered providers, which will manage the homes and be responsible for the rental income, maintenance, property management and tenant engagement.
The raise comes weeks after a new housing bond aggregator said it is targeting the “multitrillion-dollar” social bond market with its planned issuance in early 2019.
CBRE said the fund offers investors “diversification through exposure to the residential sector with the aim of having a significant social impact”.
It is a UK open-ended unlisted fund targeting institutional client capital solely investing in social and affordable housing. However it will invest in a mix of tenures, including both forward-funded stock or standing assets, with the first investment expected to close in the first quarter of 2019.
Hannah Marshall, head of UK funds at CBRE Global Investors, said: “Institutional investors are placing increasing importance on the environmental, social and governance (ESG) impacts of their investment strategies. Our strategy contributes towards our investors’ ESG targets and generates a positive social impact as we invest in the funding of homes for those households unable to afford to rent or buy in the open market.
“To have Big Society Capital committing to our fund is significant. We are working with The Good Economy to develop a social impact framework which will ensure impact considerations are incorporated into our investment process.”
CBRE Global Investors said that there is currently no market-standard way of measuring and reporting on a fund’s social impact for affordable housing investments, and that it is working with The Good Economy, along with Big Society Capital and its other investors, to develop “a robust, market-leading framework”.
The Good Economy has also done work with social housing real estate investment trust and impact funds, including Civitas Social Housing and Funding Affordable Homes.
Michael Ness, head of UK at CBRE Global Investors, added: “There is an increasing demand for low-risk, low-volatility, liability matching cashflows from UK institutional investors and AHF meets those requirements.
“The fund complements and enhances our UK offer. AHF sits neatly within our range of products, which includes the Long Income Fund, our core PAIF [property authorised investment fund], and alongside our sizeable separate account business, offering our clients a wide range of structuring choices.”