Pensions consultancy Cardano has partnered up with UK-based social impact investor Big Society Capital to direct up to £195m (€232m) of new investment towards real estate fund strategies addressing the UK housing crisis.
The partnership will be a combination of Big Society Capital’s own £45m investment and £150m of client capital from Cardano, it was announced.
The partnership is calling on real estate fund managers to participate in a joint request for proposals (RFP) focused on fund strategies that increase the supply of good quality, affordable housing in the UK – alongside generating a market-rate financial return.
The organisations will also aim to facilitate additional institutional investment. Both firms will assess proposals on a fully independent basis.
The duo said that providers are currently unable to meet the demand for 145,000 new homes each year and with over 1 million people on social housing waiting lists.
“(T)he UK has a housing crisis that is unlikely to be solved through public investment alone,” they said.
Investors are increasingly turning to the social and affordable housing sector – already valued at £3bn, according to Big Society Capital, and expected to more than double by 2025 – in line with the growing trend for investors to demand stable returns, alongside positive social and/or environmental impact.
Gemma Bourne, investment director at Big Society Capital, said: “We predict that the social and affordable housing market will reach £8bn by 2025 as more fund managers and investors become aware of their potential to generate genuine and positive impact on the UK’s housing crisis.”
The social and affordable housing sector often displays interesting investment characteristics that can suit long-term pension savers: steady long-term rental income and capital growth, often with less correlation to the more traditional real estate markets.
Geordie Cox, Cardano’s investment manager, private markets, said: “This is a sector where investments can improve lives but also offer attractive investment characteristics for our (principally pension) clients: resilient, inflation-linked cash-flows; often with government backing and often diversifying in a portfolio.”
The RFP will be open to proposals that offer solutions to help address UK social and affordable housing challenges for the benefit of vulnerable or lower-income people, alongside generating attractive, risk-adjusted returns, the two firms stated.
A three-stage process will be launched on 16 February, the details of which will be available online.
The deadline for submissions is close of business on Friday 11 March 2022.
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