A number of UK local authority pension funds are among investors in a new £220m (€250m) impact-investment real estate fund.

Funds from Greater Manchester, West Midlands, East Riding and West Yorkshire have committed capital to Bridges Property Alternatives Fund IV, which aims to benefit society as well as generate financial returns.

Bridges Fund Management, which specialises in sustainable and impact investments, said it had also raised capital from the UK’s Environment Agency Pension Fund and US-based Church Pension Fund, as well as other financial institutions and foundations.

Simon Ringer, partner and head of property funds at Bridges, said: “Our last three funds have demonstrated very clearly that by investing in needs-driven sectors where we can promote greater inclusivity and sustainability, we can not only deliver powerful societal impact but also strong financial returns for our investors.”

The firm’s previous property fund, Bridges Property Alternatives III, drew £212m of investment commitments by its final close two years ago.

All four of the funds launched invest in property or property-backed businesses that are “helping to tackle pressing social and environmental challenges”, Bridges said.

Some of the assets or businesses might help to regenerate underserved areas, it said, or provide better care solutions to old people, or reduce carbon emissions from existing buildings.

The fourth fund will continue the strategy of investing in emerging locations and niche sectors affected by changing demographics and/or consumer needs, such as healthcare, education, SME business space and affordable residential accommodation, Bridges said.

Fund IV has already signed four deals, including the development of over 500 units of lower-cost housing in central Croydon, and an industrial and office development in Cannock, which involves the transformation of a disused colliery site.