The Urban Land Institute and law firm DLA Piper have published a report on social impact investing, real estate investment where where social value returns are targeted alongside financial returns.
The report claims social impact investing can offer market rate returns, with lower risk and the opportunity for public sector support. It also argues there are opportunities beyond sectors such as affordable housing, education and healthcare.
ULI Europe CEO Lisette van Doorn said: “Real estate and social infrastructure always create an impact on society. The shift now is from unintended consequences to considered outcomes. In many ways, there is nothing new in the social impact model.”
The report includes a number of case studies, looking at projects such as Chinachem Group’s redevelopment of Hong Kong’s Central Market and Nuveen’s affordable housing programmes in the US and Germany.
Susheela Rivers, global co-chair of DLA Piper’s real estate sector, said: “As providers of the built environment where we live, work and play, real estate stakeholders have always had a social impact, both positive and negative, which puts them in a position of huge responsibility. Impact investing not only has the ability to improve lives, it also has a growing commercial imperative whereby net incomes can be improved, costs reduced and certainty provided.”
Nuveen Real Estate has announced the launch of a global impact investing business line.
The investment manager, which has total real estate assets under management of $152 billion plans to build $15 billion of real estate impact AUM by 2026.
The new business line is headed by global head of impact investing Nadir Settles (pictured above), who will also remain in his current role as head of the firm’s New York office.
Pamela West, senior portfolio manager for impact investing, will oversee the framework's strategy, portfolio construction, and client relationships. She will continue to run Nuveen’s US affordable housing portfolio.
Nuveen’s impact mandate will focus on affordable and social housing and regeneration projects. It is designed to “improve communities by providing supportive services, enhancing residents' quality of life and financial outcomes, and ensuring affordable, sustainable and climate safe housing”, while at the same time supporting its 2040 net zero carbon target.
Global head of real estate Chris McGibbon said: "Nuveen is a pioneer in impact investing and we are competitively positioned to deliver a market-leading sector globally and at scale. Under Nadir and Pamela's leadership, I am confident this new sector will address some of the most pressing challenges in real estate across the globe, while creating an avenue for investors to have a significant impact through their capital investment.”
In April, Nuveen launched a German “living impact” platform, led by portfolio manager Tanja Volksheimer, which will focus on affordable housing.
California State Teachers’ Retirement System (CalSTRS) has backed SoLa Impact’s fourth US social impact real estate fund with a $50 million commitment.
The $311 billion US pension fund has invested through its partnership with Belay Investment Group and its investment brings fund-raising for SoLa’s Black Impact Fund to $250 million. The vehicle seeks to raise $300 million to invest in affordable and workforce housing development in California’s minority communities.
The commitment from CalSTRS includes capital from the pension fund’s real estate and sustainable investment and stewardship strategies. Other investors in the fund include PayPal Holdings, Equitable Insurance, the Skoll Foundation, Ally Bank, Potenza Capital, Pacific Premier Bank and Adirondack Capital.
SoLa was founded in 2015 by CEO Martin Muoto (pictured above) and COO Gray Lusk with a mission to “to deliver superior financial returns by driving positive social change in America’s toughest neighbourhoods”. The firm owns and manages a portfolio of 1,500 apartments in Los Angeles and has a similar number in the pipeline. It is also developing a business campus, The Beehive, in an LA Opportunity Zone.