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Orchard Street Investment Management has announced the launch and first close of its inaugural impact fund. 

The UK-based investment manager’s Orchard Street Social and Environmental Impact Partnership has raised just under £90 million ($101 million) at first close. 

The fund will target value-add real estate investment opportunities in all UK sectors with the potential to generate a measurable social and environmental impact.

It will focus on three areas:

  1. Decarbonising existing buildings with an accelerated refurbishment programme 
  2. Investing in local communities, “using a proprietary place-based needs model to identify and respond to local social issues”
  3. Making buildings healthier by improving air quality, access to green space and wellness amenities.

Philip Gadsden, portfolio director of the new fund and managing partner at Orchard Street, said: “One of the underlying drivers behind both our efforts as a business and the launch of this fund is the forecast that 80% of the buildings that will exist in the UK by 2050 already exist now, underlining the impetus for immediate action to be taken today to remediate existing but underutilised buildings, and aligning the Fund with Article 8 of the SFDR*. 

"Buildings that offer top quality space and strong ESG credentials will continue to command the best rents and prices, with this fund therefore providing not only an avenue for investors to enjoy strong financial returns but also a significant positive social and environmental impact.” 

JLL Upstream Sustainability Services, UK advised on the development of the fund; Carbon Intelligence, part of Accenture, will manage the ESG performance data for the fund’s assets and BlueMark, will provide ongoing independent assurance of the fund’s impact objectives and reporting.

Real estate’s focus on environmental, social and governance (ESG) issues will be the dominant trend in the next two decades, a ULI report says. 

Emerging Trends in Real Estate Europe 2023, the 20th annual survey of European real estate sector leaders’ expectations by the Urban Land Institute (ULI) and PwC, said responsible capitalism is now seen a crucial to success. 

Asked about the factors determining success, 93% of respondents selected running a socially and environmentally responsible business, closely followed by 87% concerned with creating social impact alongside financial return.

Sophie Chick, head of research for ULI Europe, said: “For the real estate industry to be successful over the long term, it needs to step up from an operational and reporting ESG focus to an all-stakeholder model that fully aligns and integrates the interests of the planet and people with a company’s profitability.”

ULI said greening the world’s existing real estate stock will require vast capital expenditure and needs to happen swiftly to meet climate goals. Pressure to incorporate social impact is predicted to grow as public sector balance sheets become increasingly stretched. Property companies embracing ‘responsible capitalism’ will become more involved in providing social infrastructure, public realm, healthcare and community spaces and in addressing loneliness, growing inequality and ageing populations, it added.