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Huge real estate firm launches £250m affordable housing fund
The world’s largest commercial real estate services and investment firm has launched a £250m fund to invest in affordable housing.
CBRE Global Investors, a subsidiary of Los Angeles-based CBRE, raised the money from 13 institutional investors in its first close, exceeding the original target.
It aims to partner with registered providers of social housing to manage the homes and be responsible for the rental income, maintenance, property management and tenant engagement.
Hannah Marshall, head of UK funds at CBRE Global Investors, said the firm would target a 6% total return.
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This is a similar target to some of the listed funds that have bought up social housing over the past couple of years, such as the real estate investment trusts Civitas and Triple Point.
Unlike them, however, the CBRE Affordable Housing Fund (AHF) is not listed on the stock market, but simply invests its clients’ capital.
One of the clients is Big Society Capital, a self-described “social investor” funded by four shareholder banks, Barclays, HSBC, Lloyds and Royal Bank of Scotland.
It was launched at a 2012 event hosted by the London Stock Exchange by then prime minister David Cameron, who had promised in 2010 while in opposition that a Conservative government would set up a ‘Big Society Bank’ to invest in innovative projects.
Ms Marshall 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 [financial advisors] The Good Economy to develop a social impact framework which will ensure impact considerations are incorporated into our investment process.”
Michael Ness, head of UK at CBRE Global Investors, added: “There is an increasing demand for low-risk, low-volatility, liability matching cash flows 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.”
