Schroders and Civitas complete GBP192m final close for UK social impact strategy
Schroders Capital and its partner Civitas Investment Management (CIM or Civitas) have held the third and final closing of their Social Supported Housing Fund (SoHo) with aggregate equity commitments of GBP192 million.
The capital for this private, UK, closed-end limited partnership was raised from investors located in the UK, US and Singapore. Investors included public and private pension funds, insurance companies, charitable foundations and family offices, with several contributing from specific impact investment allocations.
The Fund’s social impact strategy will help alleviate a pressing social issue in the UK by contributing exclusively to the supply of newly built social supported housing to ease the considerable shortfall in the provision of these properties. The strategy will forward-fund the development of new specialist supported housing units in the UK, purpose-built to provide safe, lifelong homes for adults with significant physical and mental health conditions.
The Fund’s properties enable residents to receive dedicated, high-quality care in the heart of their communities, close to their families in safe accommodation that has been specifically designed to meet their individual needs.
Schroders Capital has been investing in UK real estate for over 50 years and incorporates sustainability and social impact into every asset plan. It takes pride in its ability to provide investors with innovative ways of tackling social and environmental challenges that achieve a lasting positive impact without sacrificing attractive financial returns. SoHo is a prime example of this philosophy in action.
CIM, is a leading impact investment manager with GBP2.5 billion of committed capital exclusively devoted to social impact projects. Among its mandates, CIM founded and acts as investment adviser to the listed FTSE250 REIT, Civitas Social Housing PLC.
In the SoHo strategy, CIM oversees the development of the properties, drawing on its extensive in-depth experience of providing high-quality supported housing for vulnerable adults with significant care needs.
Planning consent is secured ahead of any investment and assets are pre-let on a long-term basis with specialist housing associations and designed for the long-term provision of bespoke adapted homes. Funding is sourced ultimately from central government as part of the commitment to support vulnerable adults to live within their own communities.
There is clear evidence to show that living in the community close to family and friends results in significantly better physical, mental and social outcomes for residents than institutionalisation or long-term hospitalisation. Moreover, this type of specialist supported housing also provides better value for the taxpayer. The 2018 report by Mencap, ‘Funding Supported Housing for All’, found that specialist supported homes such as these cost 11% less than registered care homes and 55 per cent less than in-patient alternatives.
Robin Hubbard, Head of Real Estate Capital at Schroders, says: “We are delighted to have raised almost GBP200 million for Schroders’ first social impact real estate development strategy. This follows on from the successful IPO of the Schroder BSC Social Impact Trust PLC in the public market at the end of last year. With leverage the Fund will have over GBP300 million of capital to invest of which more than GBP150 million is already invested or committed to projects.
“This success highlights investors’ interest in Schroders and Civitas’ capabilities in this field and that impact has risen up investors’ agendas over the last year, not just in the UK but globally, as fiduciaries as well as their underlying beneficiaries and policyholders seek social and environmental returns alongside financial targets.
“Prominent investors with an impact focused commitment include The Church Commissioners for England and Jonathan Rose, a highly respected developer of innovative housing communities in the US, through his Lostand foundation.”
Andrew Dawber, Group Director at Civitas Investment Management Limited, says: “This final closing is a major milestone for CIM’s partnership with Schroders. SoHo’s prime objective is creating new specialist property supply for some of the most vulnerable individuals in society and with 11 schemes already operational and another 50 in the pipeline, the Fund looks set to generate genuine ‘additionality’, alongside an attractive risk-adjusted return.
“We are delighted to welcome new investors to the Fund and believe that despite the challenges associated with investors undertaking on-site due diligence during the ongoing pandemic, the considerable demand reflects the attractiveness of this asset class and its positive social impact credentials to institutional investors. CIM and Schroders are firm believers in the power of private capital to influence and deliver positive changes to society.”