Real Estate Impact
A real estate impact fund with a dual objective of tackling social inequality, while delivering returns for investors.
Address social inequality
We are committed to addressing the pressing shortages in housing and social infrastructure by delivering additional homes and modernising essential services.
Deliver market financial returns
Target 7–8% net total return over a rolling ten-year period. Diversified, secure income, often government-backed, linked to inflation. This target is not guaranteed.
Sustainability Impact label
*Our Fund has achieved the Sustainability Impact label under the FCA’s new Sustainability Disclosure Requirements.
Why a housing ‘plus’ strategy
For decades, the UK has faced a significant shortfall in new housing across various tenures. A lack of affordable and high-quality homes contributes to social inequality and has led to the decline of town centres, negatively impacting individuals, communities, and public finances.
The Fund aims to provide 3,000 homes and invest in local communities over the next five years by focusing on social and affordable housing - which refers to properties rented or sold at a discount to market rates - while enhancing social infrastructure, especially in town centre locations.
Why is social infrastructure important?
Social infrastructure underpins successful and thriving communities. As housing provision increases, we must also invest into essential services, such as healthcare. Investing in social infrastructure can provide diversification benefits, a financial return and a positive social impact.
Creating a diversified real estate portfolio that brings multiple benefits
By investing across multiple residential housing types as well as social infrastructure our Real Estate Impact Fund offers the opportunity to be part of the solution to address inequality across the UK, while providing a real estate market return.
Social inequality doesn’t have a single root cause, but given how our lives are impacted by where we live, where and how we work and play and incorporating education and health outcomes into this equation, we believe focussing on multiple challenges within the one strategy can help to address the inherent inequality that exists in the UK.
Pipeline case study: Housing
– Acquisition of 38 new homes that will be converted to affordable homes in a town with poor housing affordability
– Partnership with a charity and registered provider, helping to move young people from homelessness back into society
– Long-term lease with rent reviews linked to increases in social rents to maintain affordability
– Target 8% IRR (ungeared) with a 5% net initial yield
Pipeline case study: Social infrastructure
– Forward-funding of two pre-let doctors’ surgeries in Northumbria
– Deliver 150% more space for NHS and capacity for new healthcare services
– 5,000 new homes currently have limited GP provision as existing surgeries are too small and inaccessible for those with accessibility problems
– Target 7% IRR with a 6% net initial yield
Contact us
Please get in touch if you would like to find out more.
Key Investment Risks
Real estate strategy: Real estate investment is subject to a variety of risks including general economic conditions, availability of and competition for relevant real estate assets, increases in property taxes, environmental risks, changes in laws (e.g. environmental and zoning) and changes in the financial condition of tenants, buyers and sellers of properties, all of which are beyond the control of Schroders Capital.
Pricing, liquidity and valuation: Investments in real estate are illiquid and more difficult to realise than other assets such as equities or bonds. In addition, valuations of real estate are subject to uncertainty and are a matter of an independent valuer’s opinion. As a result, the price at which an asset in the Fund is valued may not reflect the actual sale price of that asset.
Development risks: The Fund may invest in development assets which may be subject to risks including those relating to availability and timely receipt of planning and other regulatory approvals, the cost and timely completion of construction, general market and letting risk, and the availability of both construction and permanent financing on favourable terms.
Tenant risks: The distributions payable by the Fund are dependent on the income from the underlying property owned and are subject to the risk that tenants may default on their rental obligations.
Concentration risk: The Fund’s investments may be concentrated in a limited number of geographical regions, industry sectors, markets and/or individual positions Concentrated portfolios are more likely to experience large changes in value, both up and down, due to specific factors having an impact on a large proportion of assets.
Leverage risk: The Fund expects to use leverage including in the form of asset-level borrowing. Leverage can increase returns but, in the case of underperforming assets or a falling market, it can also result in large losses.
Impact risk: Factors outside of Schroders Capital’s control may mean that the Fund does not deliver the social impact that it seeks. In addition, where the Fund is able to deliver positive social impact, it may not always be possible accurately to measure the extent of this impact due to the evolving nature of impact measurement and the difficulties inherent in collecting relevant data.
Interest rate risk: The fund may lose value as a direct result of interest rate changes.
Market risk: The value of investments can go up and down and an investor may not get back the amount initially invested.
Operational risk: Operational processes, including those related to the safekeeping of assets may fail. This may result in losses to the fund.
Performance risk: Investment objectives express an intended result but there is no guarantee that such a result will be achieved. Depending on market conditions and the macroeconomic environment, investment objectives may become more difficult to achieve.
Sustainable investing risk: The fund applies sustainability criteria in its selection of investment. This investment focus may limit the fund’s exposure to companies, industries or sectors and the fund may forego investment opportunities that do not align with its sustainability criteria chosen by the investment manager. As investors may differ in their views of what constitutes sustainability, the fund may invest in companies that do not reflect the beliefs or values of any particular investor.
*The Fund applies the Sustainability Impact label under Sustainability Disclosure Regulation (SDR) and invests mainly in solutions to sustainability problems, with an aim to achieve a positive impact for people or the planet. Sustainable investment labels help investors find products that have a specific sustainability goal. For further information on SCREIF, please see the Prospectus available via your Schroders Capital contact. For further information on the SDR, please visit the FCA website available here.