The fund managers have launched a joint venture to invest €75m into the development of affordable and socially and environmentally sustainable housing in the Benelux region.
Real assets investment manager Patrizia has partnered with Revive Fund Management, a specialist in urban regeneration and brownfield development, on a €75m investment to convert depleted and obsolete office buildings into affordable multi-family homes in the Benelux region.
This latest investment is the third joint venture launched through Patrizia’s €300m Sustainable Communities fund, with previous allocations made in the UK and Ireland. It will focus on the redevelopment of office buildings, initially in Belgium, to address the lack of affordable housing for first-time buyers and key workers.
Speaking to Impact Investor, Patrizia’s Marleen Bekkers, manager of the fund, said: “Belgium is a country of house owners, where the rental market and the social housing market is quite small. Our aim, therefore, is to reposition old office buildings into residential buildings and individual apartments to be sold at an affordable price to people on lower to middle incomes. These include key workers and first-time buyers, struggling to get on the housing ladder.”
Bekkers said that residents should not have to spend more than 35% of their income on repaying their mortgages.
The first building redevelopment in the initiative is underway in Brussels, with a further three to four projects planned for the future.
“There are a lot of office buildings in Belgium that have been built into residential areas or areas that have become more residential over time, many of which stand empty. We would like to invest in the Netherlands in the future too but our current pipeline is confined to Brussels and maybe Antwerp.”
The Article 9 fund has an IRR target of 12%.
Energy efficiency and social impact
The fund has three main impact goals, which includes creating affordable and social housing, developing green buildings and advancing inclusion and connectivity.
“For all three topics we have identified clear KPIs and for every investment we make, there is a requirement to focus on all three of these goals,” said Bekkers.
She gave the example of inclusion and connectivity, where every development undertaken by the fund and its partners requires the creation of a community space, such as a day care centre or library, for use by its residents.
“Our aim is to create community spaces and run social programmes to make sure people are connected to their neighbourhood and feel supported,” she said.
To help with this task, Patrizia had developed a social value framework.
“Anytime we identify an asset, the framework allows us to first analyse the neighbourhood to better understand what people need and answer questions such as: Who are the groups in need? How can we best use our community space? What price level should the homes be sold at? Or, where can our budget for community programmes be spent to have the biggest impact for this group of people?”
To convert office space into homes, Bekkers said the buildings often had to be “completely stripped” and that for any project undertaken, they had to be confident the building could be redeveloped to meet an EPC A rating and a zero operational carbon footprint.
“If we don’t think they can meet that, then we won’t make an investment from the outset,” she said.
Affordable and social housing
The Patrizia fund’s earlier ventures include the development of social housing in and around Dublin through three investments in partnership with local housing associations, and a UK partnership with investment manager Man Group, focused on developing affordable single-family homes. To date, the two initiatives have delivered 790 homes in Ireland and 205 in the UK for lower-to-middle income residents. The fund is also considering a fourth investment in Dublin.
Bekkers said the fund plans to make a total of five investments and support up to 7,500 people into affordable and social housing, with two more joint ventures in the pipeline, including one in Spain and a fifth and final investment focusing on affordable housing in London.
