Patron Capital Partners, a private equity real estate fund, recently launched the world’s first ‘gender-lens’ property fund. Its managing partner, Keith Breslauer, explains why.
CV Keith Breslauer
- Managing partner Patron Capital Partners 1999-present
- Executive vice-president Lehman Brothers 1988-97
- BS Finance, International Business NYU Stern School of Business 1982-86
“If you come into our office there isn’t any fancy art here, right? There’s a guy’s fake leg, his prosthesis, that’s what we’ve got on the wall,” Breslauer told Impact Investor about a prosthesis adorning a wall in his London office, which was donated by a wounded veteran he helped to sporting triumph.
An upfront, straight-talking New Yorker, Breslauer has become a leading figure in the UK charity world since he moved to Britain in 1992 when he was working for Lehman Brothers. He is a major supporter of the Royal Marines Trust and chairs the Prince’s Teaching Institute.
He founded UK-based Patron Capital Partners in 1999, which has grown into a major player in private equity real estate, raising some €4.3bn, and undertaking more than 170 transactions. It is one of Europe’s biggest office investors.
Patron Capital traditionally targets ‘challenged’ or ‘distressed’ assets, but recently joined the fold of responsible investing with the launch of the Women in Safe Homes Fund [PDF] (WISH).
The fund, believed to be the world’s first ‘gender-lens’ property fund, is a new departure for Patron, which operates across Europe, with offices in London, Luxembourg and Barcelona and partnerships in Germany and France.
WISH provides a solution to the lack of affordable, safe and secure homes for women and their children in Britain, who are experiencing or are at risk of homelessness.
They may be survivors of domestic abuse, been involved with the criminal justice system, or struggle with other complex needs, such as mental health problems.
Breslauer’s move into impact investing might seem surprising at first sight. But its roots can be traced back to his youth in crime-ridden Jersey City.
While he “had very supportive parents who were proud, emotional, strong people…who gave back to their communities,” Breslauer said he “grew up in the (worst) part of Jersey City…in a drug-infested area. We didn’t have any money.”
Boarding school in Washington Heights was apparently not much better. Breslauer says his generation in New York was scarred by crack cocaine. His admission to NYU Stern School of Business put him on an escape path to Wall Street.
Combining private capital and government support
Patron says the WISH fund is “unique in combining private capital and government rental support to work with charities to provide long-term social solutions.”
It uses Patron’s real estate expertise to acquire thousands of residential properties which it then leases to charity partners under 10-year leases. These charities in turn rent the properties to clients who are supported by the UK housing benefits government subsidy.
WISH is set up as a 10-year fund with a targeted ungeared annual return of approximately 5% to 7% from rental income. Moderate levels of leverage may be considered once the portfolio is stabilised. The fund is open to institutional, pension fund and professional investors, both in the UK and internationally.
First close at £15.5mn
The WISH fund came about through Breslauer’s close relationship with Harvey McGrath, the Chair of Big Society Capital (BSC), a leading social impact-led investor in the UK.
Breslauer has worked that unique personal network of his to get the first investors. The fund’s first close was in December 2020 at £15.5mn. Breslauer says he has put £1mn of his own money into the fund. His long-term goal is to raise £100mn and to provide 650 homes for vulnerable women.
Social impact investing in the UK has seen strong growth in the past decade or so, increasing from £830mn in 2011 to £5.1bn in 2019, according to figures released by Big Society Capital last October.
Affordable housing priority post-Covid
The United Nations recently made clear that both affordable housing and domestic abuse should be major focuses for responsible investors in the post-Covid world. At the start of the coronavirus pandemic, the UN estimated [PDF] lockdowns were leading to a 20% increase in domestic violence, and this number has increased since then.
Affordable housing is an endemic problem in the UK. Before Covid, UK homeless charity Shelter estimated 280,000 people were living on the streets, with thousands more at risk.
Covid has not only exacerbated this problem but has added to it the issue of increased domestic abuse. One UK domestic abuse charity reported a 700% increase in website traffic in just one day of lockdown.
Half of the fee is directly linked to impact, Breslauer said. This is measured by various metrics including polling tenant satisfaction and measuring the length of stays.
“Charity simply isn’t enough”
Although Breslauer is a leading donor and trustee of a number of UK charities, he strongly believes that faced with domestic abuse issues and other housing problems brought about by Covid, “charity simply isn’t enough.”
That is why he has turned to responsible investing. Breslauer believes “impact investing is the only way to satisfy the needs of all stakeholders, from charities and their beneficiaries to institutional investors.”
He thinks there is an increasing need for more funds like WISH to “help tackle other social issues while also providing a decent return to organisations with significant funds to invest but who are obligated to…their members.”