ANZ Bank, investment firms back $100 million social housing fund

Tuesday, 9 March 2021

The first tranche of units in a new 90-home community housing project developed by Ōtautahi Community Housing Trust in Christchurch are ready to open. (First published January 2021)

A major bank and investment firms have bought bonds in an affordable housing fund, which is more than halfway to reaching its $100 million goal.

The bond scheme, The Aotearoa Pledge, is being run by Community Finance which works to raise private and philanthropic capital for social and affordable housing built by community housing providers.

The pledge is its most ambitious plan yet, and investors include ANZ Bank, Waikato’s WEL Energy Trust, Generate KiwiSaver, Pathfinder Asset Management, Forsyth Barr and the Lindsay and Claire charitable foundations.

The Salvation Army's newest community housing developing in Westgate, West Auckland. (File photo)

Community housing providers have traditionally had significant government funding for their projects, but Community Finance was formed to end a dependency on changing government policy.

* Home ownership scheme announced in 2019 has housed just 12 families

* KiwiSaver money should be invested in providing rental housing

The Salvation Army opens its doors to a new housing estate in Royal Oak. (File photo)

A mix of philanthropic but increasingly corporate investors have bought bonds which give a return of between two and 2.5 per cent, giving providers such as the Salvation Army access to low-interest loans.

Community Finance said there is a pipeline of potential affordable home projects around the country that will benefit from the bond issue.

One of the organisation’s directors, economist Shamubeel Eaqub, said The Aotearoa Pledge directed the power of finance to the worsening housing crisis.

“The housing crisis is too big to be solved by philanthropic funds alone – when we can unleash the investments of ordinary New Zealanders to benefit the housing of New Zealanders, we can move the dial,” he said.

Economist Shamubeel Eaqub is on the board of Community Finance. (File photo)

Eaqub said Community Finance would be a more important but still small player in the spectrum of responses needed to address the housing shortage.

“Twenty-two thousand [people] are on the waiting list for Kāinga Ora – we can target those who are between social housing and the private rental market,” he said.

ANZ Bank described The Aotearoa Pledge as an innovative initiative.

“Providing access to affordable, liveable and sustainable housing is an important objective for ANZ, and enables other market participants to foster the market for community housing,” Dean Spicer, the head of sustainable finance, said.

Community Finance in 2020 raised $40 million in bonds to fund the Salvation Army’s build of 118 new homes in three locations.

Eaqub said there is no shortage of projects to invest in, and he expects the funding sector to grow with Community Finance being just one player.

He saw growth of investment from the Kiwisaver funds, with increasing interest in models such as purpose-built, build-to-rent projects.

One such fund manager, Pathfinder, is taking part in The Aotearoa Pledge bonds, and said it wants to be part of the solution to the shortage of affordable housing.

“KiwiSaver funds like Pathfinder’s are able to take a long-term investment horizon. If we can find the intersection of what is good for communities (and indeed our planet) as well as robust financial returns, then we have a great outcome,” chief executive John Berry said.

“We are all about good investment returns alongside positive environmental and social outcomes – the Aotearoa Pledge and the financing of new housing is totally a win/win for investors and communities.”