Innovative $2m investment boosts social housing projects

Thursday, 20 August 2020

The Salvation Army opens its doors to a new housing estate in Royal Oak.

The country’s biggest community trust has taken a new turn, providing $2 million of low-interest funding for three social housing developments.

Foundation North has dropped its normal criteria for what it calls a move into “impact investing”, where the social benefit becomes the main criteria.

The $2m will flow through the recently established Community Finance venture into three projects being built in Auckland by the Salvation Army, providing 118 homes for needy families.

Foundation North’s investment takes to $17.5m the low-interest funding which Community Finance has put into the three projects, in the form of a bond.

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The chief executive of Foundation North, Peter Tynan

“Impact investing is a second tier at a reduced rate of return, and that’s because of the impact you can create,” John Salter, the foundation’s chair, told Stuff.

“The positive impacts of safe, long-term housing are well documented, and families have been able to move into safe, warm, affordable and secure homes through this initiative,” said Slater.

James Palmer CEO of Community Finance with John McDougall of the Matua Charitable Trust on trust land at Bethlehem, Tauranga where a mixed housing development is planned of 100 homes.

Foundation North chief executive Peter Tynan said the move was new because it invested from the trust’s capital, whereas most of it normal support was in the form of grants.

Foundation North’s investment was part of a growing move by the community housing sector, to find philanthropical low-cost capital to build social houses, which were then financed by state-supported rents.

“Our vision is to raise affordable debt for those organisations with proven track records, who are paving the way for social and environmental change,” said James Palmer, chief executive of Community Finance.

Community Finance raises funding from philanthropically minded investors, happy with a low return to enable funding for social housing.

Another project which it is progressing is 100 homes at Bethlehem near Tauranga, on land owned by the property investing McDougall family’s Matua Charitable Trust, which is also putting in finance.

The homes will made available on a progressive-ownership model to low-income families and key workers’ families who will gradually buy an increasing share in their own home.

The project is the first for Community Finance involving a major benefactor.

In Auckland, the $2m will provide a five-year bond for three developments, the first of which the Salvation Army has opened in Royal Oak, with others at Westgate and Flatbush.

“The investment is a win-win for all parties,” said Greg Foster, the Salvation Army’s national director of social housing.

Foundation North was formed in 1988 with the proceeds of the sale of the community stake in the former Auckland Savings Bank, and holds more than $1.3 billion which generates grants of around $40m a year.