Social impact investing can generate inflation-beating, long-term returns while also performing social good.
This is the philosophy that drives property investment platform Assetz Exchange as it celebrates more than a year in business.
“Our primary objective is to provide stable, long-term property investments for our investors,” says Peter Read (pictured), managing director and co-founder of Assetz Exchange.
“We have found that property investments in the social housing sector enjoy these qualities whilst also having the advantage of providing a beneficial impact for vulnerable people in society.”
Assetz Exchange was launched in 2019 as a way to enable retail investors to create their own customised yet diversified property portfolios quickly and cheaply.
Income from property has long attracted investors, but rising costs, administrative fees and the end of some tax breaks has eaten into these returns. In the summer of 2020, Assetz Exchange spotted an opportunity to deliver better long-term returns than conventional buy-to-let, by investing in properties for use as social housing, which can be leased to charities on corporate leases over five to 10 years.
During the lease, the charity or housing associations are usually responsible for the majority of repairs, maintenance and insurance, which means that investor yields are not eroded through wear and tear. They also make good long-term partners, with leases often being renewed. In the event that a lease is terminated, investors can choose to sell the property in order to realise funds.
But for many investors, the added benefit is the ability to invest in projects which have a social purpose.
“If they can directly channel their money to something that does good at the same time as providing a return, then that’s a massive positive and a key factor in their decision to allocate funds to Assetz Exchange,” says Read.
To date, Assetz Exchange has seen the majority of its investors join due to word of mouth, but Read has noticed an increase in the number of investors who are actively seeking out socially conscious investments. However, he is adamant that the platform is not paying lip service to the environmental, social and governance trend.
“We are different from other social impact funds out there,” he says.
“There is full transparency with us and we are proud of the working relationships we build with the care providers. Investors can log on and see the full history of every one of our properties at any time and they know the social purpose of each property.”
This transparency is extremely important to the platform and Read believes that it sets Assetz Exchange apart from its competitors in this emerging space.
“People have realized that there are good returns to be made from supplying housing used for supported living, and there is a bit of a feeding frenzy going on at the moment,” he says.
“It’s attracting a lot of investment, but often on terms that are not sustainable for all the parties involved in the provision of good quality care. By contrast we provide housing to our charity partners on more flexible leases that puts them in a better place to accommodate changes to the care environment.”
Just under half of the properties on the Assetz Exchange platform are now tenanted by charities and registered providers that use them to deliver high-quality care to vulnerable people. These properties typically deliver net yields of approximately five per cent that are linked to inflation.
This proportion will continue to grow as word has spread in the care community about Assetz Exchange’s flexible approach. As a result, the company has a substantial pipeline of new properties for the final quarter of this year.