Big Society Capital Impact Report

Impact Report 2023 | Schroder BSC Social Impact Trust plc

Schroder BSC Social Impact Trust plc | Impact Report 2023

CASE STUDY: Man GPM Community Housing Fund, Campbell Wharf

LEARNING AND ENGAGEMENT IN High Impact Housing

Growth in social and affordable housing fund investments

Partnering with strong counterparties, ensuring transparency in a growing market The affordable and social housing sector in the UK is rapidly growing but remains characterised by structural undersupply. Housing impact market valued at £3.8bn in 2021 While good quality social property fund managers offer a strong investment and impact profile, the wider sector faces multiple challenges, including the need to upgrade poor-quality housing, and improve financing capacity and tenant management. Market volatility over the last year has also been exacerbated by some issues within social property REIT exposure to models that have not ensured adequate standards for tenants or investors. The Portfolio Manager’s focus on quality and its rigorous diligence processes has helped build a portfolio that has maintained full rent collection and no negative regulatory judgements to date. The resilience of housing provider counterparties and market transparency have proved particularly important to managing risk and delivering positive social impact. Ensuring transparency and accountability The portfolio manager uses a property impact dashboard to ensure it has sufficient information on all investments, enabling BSC to look through to frontline organisations and see individual properties. At market level, supporting growth of high-quality social housing investment is central to BSC’s mandate. We want to help others make informed investment decisions, that include a robust assessment of managers’ impact practices, as social and affordable housing becomes an increasing part of investor portfolios. In 2022 Big Society Capital published an extensive market mapping report to help institutional investors navigate this rapidly growing market. Mapping the Market: UK social and affordable housing funds

4,000 £m

Campbell Wharf is an affordable housing development in Milton Keynes, financed by SBSI investee Man GPM Community Housing Fund. The development provides key worker housing at 80% of the market rate as part of Man Group’s focus on affordable housing. There is a significant shortage of housing in the UK, with the Centre for Cities estimating a backlog of 4.3 million homes missing from the housing market. This shortage is pronounced in the lack of social housing, with the amount of social housing sold or demolished outnumbering the

number of social homes built. Key workers are at further risk, with an estimated 1 million children of key workers in the UK living in poverty 22 . The Fund’s investment in new housing stock addresses these concerns directly, with the benefit of a stable housing market strengthening the financial case for the investment. The Fund has also partnered with Homes England, the Government’s housing body, who provide grant funding to contribute to ensuring affordable maintenance of properties, and to implement an extensive, independent impact audit of the Fund annually.

3,500

3,000

2,500

2,000

1,500

1,000

500

£20m Fund investment in Campbell Wharf

MAN GPM Community Housing Fund

79 new affordable rent flats for lower income and key worker households made available in the year

2015 2016 2017 2018 2019 2020 2021

Transitional Supported Housing Specialist Supported Housing

General Needs Social and Affordable

Financial drivers and risk mitigation

Impact return and risk mitigation

SBSI

Mixed tenure homes well located in Milton Keynes

What: Affordable, inclusive new housing addressing local housing crisis W ho : Median income and below, including key worker households How Much: 79 affordable rent flats for lower income and key worker households Contribution: Increased supply of affordable homes, community spaces Risk: Alignment risk that investments are not sufficiently targeted towards underserved areas, mitigated by socialunderwriting of projects based on assessment of local need

Number of Counterparties

Counterparty indicators on a portfolio weighted average basis for funds/entities Age (proxy for experience) Number of staff (proxy for ability to provide sufficient support)

100% affordable rent, in an area of poor rental affordability of good quality of housing

27 years

Sweet Sp o t

The development benefits from Homes England grants supporting affordability and impact management

887

Net assets (proxy for financial resilience)

£49.8m

Net assets as a % of overall fund valuation (proxy for liability coverage)

Property in Fund leased to housing associations and councils with rental income indexed at CPI

>200%

22 1 in 5 key worker households have children living in poverty | TUC

User Voice

The Community Housing Fund is subject to an Annual Impact Audit currently conducted by Sheffield Hallam University. The audit assesses Fund performance in delivering new affordable homes in underserved areas and monitors tenant satisfaction. Key metrics include number of complaints raised by tenants, percentage of households satisfied with the quality of their accommodation, and how secure households feel in their tenancy

Campbell Wharf: video case study

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