More pension schemes join Cheyne’s RE Impact strategy

Cheyne Capital has secured two new commitments from Greater Manchester Pension Fund and South Yorkshire Pensions Authority for its Impact Real Estate strategy, the alternative investment manager announced yesterday.

An image of Cheyne Impact Real Estate’s development in Manchester’s New Cross district

The strategy aims to address the affordable housing crisis in the UK by providing affordable homes to lower income and key worker residents. The two local government pension schemes join the London Borough of Newham, which had already committed to Cheyne Capital’s strategy.

“Aiming to deliver a competitive risk adjusted return to ensure we meet future pension obligations, as well as delivering measurable and positive social change in the Greater Manchester area, Cheyne Impact Real Estate is providing a socially inclusive and place-based solution for economic growth in the region and beyond,” said Gerald Cooney, chair, Greater Manchester Pension Fund. “I look forward to seeing Cheyne Impact Real Estate scale up its efforts to build high quality housing for lower income residents and other specialist needs accommodation.”

Cheyne Impact Real Estate’s development in Manchester’s New Cross district will open its doors to residents later this month. This scheme contains 35% of homes reserved for local key workers at rents which are calculated to account for no more than 30% of the tenants’ net disposable income. With another two schemes due to complete this year, Cheyne is now working on similar projects in other regions of the UK.

“Cheyne Impact Real Estate is helping to provide more affordable and specialist housing in the UK to those who need it the most in the current difficult economic climate,” said George Graham, director, South Yorkshire Pensions Authority. “As an Authority we are committed to place-based impact investing and using our power as an investor, we can help and provide more homes in South Yorkshire and across the UK, while making the returns we need to pay our members’ pensions.”

Cheyne Impact Real Estate specialises in building high quality housing both for general needs and specialist purposes. Within its projects, a significant proportion of the homes are made available to lower-income and key worker residents at significant discounts and all homes have capped rental increases to offer longer-term certainty for residents.

The affordable homes are provided on a voluntary basis, above and beyond any mandated affordable housing requirement, and without the use of government grant funding. The properties are developed on a “tenure blind” basis, so that all tenants enjoy identical levels of specification and service.

The group’s cross-subsidy approach means the discounted market rent does not have to be increased at the full rate of inflation, and it allows properties to be developed to a high sustainable standard and to be socially inclusive. The Good Economy, specialists in verification, will report on the social and place-based impact credentials of the strategy on an annual basis.

“The solution we are offering both to tenants and to investors has resonated with Greater Manchester Pension Fund and South Yorkshire Pensions Authority, as well as with the London Borough of Newham,” said Stuart Fiertz, co-founder and head of responsible investment, Cheyne Capital. “Thanks to their support, we will now be able to expand our portfolio elsewhere in the UK and we are excited at the prospect of announcing some of the future projects in our pipeline.”

Cheyne Capital, which was founded in 2000, launched its first Social Property Impact Fund in 2014 and its Impact Real Estate Trust in April 2020.