Greater Manchester Pension Fund and South Yorkshire Pensions Authority have joined the London Borough of Newham as the latest Local Government Pension Schemes (LGPS) committing to Cheyne Capital’s Impact Real Estate strategy.

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. At the same time, the properties are always developed on a ‘tenure blind’ basis so that all tenants enjoy identical levels of specification and service.

Cheyne’s cross-subsidy approach allows for the Discounted Market Rent to be meaningful and removes the need for it to be increased at the full rate of inflation when the sources funding it may be increasing at sub-inflationary levels. The approach also enables properties to be developed to a high and sustainable standard and to be socially inclusive.

With lower expected void rates than the traditional Build-to-Rent (BTR) sector, as well as careful sourcing of investments to lower the entry basis and the ability to develop in-house to keep development profits captive for investors, the strategy is not considered to be concessionary from a financial perspective. The Good Economy reports on an annual basis on the social impact credentials of the strategy, and going forward will report on its place-based impact.

Stuart Fiertz, Co-Founder of Cheyne Capital and Head of Responsible Investment said, “We are delighted that 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. 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”.

Cllr Gerald Cooney, Chair, Greater Manchester Pension Fund, added: “Our Impact Portfolio seeks to invest locally and create a positive impact, alongside generating a commercial return. I am proud that the Greater Manchester Pension Fund is supporting Cheyne Impact Real Estate and its effort to provide affordable homes for key workers in Greater Manchester. 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. 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.”

George Graham, the Director of South Yorkshire Pensions Authority, concluded: “It’s a pleasure to have invested our members’ capital with Cheyne Impact Real Estate, helping to provide more affordable and specialist housing in the UK to those who need it the most in the current difficult economic climate. 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’s development in Manchester’s New Cross district (pictured) 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.