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Patrizia Group launches closed-end fund structure for social impact strategy

The subsidiary of the Augsburg-based manager is targeting an initial €500m for an affordable residential-focused strategy. In a departure from many social impact vehicles, the firm is raising the capital via a limited life vehicle.

Patrizia Global Partners, a subsidiary of the Augsburg, Germany-based manager, is taking a less trodden path in terms of investment vehicle for a social impact strategy.

Patrizia, which has more than €50 billion in assets under management, has launched an affordable, sustainable housing-focused fund, PATRIZIA Sustainable Communities, using a closed-end fund structure.

The firm is targeting €500 million from investors for the vehicle and has set a hard-cap of €600 million, according to Marleen Bikker-Bekkers, the fund’s manager. A final close is anticipated by the end of the year.

Bikker-Bekkers: the structure of the vehicle allows Patrizia to focus on creating the assets needed

Initial commitments have been made by Danish pension investors AP Pension and PKA. Further capital is expected to come from other European investors as well as investors from Asia. US capital is not anticipated given where the fund is registered.

Patrizia has opted for a closed-end fund structure because it is looking to develop new and reposition old properties with a view to exiting them. This is a notable departure from many affordable housing-focused vehicles, which typically build to retain and provide income to their investors and so are open-ended in structure. Patrizia Sustainable Communities is expected to run for 12 years.

Bikker-Bekkers told affiliate title PERE: “The intention here is to gather a group of investors together, do these projects and then see if we can do the same thing again. The impact really comes from creating the product where communities are underserved.”

In terms of risk and return, the fund carries a core-plus profile and is expected to generate returns of 10 percent a year.

Patrizia is targeting residential assets in 25 Western European cities for the fund’s investments, with 60 percent of the money expected to be deployed in housing and the remainder into community-centric assets like libraries, day-care and community centres. One investment has already been made in a mixed-use development in Dublin.

Patrizia will measure impact through seven key performance indicators it has developed in-house. One measure will the ratio of affordable housing and social housing. In many projects, the firm will be looking to out-build the region’s affordable and social housing quotas.

“We’re trying to do 30 percent in social housing in our Dublin project, while the regulation says you need to do 10 percent,” Bikker-Bekkers said, pointing at the first deal for the fund. “We’re pushing to do more and doing what’s needed.”