Schroders Capital has launched a new real estate impact investment fund that aims to deliver positive social impact outcomes across the UK.

The UK Real Estate Impact Fund will mainly invest to bring forward affordable homes, workplaces and mixed-use town centre repurposing projects, the company revealed at Bisnow's 2021 Women Leading Real Estate event.

The fund is aiming for a first close of approximately £150M by end of Q1 2023 and Schroders aims to scale the fund’s portfolio to about £1B within three years, assuming an average loan-to-value ratio of 20-30% and a maximum LTV of 40%.

The fund has the specific objective to address social deprivation and inequality as well as delivering a financial return.

In an outline of its impact investment strategy, Schroders said there are clear, measurable metrics to demonstrate both positive social impact in deprived areas and a target net return of 7%-8%.

Geographically, it will predominantly target areas defined as deprived by the UK government, Schroders said. The fund’s objectives are aligned with seven of the United Nations’ Sustainable Development Goals. It will aim to deliver solutions that address social challenges faced by a range of beneficiaries, including low-income families, community groups, social enterprises and small and medium-sized businesses.

Schroders said additionality is key, meaning it will invest in projects that would not otherwise happen.

Alongside social impact objectives, all assets will have environmental targets aligned with the Schroders real estate team's net-zero-carbon pathway.

“The Covid pandemic exposed and exacerbated the widening gap in social inequality,” Schroders Capital Global Head of Real Estate Sophie van Oosterom said.“ [The fund] offers institutional investors the opportunity to be part of the solution to help address regional inequality through investment in real estate assets in more deprived areas in the UK. The fund will invest to deliver positive, measurable social impact alongside attractive long-term financial returns.”