New figures from TIME Investments (“TIME”), which specialises in asset-backed and income producing investments across infrastructure, real estate, renewable energy and lending, shows that Social Real Estate (SRE) investments, which comprise physical assets that accommodate or facilitate social activities or services, can deliver a significant multiple in societal value for every £1 invested1.
TIME:Social Long Income (the “Fund”) invests in a portfolio of social infrastructure including supported living accommodation (for those with a physical or learning disability), assisted living accommodation (for the elderly) and education facilities such as day-care nurseries. The Fund seeks to offer investors consistent income with underlying rental income linked to inflation, whilst creating a positive impact on society. Analysis of its assets by Social Profit Calculator (SPC)2 shows that its total portfolio value of £106 million returns a total social value of £694 million over a 25-year period, or a total Portfolio Asset Social Ratio Value of 6:1.
TIME also estimates that the SRE investment opportunity totals more than £50 billion in the UK because private capital is needed to support the delivery of SRE assets that cannot be met by over-stretched public finances and is significantly undersupplied.
For example, at least £8 billion is needed to meet the 45,000 units shortfall in specialised supported housing3, £6 billion to replace smaller care homes, £17 billion to replace existing GP practices considered unfit for purpose, while solutions for homelessness and day nursery shortfalls could each require more than £10 billion.
TIME:Social Long Income has continued to maintain an impressive performance against the IA UK Direct Property sector, outperforming all other funds in the sector over the three-year period to the end of June 2021, delivering a total return of 5.16% over 12 months and 14.49% over three years, demonstrating the resilience of the portfolio and the social infrastructure sector during these difficult times.
From an investor perspective, SRE assets such as those held in TIME:Social Long Income offer several key benefits:
▪ Typical lease terms of 15 to 30 years or more, offering longer-term security versus traditional commercial property leases elsewhere that are commonly below 10 years
▪ Tenants’ incomes are often supported by local or central Government, reducing counterparty risk and offering greater certainty of rental payment
▪ The nature of long leases means leases often have rent reviews that are linked to an inflation index such as CPI or RPI, providing cashflows that give some protection against inflation
▪ SRE sectors have positive, structural rather than cyclical, supply-demand dynamics and are less exposed to the short-term cyclical changes experienced by many other real estate sectors
Commenting on the outlook for the sector, Roger Skeldon, Fund Manager of TIME:Social Long Income said:
“A growing and ageing population in the UK means demand for SRE assets and the services they provide will rise significantly over the next ten years. The UK population is forecast to increase by c.3 million and reach c.70 million over the next decade4 placing further demand on assets and services that are already stretched. Additional high quality facilities are needed across the whole social real estate spectrum presenting a compelling investment opportunity, which TIME:Social Long Income seeks to take advantage of.
“With the ongoing COVID-19 pandemic, there remains significant uncertainty which is affecting the economic recovery but given the investment strategy and nature of the assets within TIME:Social Long Income, it is well placed to continue to deliver positive performance. Investors can enjoy the benefits of consistent income – something that is hard to come by in the current economic climate – and the knowledge that they are having a positive impact on society.”
The minimum investment for retail investors is £5,000. Investors are able to access the Fund through ISAs, SIPPs, SSASs and offshore bonds via income or accumulation shares.
The value of investments and the income from them may fall as well as rise as a result of fluctuations in market, currency or other factors and investors may not get back the original amount invested. Any past performance data cited is not a reliable indicator of future results.
(1) Asset Social Value Ratio is an illustrative figure. This differs from a standard Social Return on Investment Ratio, which would also include average operational costs of the asset. TIME Investments is not responsible for operational costs of the assets. As such, operational costs are beyond the boundaries of our analysis, and have been excluded from the calculations.
(2) Social Profit Calculator (SPC) help organisations to understand, create and calculate community benefit from your stakesholders and the wider community. TIME Investments
commissioned SPC to conduct a social value assessment of TIME:Social Long Income’s existing
portfolio of social infrastructure assets in March 2021.
(3) Source: Mencap – Funding Supported Housing For All, 2018
(4) Source: ONS – National Population Projections, 2018