Community Finance raises $40 million for affordable homes

Community Finance gained the initial backing of Sir Stephen Tindall's foundation. Photo / NZ Herald

Community Finance, an investment platform launched last year, says it has successfully reached a $40 million investment target to build 118 affordable homes for New Zealand families.

The platform was established with capital from the Lindsay Foundation, the Tindall Foundation and Christian Savings, the Wilberforce Foundation and the Matua Foundation, to build homes for people in need.

The organisation provides finance at lower cost than banks to organisations such as The Salvation Army to address homelessness and New Zealand's ongoing housing crisis.

Community Finance's first projects started in December 2019 - 118 new homes in Royal Oak, Westgate and Flat Bush.

The $40m community bond, paying investors 2.30 per cent, successfully closed on Friday in what is understood to be the first of its kind in New Zealand.

There were 12 investors involved, including a $20m investment from Generate KiwiSaver.
Community Finance said it was New Zealand's largest "open impact" investment platform and $43m of loans were advanced already.

Economist and Community Finance director Shamubeel Eaqub said in a statement the bond delivered sound investment returns for a fixed-interest product, given it is backed by secure income from income-related rent subsidies, and comparable government bond yield is 0.05 per cent per annum and bank deposit rate of just over 1 per cent per annum.

Community Finance chief executive James Palmer said there was a need for collaboration to deal with the housing crisis.

"No one can solve this on their own, so it requires business, fund managers, charities and the Government to step up together," he said.

He said Generate KiwiSaver coming on board with its $20m investment was a tipping point for the fundraising.

"Reaching the $40m community bond milestone two months ahead of target, in what has been a challenging and uncertain year for everyone, is testament to the strength of the Community Finance model and its purpose of getting people well housed," he said.

With the Royal Oak and Westgate projects completed and Flat Bush well underway, the benefit was already being felt by more than 70 households.

Palmer said Community Finance was accelerating with community housing groups, Government, iwi, and local councils to launch new community bonds across the country.

He said Community Finance works with community housing providers to undertake financial modelling, social impact assessments and credit analysis and, if the project stacks up, the loan is approved.

The platform acts as an intermediary, with loans secured and managed through securitisation, to create a community bond.

Community Finance charges less than 1 per cent per annum to manage the investments, lending and impact reporting.

Investors receive regular reports on the direct social impact of their investment as well as a financial return of between 2 per cent pa and 2.50 per cent.

The Lindsay Foundation was set up by Sistema Founder Brendan Lindsay and his wife Jo.

The Tindall Foundation was co-founded by Sir Stephen Tindall, founder of The Warehouse.