Adding Social Impact to Existing Real Estate Investment Strategies

A June webinar hosted by ULI Europe brought together a panel of real estate investment professionals to share views and best practices on the rise of social impact investing across Europe and North America.

As part of the launch of a new ULI report, Social Impact: Investing with Purpose to Protect and Enhance Returns, this webinar explored examples of how the social impact approaches recommended in the report can and are being integrated into investment strategies globally.

Social Impact: Investing with Purpose to Protect and Enhance Returns concludes that all real estate investment and development has the potential to deliver social impact. With relatively small adjustments to strategy, real estate can deliver market rate returns, while at the same time intentionally deliver social benefits that would not have otherwise occurred to underserved people, communities, and locations.

The report defines social impact investing within the spectrum of social value generation. Social impact investing strategies deliver a market rate return while simultaneously creating measurable social value benefits to underserved people and geographies.

Raymond Jacobs, managing director of Franklin Real Estate Advisors, shared “Delivering a market financial return is key to having the varied institutions that are on this call to become part of impact investing. Because while we all want to make the world a better place our first and foremost priorities are with our constituents and have that fiduciary share of delivering the target return, the financial returns that we have set.”

Glenn Pierce, principal and president of education initiatives, Turner Impact Capital, added that, “[Turner Impact Capital] [has] to support both the financial return requirements and the mission of our investors. You know the only way to get more money is to be a good custodian of the money that you first receive.”

A holistic and community-scale approach to delivering social impact investing is necessary for controlling the unique partnerships and elements of communities, said Lisette van Doorn, CEO of ULI Europe, “[i]t’s not just adding affordable housing here—it’s really thinking through what is needed here and what it can contribute.”

Jacobs said, “In many cases all of us on this call that are in real estate will have engagements with their tenants in general, but when you’re talking about social impact you go beyond that. You look at which other stakeholders are important in the communities.”

About Turner Impact Capital, Pierce said, “We think that this is our leading advantage in the work that we do. That we actually have a team in place that understands what the person on the other side of the table goes through on a daily, monthly, annual basis and then the challenges of running a school or a network of schools or an organization.”

Peirce said, “My hope for the future, as Lisette said, [is] that this is not a series of one-offs. That this is a very much plan of attack in uplifting communities and bringing all the resources of our organization and other organizations and the operators and government all to bear on the solution. I would hope that the crystal ball would suggest that large parts of large urban environments are changed over the next decade for the better.”

When speaking to the scope of the new report from ULI, Social Impact: Investing with Purpose to Protect and Enhance Returns, van Doorn said, “We deliberately left the E and the G out of this project because we wanted to dive deep into the S. But I think it is an integral part. You can’t achieve the E nor the G without the S and vice versa. Because I think we are looking a lot at the environmental side at the moment. And of course, if we need to make a whole energy transition getting to a zero-carbon economy, you need to address the social side too because not everyone has the same financial strength to make that transition. So you need to provide support there. And I think that is very important to make that just transition.

“I do think that in real life you need to address the E, the S, the G in an integrated way,” said van Doorn.

Jacobs said, “Now everyone is kind of bought into the social and environmental impact that we’re delivering. But in the beginning, it was, ‘This is a great diversifier and you’re delivering your financial returns, your dividends yield? Great, we’re going to join you.’ Over time the education has kicked in and everyone has become a believer.”

The webinar opened with a presentation by report author, Brenna O’Roarty, executive director of RHL Strategic Solutions, based on the findings in the new global report Social Impact: Investing with Purpose to Protect and Enhance Returns from ULI in partnership with DLA Piper.

This webinar was moderated by Mike Bedke, partner and location head Miami real estate practice, DLA Piper. A second webinar focused on the same topic brought together experts from Europe and Asia and is available on Knowledge Finder.