Property
There are opportunities for charities to invest in property whilst taking environmental, social and community issues into account. It is possible to invest directly or through a pooled investment fund. Property investment can fit well with a positive screening or engagement approach.
In this section:
What is property investment?
Responsible Investment issues
How Responsible Investment operates
Examples
What is property investment?
Property suitable for investment by charities is usually commercial property. This can either be bought directly or through investing in a pooled property fund.
Most property investing involves buying already built commercial property and renting it out, but it can also entail investing in a property development for future sale.
Responsible Investment issues
There are environmental, social and community aspects of property that you may wish to consider.
Environmental issues
These mainly relate to issues such as: energy efficiency, climate control, waste management, water consumption and pollution.
Social and community issues
These include
- accessibility
- regeneration
- the location of developments – building on greenfield or brownfield sites
- the use a building will be put to – avoiding investments in buildings where the tenant is involved in activities which contradict the work of the charity or potentially risk the charity’s reputation
- the construction process - the sourcing of materials and the use of local labour
How Responsible Investment operates
A property investor has obligations both for the property and towards the tenants.
In relation to the tenant the scope for Responsible Investment could include screening out certain types of tenants (although few funds offer this) or helping tenants to make their operations more environmentally and socially sustainable.
Engagement
If your charity invests directly in property you are likely to be much closer to the impact of your investment than with equity investment. Engagement can be hard hitting: in a new development, you may be able to influence how it is designed and built. As you are likely to be dealing with a handful of companies, you can also have a deeper engagement with property developers and builders (as opposed to engaging as part of an equity portfolio with a large number of holdings).
Positive screening
Your charity could specifically invest in environmentally sustainable new buildings through the development process and in existing buildings where energy usage and emissions are controlled.
Examples
The investment options for charities are varied with different types of funds and approaches being applied. A selection of examples is given below:
The COIF Charities Property Fund is a Common Investment Fund which generally avoids purchasing properties with occupational leases where the main activity of the tenants contravenes the guidelines of the COIF Charity Funds’ approach to Responsible Investment.
The Ethical Property Company buys properties in areas of social exclusion and develops them as centres for charities and other not-for-profit organisations. Investors can purchase shares in the Company which, once issued, can be traded on a matched bargain market.
Hermes Property Asset Management has environmental and Socially Responsible Investment policies.
The Igloo Regeneration Partnership describes itself as investing in mixed-use urban regeneration projects in major towns and cities in the UK that are environmentally sustainable. Its projects vary between new developments on brownfield land and refurbishment of existing buildings.
Investing in REITs (Real Estate Investment Trusts) and listed property companies with strong social and environmental performance (usually considered as equity investment) may also interest some charities.
Disclaimer
The featured products have been selected as examples only. The inclusion of a particular fund does not imply an endorsement of it. Moreover, the use of an example does not imply a recommendation of it over any other example or further example used or of any product not listed.
