Positive Capital says it has been joined by investment firm Alvarium and KiwiSaver provider Pathfinder to build $200 million of new public housing through a shared equity programme.
The company said it had developed an equity programme for registered community housing providers involving Positive Property investing 50 per cent of the purchase price as equity, its associated Community Finance lending 40 per cent as debt.
By contributing 90 per cent of the upfront cost of each home, the community housing providers can meet this growing need at a significantly increased scale.
The $200m could go towards building up to 400 new public houses, Positive Capital said.
The programme enabled new homes to be built now, while focusing on growing the balance sheets of leading charities in the long term, it said.
It involves the community housing provider owning a half share of each property and Positive Property owning the other 50 per cent from day one.
During the term of the programme, the community housing provider pays down its 40 per cent debt and then has a first right to purchase the remaining half share from Positive Property.
Community housing providers are funded by long-term agreements with Te Tūāpapa Kura Kāinga –the Ministry of Housing and Urban Development.
Positive Capital was established earlier this year by James Palmer, after founding Community Finance 2019.
Sistema founder Brendan Lindsay, sons of philanthropist and entrepreneur the late Sir Eion Edgar, as well as economist and housing expert Shamubeel Eaqub are also involved.
In addition to committing to invest in Positive Property, Pathfinder is one of the key investors in Community Finance's Aotearoa Pledge, which has raised $71m investment commitments this year to tackle New Zealand's housing shortage.
Palmer said the combination of equity from Positive Property, debt through Community Finance and social services from the community housing providers, all underpinned by long-term Government funding, would drive new public housing supply.
"We set up Positive Property to work alongside and support the Government's significant investment in public housing, with the shared goal of providing more affordable homes to those most in need, while delivering both market and social returns to investors, at scale," he said in a statement.
Positive Capital provides investments for wholesale investors, which focus on partnering with community housing providers, leading developers and builders and investors.
Investors co-own community housing through Positive Property in partnership with leading housing charities.
Investors receive quarterly payments from the net rental income, share in capital gains and the rent received is inflation adjusted annually for the length of the services agreement.
Community Finance was launched in 2019 and currently has advanced loans of more than $90m.
(This article was originally published by NzHerald November 29, 2021)