Published on 23/03/2021
KiwiSaver provider Simplicity has committed $20 million to a new initiative aiming to raise $100 million to address New Zealand’s housing shortage and help Kiwi families into new homes around the country.
Simplicity’s contribution is the largest to date and takes investment in The Aotearoa Pledge, which was established by impact investment platform Community Finance at the beginning of March, to $71 million.
Sam Stubbs, Simplicity MD, says KiwiSaver funds have a large-scale, long-term investment structure that is ideally suited to help build more homes on a mass scale for families and those in need.
“We believe safe, secure housing is a human right. We can get Kiwis into safe, secure homes, while making good returns for our members. Who wouldn’t want that?”
The Community Finance model enables investment in housing projects through Community Bonds, which are issued to provide finance to leading Community Housing Providers across New Zealand.
Simplicity’s investors will receive a financial return of between 2% pa and 2.50% pa.
“You can make money and do good,” says Stubbs. “Our members will make twice what they would in the bank, while helping get Kiwi families into homes across the country.”
Stubbs says KiwiSaver funds and organisations such as NZ Super, ACC, and iwi have collectively upwards of $150 billion to invest, making them key in the push to build more homes and tackling New Zealand’s housing crisis.
“KiwiSaver fund managers alone should have $200 billion by 2030. The capability to build warm, dry, quality homes at scale is easily affordable for these organisations. If they had just five per cent of their funds in rental housing, we could already have 15,000 extra homes for rent.”
The other companies and investors involved in The Aotearoa Pledge are ANZ Bank, Generate KiwiSaver Scheme, Pathfinder Asset Management, each committing $10 million, while Forsyth Barr, the Lindsay Foundation, Clare Foundation, and WEL Energy Trust contributed a combined $11m.
“The 250 or more homes that will be built using capital from The Aotearoa Pledge will be life-changing for the families who get to buy or rent them,” says Stubbs. “It’s wonderful to see KiwiSaver playing its part in getting Kiwi families into homes.”
James Palmer, Community Finance Chief Executive, says having Simplicity behind The Aotearoa Pledge will help to deliver more affordable homes for families and future generations of Kiwis who need them most.
“Simplicity and the other KiwiSaver funds who have committed to the Pledge recognise the benefit for both New Zealand as well as their members.
“One of the most important things we can do as a country is increase the supply of new affordable homes. We must all play our part. The Aotearoa Pledge is one way to increase new affordable housing supply through Community Housing Providers. Today we celebrate Simplicity stepping up and being a part of this solution.”
The capital raised through The Aotearoa Pledge will be used to build affordable homes throughout the country, with the first projects to be announced in the coming weeks.
Last year, Community Finance raised $40 million for the Salvation Army Community Bond to build 118 new homes in Royal Oak, Westgate, and Flat Bush.
Palmer says the Salvation Army Community Bond, which helped to house 150 adults and 59 children, highlights how its model can deliver on financing large-scale affordable housing developments.
“We hope to see others step up this year and join The Aotearoa Pledge to help bring transformational change for the community and those in need.”
The Aotearoa Pledge is officially endorsed by Mindful Money, Te Matapihi and Community Housing Aotearoa, the peak bodies for New Zealand Community Housing Providers.
How the Community Finance model works:
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.
Community Finance acts as an intermediary with loans secured and managed through securitisation to create a Community Bond. Community Finance typically charges less than 0.65% pa 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% pa and 2.50% pa.