Community of Refuge Trust (Cort) CEO Peter Jeffries said ACC's $50 million investment in 100 homes was a huge boost to the community housing sector. Photo / Natalie Slade
Community of Refuge Trust (Cort) CEO Peter Jeffries said ACC's $50 million investment in 100 homes was a huge boost to the community housing sector. Photo / Natalie Slade
ACC has moved into a completely new area of investment, spending $50 million on community housing in Auckland.
It has partnered with housing group Community of Refuge Trust (Cort) to build 100 homes across the city.
It is the first time the corporation has used its $47 billion fund for residential housing. This new direction has been welcomed by non-government housing groups, which are crying out for funding which will help them to address chronic supply shortages.
"It's really important," said Cort CEO Peter Jeffries. "It's a big step when we're able to attract an investor which is the size and scale of ACC - and show that the community housing sector can operate in this space."
ACC is one of New Zealand's largest private infrastructure investors and has previously used its fund to back roading projects and prisons.
"The community housing sector has been pushing for a long time that housing has to be seen as infrastructure," Jeffries said.
"If you don't get that right, cities fail. And infrastructure is always an attractive area for large investment companies to be able to invest in, and particularly in this area of residential housing - it is a sector that they want to diversify across."
He said it was possible to provide a good return on the investment without compromising on Cort's support for low-income tenants.
"I think we can do both," Jeffries said. "There is no reason why we can't provide a commercial rate of return and I think that's what we're demonstrating what we're able to do."
Louise Marsden, from ACC Investments' Private Markets team, said the partnership appealed to ACC because it was a long-term investment with a relatively certain income stream. She said it was an example of how investments could improve the lives of New Zealanders and also deliver a sound financial return.
Marsden said the partnership would make no difference to the way Cort operated and would not affect tenants' costs. ACC had contracted Cort to provide the same services it was already delivering, and these were set at a minimum standards set out by Government contracts.
The "urgent" waitlist for social housing in New Zealand was 18,520 in June, up from 16,300 when New Zealand went into Covid-19 lockdown in March. Of the June total, 6600 households were in Auckland.
The Coalition Government has set a goal of building 14,400 state or public houses by 2024, and community housing organisations are expected to build 30 per cent of them.
To assist the housing organisations, the Government offers generous rental subsidies for 25 years. But they must first have the capital funding to start construction - which many of them have struggled to raise. As a result, their pipeline of housing has started to dry up.
That is why the ACC investment is such a boost to the sector.
Community Housing Aotearoa CEO Scott Figenshow said it sent a signal to other potential funders that community housing projects provided an opportunity to make a contribution to society - while also securing relatively secure financial returns over a long period.
"The past few decades have shown us that neither the state nor the market can fix this [housing] crisis alone," he said. "A sustainable solution needs both to be involved, and organisations such as Cort and other community housing providers can help make that happen effectively."
Marsden confirmed that ACC was looking for further opportunities in the sector: "It is certainly a model we would like to replicate."
Housing Minister Megan Woods announced plans to build an extra 8000 social houses in May, and community housing groups are expected to build a third of them. Photo / Mark Mitchell
The joint venture between ACC and Cort means a new company will be formed, with each organisation owning half of the shares. The company will build the developments, and CORT will lease the properties off it and take responsibility for the houses and tenants.
The 100 properties funded by the joint venture will be spread across the city in 10- to 20-unit blocks. Each of the developments, once underway, were expected to take between 18 months and two years to complete.
