[+] More than Profit: The Steady Rise of Sustainable Investment

“The interest in people and the planet has probably never been greater and it’s been building. As interest grows, capital flows.” So says Peter Johnston, the managing director of one of the fastest-growing sustainable infrastructure and real assets fund in the country. Lighthouse Infrastructure moved to the sustainable asset sector in 2007 and now has more than $700 million in assests under management across three funds—and is expanding to another property sector. Johnston heads the growing team at the firm that is looking to use capital to do good in the world and investor interest, not just the financial kind, is growing. “What you did for others is probably a better way to define your purpose in life than what you did for yourself,” Johnston says. “We came together as a group wanting to finance hard assets but assets that make good returns while having a positive impact and if it didn’t do that we weren’t interested. ▲ Peter Johnston, the managing director of Lighthouse Infrastructure. “We are at that stage of our careers where we can choose what we do, which is an extraordinary luxury. “Some of the stories we get are intoxicating, about the impact that we can change or have on people’s lives ... it’s really refreshing. “My children never cared when I closed a really big toll road deal. They want to know what I did yesterday now. “We’ve been able to take on two very senior advisors in the past few months because they believe in our purpose.” Former ISPT chief executive officer Daryl Browning recently joined the firm as well as Adrian Harrington, former chair of the the Federal Government’s National Housing Finance and Investment Corporation (NHFIC) and former chair of the Australian Housing and Urban Research Institute (AHURI). “The worship of the dollar has started to diminish and the validation is not the size of the house but how did you change people’s lives or the planet’s existence,” Johnston says. “We need to bring our investments there as well, so they’re our touchstones at the moment. ▲ Lighthouse Infrastructure is working on a $400-million capital raising to decarbonise the energy sector with its LEAF fund. “We’re working on other areas and housing looks like a really big challenge for the country. “You can just start to see people moving towards the sector. The money comes after the people, it never precedes.” Johnston said now is the time to decide what the market is going to look like, what the risks are and in what sector they belong to. He is looking abroad to Europe and the US at how things have shaped up there in the past 15 to 20 years for major fund managers. “Today, 15 to 20 per cent of their total allocation of capital sits in residential, so yes, they are in office towers and shopping malls, yes they own industrial parks but also [up to] 20 per cent of their allocation is residential,” he says. “Affordable housing is most likely, we think, to be a successful investment in that class and that’s what offshore investors are doing. ▲ SGCH is a community housing provider with 7000 homes across the Sydney region. “That’s what we see when we analyse the investment proposition in detail. “Where do the risks lie, they look like property risks, they don’t look like infrastructure risks. “The only way you can make it an infrastructure risk is if the government actually wraps all the risk and says, ‘I’ll take the risk away’ and everyone says, OK, now it’s infrastructure and we’ll take a highly secure income stream.” Lighthouse Infrastructure has invested in key worker accommodation in Westmead and Paramatta in western Sydney with SGCH Keys, a subsidiary of SGCH Group (St George Community Housing). Lighthouse has also provided funding to Home4Life through its Australian Disability Accomodation Projects Trust 2 to build 118 homes in NSW. The success of these investments bolster the case for institutional investors’ potential to make an impact on the housing crisis. “At the end of the day, we’re going to have human beings who are going to need to be housed and institutions will have to participate in it,” Johnston says. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] More than Profit: The Steady Rise of Sustainable Investment

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