CONTACT
Franklin Templeton
Saira Khan
+44 20 7073 8644
London, 25 September: Franklin Templeton1 today shares the Fifth Annual Impact Report of the Franklin Templeton Social Infrastructure Strategy (FTSIS). Managed by Franklin Real Asset Advisors (FRAA), the strategy which has a dual return approach, was the first of its kind to be offered by Franklin Templeton in Europe.
Since the strategy was launched in 2018, 40 investors from nine different countries have committed approximately €800m. Based on increasing societal need for private capital, Franklin Templeton was able to create new social infrastructure assets as well as improve and enhance existing properties for communities and cities across Europe.
Raymond Jacobs, Manging Director, Franklin Real Asset Advisors commented: “While the unique dual-return strategy of delivering a social and environmental impact alongside a market-level financial return was nouveau and seemed aspirational five years ago, it has proven to be a sound and sustainable way for private capital to support adequate social infrastructure across Europe. This has become even more evident in today’s new market environment of higher inflation, increased interest rates and geopolitical conflict. Owners of social infrastructure assets and the public sector that supports its funding are under pressure. Aligned long-term private capital, such as that provided by our strategy, has an opportunity to not only address the current funding gap for social infrastructure but to do so while potentially providing attractive financial returns.”
“By investing in the Franklin Templeton Social Infrastructure Strategy, investors have received an attractive financial return, gained access to a diversified, European real estate portfolio and at the same time supported the creation and improvement of much needed social infrastructure assets and services. We are proud of what we have accomplished over the past five years and look forward to even greater things ahead,” he added.
KEY TAKEAWAYS FROM THE FIFTH ANNUAL IMPACT REPORT:
Strategy highlights:
- 28 total investments (+2 from 2022), including 10 in healthcare (+1 in 2022); 7 in education (+1 in 2022)
- €719 million invested (an increase of 7.8% from 2022)
- 88.2% of the investments of the strategy are sustainable investments with a social objective, with the remaining 11.8% consisting of cash and other.
During 2023, the strategy completed social housing developments in Ireland and Spain, thereby delivering additional stock to the deeply undersupplied affordable housing sector in Europe. At the end of the year, the strategy also made its first investments in the new market environment with the purchase of an education asset and the exchange of contracts for a portfolio of health care assets, both in the U.K. As a result of these investments, the team is providing more university space, accredited healthcare beds, and more affordable housing units, all while continuing to lower the energy and carbon intensity of the portfolio.
John Levy, Director of Impact, Franklin Real Asset Advisors added: “The “tragedy of the commons” is a concept that describes a scenario where individuals, acting independently in their own self-interest, inadvertently deplete shared resources or underinvest in common goods, even when it’s clear that such actions are not in anyone’s long-term interest. For example, in the context of real estate, this manifests as overutilisation and degradation of shared resources like energy and water, leading to pressing issues such as climate change and water scarcity.
“Impact-minded investment in social infrastructure can be a powerful solution to this problem. By offering attractive financial returns through finance-first Impact investing, we can attract capital on a scale that materially augments other capital sources such as philanthropy and government capital. This influx of capital can then be directed towards providing space for the provision of quality social services while also leveraging market forces and burgeoning regulation that favour owners who improve the environmental performance of their buildings. This approach can align to the interests of multiple stakeholders. Investors achieve their financial objectives; residents enjoy higher quality, sustainable living spaces; and society at large benefits from quality healthcare and education, the preservation of shared resources and the mitigation of environmental impact.
“By focusing on impact and increasing the quantity and quality of social services in our portfolio, we are shifting the narrative around shared resources from one of competition and depletion to one of collaboration and sustainability.”
The UN’s 17 SDGs inform the strategy’s entire impact management system and process. Specifically, the strategy seeks to create measurable impact via seven of the SDGs, and the team also utilises SDG 17, Partnerships for the Goals, as a foundational SDG for its overall approach to achieving impactful outcomes.
The report includes several case studies highlighting the role of social infrastructure in contributing to the SDGs. The first case study focuses on the acquisition of a portfolio of care homes in the UK through a strategic partnership with a care home operator, who has stepped in to replace the previous failing operator. At the time of the acquisition, a significant 71% of the beds were either closed or had exposure to inadequate CQC (Care Quality Commission) rating. The care home operator’s proactive strategy is centred around enhancing quality rating and revitalizing all beds to reintroduce them to the market.
The second case study looks at an affordable and green student-housing complex in Italy and the third focuses on a healthcare asset that houses the largest private hospital in Denmark.
Franklin Real Asset Advisors has been investing since 1984 and started investing in social infrastructure in 2005. Clients include major institutional and retail investors around the world. The team provides global expertise in private real estate funds, including core, noncore, and impact-investing strategies.
With over $255 billion in alternative assets (as of 30 June 2024) Franklin Templeton’s growing and dedicated alternatives platform extends beyond traditional investment offerings. The firm’s autonomous specialist investment managers, each with deep domain expertise, provide a diverse range of alternative asset capabilities including private credit offerings from Benefit Street Partners and Alcentra, commercial real estate from Clarion Partners, social infrastructure from Franklin Real Assets Advisors, hedged strategies from K2 Advisors and secondary private equity and co-investments from Lexington Partners.
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For more information please visit: ftinstitutionalemea.com
Contacts:
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Saira Khan Senior Corporate Communications Manager Franklin Templeton Investments Cannon Place, 78 Cannon Street London EC4N 6HL Tel: +44 20 7073 8644 Email: [email protected] |
Dorine Johnson Head of Corporate Communications EMEA Franklin Templeton Investments Cannon Place, 78 Cannon Street London EC4N 6HL Tel: 0207 073 8538 Email: [email protected]
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This is a marketing communication.
Notes to Editors:
About Franklin Templeton
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization with subsidiaries operating as Franklin Templeton and serving clients in over 150 countries. Franklin Templeton’s mission is to help clients achieve better outcomes through investment management expertise, wealth management and technology solutions. Through its specialist investment managers, the company offers specialization on a global scale, bringing extensive capabilities in fixed income, equity, alternatives and multi-asset solutions. With more than 1,500 investment professionals, and offices in major financial markets around the world, the California-based company has over 75 years of investment experience and over $1.6 trillion in assets under management as of 31 August 2024. For more information, please visit www.ftinstitutionalemea.com
This press release is intended to be of general interest only and does not constitute professional advice. Franklin Templeton and its management groups have exercised professional care and diligence in the collection and processing of the information in this press release. Franklin Templeton makes no representations or warranties with respect to the accuracy of this document. Franklin Templeton shall not be liable to any user of this report or to any other person or entity for the inaccuracy of information contained in this press release or for any errors or omissions in its contents, regardless of the cause of such inaccuracy, error or omission.
Any research and analysis contained in this document has been procured by Franklin Templeton for its own purposes. For more information, UK investors should contact: Franklin Templeton, Cannon Place, 78 Cannon Street, London EC4N 6HL. United Kingdom. Phone: 0800 305 306, Email [email protected].
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