Milan-based manager COIMA SGR has launched a fund focused on social housing and student accommodation in Italy. The manager, which has €9 billion in assets under management, is looking to raise €400 million for the closed-end value-add COIMA Housing Fund, and is targeting a first close on approximately €300 million in Q2 2023.
The fund’s primary investor in the initial closing is COIMA ESG City Impact Fund, which is backed by Italian institutional investors and invests in building reuse and urban regeneration at the neighborhood level. CECIF, which was established in July 2020, had itself raised €521 million in commitments as of July 2022 and has a target size of €1 billion. Italian banking group Intesa Sanpaolo has also made an undisclosed commitment to the Housing Fund.
COIMA is targeting a minimum net IRR of 3 percent plus the expected inflation rate for the Housing Fund, PERE understands. This is in line with the objective set by the National Fund for Sustainable Housing, a three-year initiative launched by Italian sovereign wealth fund Cassa Depositi e Prestiti. The state fund put out a call for proposals in November 2022 to real estate fund managers specializing in social housing, with the goal of generating up to €1 billion in investment in social, student and senior housing.
COIMA expects to use limited leverage for the fund’s investments in the current market cycle, but retains the option to use leverage of up to 50 percent during its life.
Alongside the fund launch, COIMA announced a partnership with Consorzio Cooperative Lavoratori, a consortium of housing co-operatives in the Milan area. The collaboration aims to expand over time to create a national investment platform for social housing.
The first project for both the platform and the Housing Fund is the development of 320 homes as part of the wider regeneration of the Porta Romana railway yard in Milan, which will host athletes competing in the 2026 Winter Olympic Games. After the event, the partners will transform the Olympic Village into 1,700 beds’ worth of student accommodation. PERE understands that investments in Porta Romana are expected to represent between 30 and 50 percent of the fund’s equity, depending on the size of the vehicle at first close.
Overall, there are two student housing assets and three social housing assets in the fund’s investment pipeline – all of which are located in Milan. Rome is also a major target market for the fund.
The fund aims to deliver up to a quarter of Milan’s social housing need, which is estimated at around 40,000 homes. According to the OECD Affordable Housing Database, Italy has the highest overcrowding rate for low-income households of any country as of 2020, at a rate of 23 percent. Italy is also among the top five countries globally by share of low-income private tenants spending more than 40 percent of their income on rent, at 35 percent.