Impact Summary
Sustainalytics has calculated the estimated social impact achieved by affordable housing projects within The Proactive Realty Income Fund’s footprint, namely USD 29 million allocated to projects in Alabama, Illinois, Nevada and South Carolina in the United States. Using the number of individual housing units financed and the number of individuals financed, Sustainalytics has calculated the beneficiary savings at USD 4 million over a 12-month period.
Introduction
Proactive Realty Income Fund (“P IF” o “T Com ”) is a real estate equity fund established in August 2019 in Chicago, USA. The Company focuses on repositioning distressed real estate assets into affordable community development and developing manufactured housing for American communities. 1 As of March 2024, PRIF has 8 employees, at least 15 contract employees and a portfolio that consists of 115 manufactured housing pads. The Proactive Realty Income Fund intends to issue a sustainability bond under an upcoming sustainable finance framework to finance or refinance a portfolio of affordable housing units for underserved communities.
In May 2024, The Proactive Realty Income Fund engaged Sustainalytics to quantify the environmental benefits of the projects funded with the proceeds from the Company’ upcoming bond. Using established methodologies, Sustainalytics has estimated the monetary beneficiary savings from the affordable housing projects. This report presents the details of our findings, including a description of the methodology used to calculate the estimated impacts. The company also engaged Sustainalytics to provide a Second-Party Opinion of the upcoming bond framework. The Second-Party Opinion will be published separately.
Scope of Work and Limitations
For this report, Sustainalytics relied on the data provided by PRIF on the affordable housing developments, allocated amount, the rent and further housing data on the projects financed. u l ’ impact reporting is aligned with the I o l C l M k A o o ’ June 2023 Harmonised Framework for Impact Reporting for Social Bonds. 2 The methodology and assumptions made for the impact calculation are outlined in the methodology chapter. As part of this engagement, Sustainalytics exchanged information with the Com ’ management team to understand the sustainability impact of its project. Through these exchanges, Proactive Realty Income Fund’ representatives have confirmed that: (1) They understand it is the sole responsibility of PRIF to ensure that the information provided is complete, accurate and up to date;
(2) They have provided Sustainalytics with all relevant information;
(3) Any provided material information has been duly disclosed in a timely manner. Sustainalytics also reviewed relevant public documents and non-public information.
Methodology
Sustainalytics developed a methodology for quantifying the beneficiary savings or savings of affordable rent compared to market rent, specifically for affordable housing rentals. The metric beneficiary savings is recommended for impact reporting in the Harmonized Framework for Impact Reporting for Social Bonds5 and the Glob l Im I m N o k’ I I + catalogue of metrics. 6 Affordable Housing Affordable housing is offered to a target group at a significantly lower price than the housing of the same quality offered in the market. It is assumed that in the absence of affordable housing, dwellers would have needed to pay market rent for housing, and the difference between the two is the beneficiary savings.
a) The affordable cost of the project itself is built on data from the issuer to the extent available. Where no detailed rent data is available, affordable rent is estimated with eligibility criteria, where the highest rent that can be considered affordable is estimated.
b) The market cost, which constitutes the baseline for the estimate, is sourced from credible regional statistics. Data Sources and Assumptions
• The rents charged by the affordable housing projects was provided by the client.
• For estimating the market rent, city-level data was sourced from US government sources.7 Based on this data, city- or zip code-level values were estimated based on the number of bedrooms in each home.
• For estimating the monthly housing cost of house ownership, the monthly cost was estimated as the cost of a standard mortgage of 6.25% for 30 years. 8
• Some affordable homes include different types of utilities, and these have been estimated from local sources and deducted from the baseline cost
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