The Proactive Realty Income Fund - Empowering Communities Through Impact-Driven Investment

Impact Summary

Sustainalytics has calculated the estimated social impact achieved by affordable housing projects within The Proactive Realty Income Fund’s footprint. Specifically, USD 29 million has been allocated to projects in Alabama, Illinois, Nevada, and South Carolina in the United States. Based on the number of individual housing units and beneficiaries financed, Sustainalytics has estimated total beneficiary savings at USD 4 million over a 12-month period.

Introduction

The Proactive Realty Income Fund (“PRIF” or “the Company”) 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 developments and developing manufactured housing for American communities. As of March 2024, PRIF has 8 employees, at least 15 contract employees, and a portfolio consisting of 115 manufactured housing pads. PRIF 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, PRIF engaged Sustainalytics to quantify the environmental benefits of the projects funded with the proceeds from the upcoming bond issuance. Using established methodologies, Sustainalytics estimated the monetary beneficiary savings from the affordable housing projects. This report presents the details of their 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, which will be published separately.

Scope of Work and Limitations

For this report, Sustainalytics relied on the data provided by PRIF regarding affordable housing developments, allocated amounts, rent, and additional housing data for the financed projects. The impact reporting is aligned with the International Capital Market Association’s June 2023 Harmonized Framework for Impact Reporting for Social Bonds. 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 Company’s management team to understand the sustainability impact of its projects. Through these exchanges, PRIF representatives confirmed that:

They understand it is PRIF’s sole responsibility to ensure that the information provided is complete, accurate, and up to date.
They have provided Sustainalytics with all relevant information.
Any material information provided 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 beneficiary savings, which refers to the savings from affordable rent compared to market rent. This metric is recommended for impact reporting in the Harmonized Framework for Impact Reporting for Social Bonds and the Global Impact Investing Network’s IRIS+ catalogue of metrics.

Affordable Housing:
Affordable housing is offered to a target group at a significantly lower price than comparable market-rate housing. It is assumed that, in the absence of affordable housing, residents would have to pay market rent. The difference between the two is considered beneficiary savings.

Affordable rent was determined using data provided by the issuer, where available. When detailed rent data was unavailable, eligibility criteria were used to estimate the highest rent considered affordable.
Market rent, the baseline for comparison, was sourced from credible regional statistics.

Data Sources and Assumptions

The rents charged by the affordable housing projects were provided by PRIF.
Market rent data was sourced at the city level from U.S. government databases. Based on this data, city- or zip code-level values were estimated according to the number of bedrooms in each home.
For estimating monthly housing costs for homeownership, a standard 30-year mortgage with an interest rate of 6.25% was used.
Utility costs for certain affordable homes were estimated from local sources and deducted from the baseline cost.

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