Real Assets Financial Performance Research Roundtable Session

1

Aliana Pineiro

OFN Conference

September 27, 2017

Real Assets Financial Performance Research

Roundtable Session

2

Today’s agenda

• Overview of the GIIN

• Real assets financial performance presentation

• Q & A

• Round table discussions

• Share discussion highlights

3

Global Impact Investing Network

ImpactBase• Profiles of 400+ funds investing across geographies, asset classes,

and impact themes• Free access to 2000+ accredited investors

IRIS & IMM• A taxonomy of 450+ social / environmental performance metrics• Incorporated into leading tools and frameworks, including GIIRS

and SROI

Membership• Investors’ Council: 54 impact investing leaders• Network Members: ~200 members

Training• Training for new fund managers, especially in emerging markets• Topics include: fundraising, fund economics, impact

measurement

Research• Practitioner-oriented research to fill market gaps• Focus on market studies, performance, and practice

5

Methodology

6

Data collection – financial performance

Data Sources

> 300 funds identified

129 funds targeted for

inclusion

55 funds

Data Collection Process

7

Data collection – impact objectives and metrics

• Basic impact related data collected from ImpactBase and fund

manager impact reports and websites

• Data includes impact objectives, impact measurement system,

third-party certification, and impact metrics tracked.

8

Sample Characteristics

9

Three sector benchmarks

Timber Real Estate Infrastructure

Number of

Funds18 20 17

Capitalization

USD million4,053 4,657 9,089

Sample

Impact

Objectives

• Sustainable Timber Management

• Land Conservation /Restoration

• Biodiversity Conservation

• Green Real Estate

• Affordable Housing

• Community Services

• Renewable Energy Generation

• Climate Change Mitigation

• Water Resource Management

As of June 30, 2016

10

Distribution of Fund IRRs Net to LPs by QuartileAs of June 30, 2016 Performance (%)

Notes: IRRs are in USD and are net of fees, expenses, and carried interest. Percentile rankings are based on a scale of 0 - 100 where 0 represents the highest value and 100 the lowest. Source: Cambridge Associates LLC | Copyright © 2017 by Cambridge Associates LLC. All rights reserved.

Financial Performance

-35

-25

-15

-5

5

15

25

35

Real EstateImpact Investing

Benchmark

Comparative RealEstate Universe

InfrastructureImpact Investing

Benchmark

InfrastructureBenchmark

(Non-Impact)

Private EquityEnergy

Benchmark

-35

-25

-15

-5

5

15

25

35

Timber ImpactInvesting

Benchmark

ComparativeTimber

Universe

n=18 n=24 n=20 n=618 n=17 n=60 n=162

Pooled net IRR

11

Real Estate Impact Investing Benchmark

12

Impact Objectives

16

11

8

54

0

2

4

6

8

10

12

14

16

18

Green real estate Affordable housing Energy efficiency Employmentgeneration

Community servicesfor residents

Real Estate Top Impact Objectivesn = 20; Funds may target more than one impact objective

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Impact Objectives and Metrics

Metrics for tracking progress toward impact objectives

Impact Objective Metrics used

Green real estateEnergy efficiency

• Gallons of water conserved• Watts of energy conserved• LEED certification• Watts of energy conserved• Energy Star certification

Affordable housing • Number of affordable units• Average income level of tenants

Employment generation • Number of jobs created

Community services for residents • Number of residents provided with social services

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Real Assets Impact Investing Benchmark & Comparative Universe Characteristics

Real Estate Benchmark n = 20; Capitalization USD 4,657 million

Comparative Universe n = 618; Capitalization USD 499,630 million

15%

35%

50%

32%37%

31%

0%

10%

20%

30%

40%

50%

60%

2004-2006 2007-2010 2011-2014

Fund count by Vintage Year

Impact Investing Benchmark Comparative Universe

15




30%

40%

30%

5% 6%

19%

70%

0%

20%

40%

60%

80%

<=50 50-100 100-250 250+

Fund Count by Size


16




60%

25%15%

77%

6%17%

0%

20%

40%

60%

80%

100%

Diversified Real Estate Residential Multi-Family Other

Sub-sector Focus


17

Distribution of Returns

0%

25%

10%

20%

5%

10%

30%

5%

10%11%

17%15%

20%22%

0%

8%

15%

23%

30%

38%

<-15% -15% to -5% -5% to 0% 0% to 5% 5% to 10% 10% to 15% >15%

Per

cen

t o

f Fu

nd

s b

y C

ou

nt

(n)

IRR Range


Comparative Real Estate Universe

Notes: IRRs are in USD and are net of fees, expenses, and carried interest. Source: Cambridge Associates LLC | Copyright © 2017 by Cambridge Associates LLC. All rights reserved.

As of June 30, 2016

18

Performance by Fund Size

10.2

3.9

-0.9

6.36.8

6.1

4.8

-2

0

2

4

6

8

10

12

<50 50-100 100-250 250+



Impact Funds (n) 6 0 8 6

Comparative Funds (n) 31 39 117 431


As of June 30, 2016 Pooled IRR (%)

19

Equal-Weighted Performance by Vintage Year


Comparative Funds (n) 196 230 192 618

-2.8

2.8

14.0

3.8

0.2

8.4

12.7

4.9

-5

0

5

10

15

2004-2006 2007-2010 2011-2014 Full Period



As of June 30, 2016 Equal-Weighted IRR (%)


20

InfrastructureImpact Investing Benchmark

21

Impact Objectives

16

4 4

2 2

0

2

4

6

8

10

12

14

16

18

Renewable energy Energy efficiency Water resourcesmanagement

Climate changemitigation

Employmentgeneration

Infrastructure Top Impact Objectivesn = 17; Funds may target more than one impact objective

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Impact Objectives and Metrics

Metrics for tracking progress toward impact objectives

Impact Objective Metrics used

Renewable energy • MW of renewable energy generated

Energy efficiency • Reduction of CO2 emissions

Water resources management • Cubic meters of water conserved• Acre feet of water replenished to aquifers

Climate change mitigation • Reduction of CO2 emissions

Employment generation • Number of jobs created

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Benchmark Characteristics

68%

16%

16%

Capitalization by Geographic Focus

U.S.

DevelopedMarkets ex U.S.

Emerging Markets

3

8

6

0

2

4

6

8

10

<100 100-500 >500

Fund Count by Size

5 5

7

0

2

4

6

8

2005-2007 2008-2010 2011-2014

Fund Count by Vintage year

24

Performance by Vintage Year


-9.7

5.5 6.2

0.3

5.6

8.6

10.5

6.65.6

0.6

2.73.8

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

2005-2007 2008-2010 2011-2014 Full Period

Infrastructure Impact Investing Benchmark

Infrastructure Benchmark (Non-Impact)

Private Equity Energy Benchmark

As of June 30, 2016 Pooled IRR (%)

Notes: IRRs are in USD and are net of fees, expenses, and carried interest. Source: Cambridge Associates LLC | Copyright © 2017 by Cambridge Associates LLC. All rights reserved. n

25

Performance by Fund Size

11.8

-1.9

0.9

5.3

8.3

6.5

11.2

2.8

3.9

-4

-2

0

2

4

6

8

10

12

14

<100 100-500 500+

Infrastructure Impact Investing Benchmark

Infrastructure Benchmark (Non-Impact)

Private Equity Energy Benchmark

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Key Findings

1 | Market rates of return are achievable in impact investing

2 | Fund selection is the key to success

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Q & A

28

Group Discussion

• How is this type of data helpful to you in your work? Would

benchmarks help in fundraising?

• What tools are available to the CDFI industry for evaluation of risk

and return? What additional resources or information do you

need?

• How could financial performance studies be used to help CDFI

funds improve investment strategy? Are there any major risks to

conducting these studies?

29

Thank you

Aliana [email protected]

https://thegiin.org/knowledge-center/

mailto:[email protected]

https://thegiin.org/knowledge-center/

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Criteria for inclusion

• Structured as private, fixed-term limited partnerships

• Invested with the intent of generating positive social and/or

environmental impact

• Investing in real assets

• Targeting market rate investment returns

• Vintage year 2014 or earlier

Real Assets Financial Performance Research Roundtable Session

Documents

Transcript of Real Assets Financial Performance Research Roundtable Session