Ingaramo L., Sabatino S.

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THE ITALIAN BANKING FOUNDATION 
COMMITMENT IN SOCIAL HOUSING
Affordable finance for affordable housing by      
means of Real Estate Funds  
arch. Luisa Ingaramo
Project Manager 
SiTI – SisTer
presented by 
arch. Stefania Sabatino 
MAIN QUESTIONS
What are the challenges to 
social housing providers following the economic crisis of 2008/2009?
How will the fall out of the crisis change the finincing environment 
and traditional financing istitutions?
What are the challenges to 
social housing providers following the economic crisis of 2008/2009?
How will the fall out of the crisis change the finincing environment 
and traditional financing istitutions?
Wh t h l d?a  ave we earne
How can we adapt our business 
models to be more resilient in the future?
What should financing vehicles be trying to accomplish?
       
fThe Local Funds: a resource ul 
tool fitting the operators’ expectations
What are the challenges to 
i l h i id f ll i thsoc a  ous ng prov ers o ow ng e 
economic crisis of 2008/2009?
 From the “Bricks and mortar” subsidies to the “3rd sector expertise & the 
cost effective philosophy” 
St bilit d G th P t S i l I l i E ffi i a y an  row  ac , oc a  nc us on, nergy e c ency…
How will the fall out of the crisis change 
the finincing environment and traditional 
financing istitutions?
 Decreasing trust feeling of private investors (commercial players)
 Qualified investors avoiding free grants (Banking Foundations…)      
 Restrains in public investments, grants, etc.. (Central Gov.)
 Hit the Real Estate Economy, didn't cut dwelling costs and housing 
discomfort
What have we learned?
• Inadequate supply of houses on the rental market
 A strictly private market (80% private ownership) – rents submerged in 
the black market
 The Public Building Trade is frozen (since ’80s) due to central Gov. 
policies
 Lack of available and fitting residential stock (for young, old people, 
students)
• The decreasing wealth on the demand side 
 Mid-class “new families” (changes in families structure)      
 quite stable incomes +10% per family (since ‘95)
 Strong speed up in rents and prices +110% in metropolitan areas (s. ‘95)
 A cluster discarded by the Governmental traditional deals
Wh t h ld fi i hi l ba  s ou  nanc ng ve c es e 
trying to accomplish?
• Both Public and Private players are looking for:
 Resilient investments (low risk, reliability, cost effectiveness)
 Trusting partnership
 New Central Regulation and more co-ordination with local programs
 Local co-operations (commercial players, major investors, Public Bodies)
 The 3rd sector expertise involvement   
 Tax privileged treatment
How can we adapt our business 
models to be more resilient in the future?
The Italian turning issue: development of 
Housing Finance 
• By 2009 a new Government Decree enabled a new coherent 
framework for social housing investments:    
 An integrated system of Real Estate Funds (SIF): 1 billion €
 Æ direct investment in Social Housing initiatives (10%)
 Æ promotion and investment in Local Funds (up to 40% of each)
• First operative stages: the role played by Banking 
Foundation
 The Company CDP-Investment (Deposits and Loan Bank), shared by the Italian 
Banking Foundation Association (ACRI) and the Italian Banking Association (ABI) 
become the Investment Management Company (in Italy: SGR)
Th L l F d f le oca  un s: a resource u  
tool fitting the operators’ expectations
• Flexible, Granted, Controlled & in Partnership…
M i S bj t d l• a n u ec s an  proper ro e
 LOCAL PUBLIC BODIES (Municipalities) providing areas and buildings at 
affordable price or just in leasehold; ,     
 MAJOR PUBLIC AUTHORITIES (Regions) investing equity through local 
social housing programs;
 MAJOR PRIVATE INVESTORS (Banking Foundations, Insurance 
Companies) whose involvement is a key driver to collect equity;
 NO PROFIT ORGANISATIONS whose experience in social issues        
management and tenants discomfort it’s extremely useful;
 The National Bank “Banca d’Italia”  to which the Funds Regulation 
A l i b dpprova  s oun .
The Local Funds: a resourceful
• Low risk and cost effective
     
tool fitting the operators’ expectations
    …
• Main Features and Mechanism
 Profitability goal: 2% over the inflation rate
 Local Technical Advisor: continuous support within the projects and 
the involved partners, being acquainted on the local issues and          
expected goals
 Tax treatment of Real Estate Funds: income tax exempted, and other 
i il d diti 20% d d ti fi lpr v ege  con ons,  e uc on on na  revenues.
 Debt and leverage
Æup to 60% of the Real Estate portfolio and up to 20% of the other               
investments
 The CDP-Investment commitment, enabling to collect equity from a 
t t d i it f i (40% th t t tf li ) A t th CDPIpro ec e  c rcu  o  sav ngs  on e o  por o o .  no e: e  
profitability expectation is around 3%-4% over the inflation rate
The Local Funds in Italy:
Case record of the existing Regional
Fund in Lombardia 
I L   P R I M O   F O N D O   I M M O B I L I A R E    E T I C O D E D I C A T O   A L L ’ E D I L I Z I A   S O C I A L ESource:
Milan – in progress Crema – to be finished in 2011 
The first Regional Fund in Piedmont:
FASP 
Fondo Abitare Sostenibile in Piemonte
• Land cover: Piedmont Region
• Investors’ target: Closed for qualified Investors
105 MUNICIPALITIES
CONTACTED
37 MUNICIPALITIES
INTERESTED IN
  ,   
SCOUTING IN
PROGRESS
?
FASP 
Fondo Abitare Sostenibile in Piemonte
• Subscribers (tot  portfolio=85 millions €)
 9 Local Banking FoundationsÆ 45 millions € investment      
 Piedmont Region
 CDPI – the national Deposit and Loans Bank
• Duration: 30 years
• Equity (60-70%); Debt (30-40%)  
• Local IMCo: Polaris Sgr (selected by ITB)
T h i l Ad i• ec n ca  v sors
 FHS-Fondazione Housing Sociale (MilanÆ Expertise on 
Management)
 SisTer.srl (TurinÆ Expertise on local issues and Real Estate Market)
FASP 
Fondo Abitare Sostenibile in Piemonte
• Design: eco-sustainability, energy efficiency
• Target: families or singles facing dwelling discomfort 
• Contracts: permanent rents (3+2 or 6+2 years)      
• Social mix: 3 income levels
• Rent Levels: -25%; -30% compared to the market
• Presence of non residential activities
• Exit Strategy: final sale (at a revalued cost; pre-
emption right for Public Local Bodies)     
FASP 
Fondo Abitare Sostenibile in Piemonte
• Threats elements
 Development costs (area, buildings and start up)
 Urban, social quality
 Fair balance between offered rents and local Real Estate market
 Real Estate mix, both in lease/sale and in residences/services
 Rent levels mix
 Additional free grants where necessary  ,  
 Use of revolving funds, thanks to the tenants’ equity
• Profitability levels distinction (depending on the Investor)
• Key tool: the feasibility control by means of an 
Economic-Financial Model. It is a shared tool       
between the partners 
FASP 
Fondo Abitare Sostenibile in Piemonte
• The setting of an EFM by the Technical adivisor 
to demonstrate the Fund finance affordability     
 It is a model developed for the FASP Fund, requested by the Compagnia di 
San Paolo to assess the future incoming cash-flows and to compare the            
different profitability and sustainability profiles. It depends on: 
Æ design choices
Æ financial structure
Æ promoter & investor type
Æ management
 It works through hypothesis (parameters, depreciations, inflations,               
Gross profit margin, taxes, financial management and exit strategy variables)
 The outcomes concern financial ratios and results.
Thank you for your kind 
tt tia en on
For any question please contact:
Luisa Ingaramo
luisa ingaramo@polito it. .
Stefania Sabatino 
stefania.sabatino@polito.it


The Italian Banking Foundations committment in social housing

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