Ingaramo L., Sabatino S.

English

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THE REAL ESTATE FUNDS FOR SOCIAL HOUSING: 
an insight into the Local Ethical Fund  
“FASP” in Piedmont
Arch. Luisa Ingaramo
arch. Stefania Sabatino 
1june 2011
MAIN QUESTIONS
What are at present the challenges to social housing providers?
How the fall out of the crisis is changing the finincing environment and 
traditional financing istitutions (i.e. public and private investors)?
What should financing vehicles be trying to accomplish?
Which social groups are suffering from housing stress?
The New Italian Housing Plan: a new coherent 
National framework
               
The Local Ethical Funds: a resourceful 
tool fitting the operators’ and households’ 
 
Expectations
The start up of the forthcoming Fund FASP in
MAIN 
QUESTIONS
                 
the local context of the Piedmont Region.
What are at present the challenges to social 
housing providers?
MAIN 
QUESTIONS
 Stability and Growth Pact, social inclusion, energy efficiency…
 From the “Bricks and mortar” public subsidies to the private investors 
commitment
 3rd sector expertise & the cost effective philosophy”
How the fall out of the cris is changing the finincing 
environment and traditional financing istitutions?
 Is 
    
 Risk aversion 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
Wh t h ld fi i hi l ba  s ou  nanc ng ve c es e 
trying to accomplish?
• Both Public and Private potential investors are 
looking for:
 Resilient investments (low risk, reliability, cost effectiveness)
 Trusting partnership
 New Central Regulation and more co-ordination with local programs
L l ti ( i l l j i t bli b di ) oca  co-opera ons commerc a  p ayers, ma or nves ors, pu c o es
 The 3rd sector expertise involvement
 Tax privileged treatment  
Early fallout of actions led by means of the 
advisory activity (demand supply analysis
ITALY – rents
NORTHERN ITALY rents
Evolution of housing rents and sales (average data)
Time series: 1996-2010 (at constant values)
  -  
  –
PIEDMONT REGION – rents
ITALIAN CORE CITIES (AVE. VALUE) - rents
TURIN CITY – rents
ITALY l i
     
ITALY – rents
NORTHERN ITALY – rents
PIEDMONT REGION – rents
 – sa e pr ces
NORTHERN ITALY – sale prices
PIEDMONT REGION – sale prices
ITALIAN CORE CITIES (AVE. VALUE) sale prices
TURIN CITY l i
ITALIAN CORE CITIES (AVE. VALUE) - rents
TURIN CITY – rents
ITALY – sale prices
NORTHERN ITALY – sale prices
  - sa e pr cesPIEDMONT REGION – sale prices
ITALIAN CORE CITIES (AVE. VALUE) sale prices
TURIN CITY - sale prices
In order to gather the sense of the FASP Fund and to address the right social 
housing interventions within the Piedmont Region, this paper offers an insight 
of the present housing stress in Piedmont (Northern Italy) and in its core city “Turin”              , 
with a particular deepening into rent and income levels, as well as into some 
demographic variables, especially for particular social groups, emerged through 
the recent phenomenon of fragmentation of the family unit .
Early fallout of actions led by means of the 
advisory activity (demand supply analysis
A diffused emergency, particularly evident in the core italian cities
  -  
Early fallout of actions led by means of the 
advisory activity (demand supply analysis
Household belonging to an intermediate-low income bracket (2° statistic
  -  
        
quintile, 26,000 - 50,000 €/year (Italian Social Sousing target): the singles and the 
elderly people are a particular target group especially in Piedmont
Italy
1 component
Piedmont Region             
(the local context further on analyzed with 
the local Fund FASP)
2 persons (>65years old, 
without children)
2 persons (1<65years old, 
without children) 
Other groups without 
children
2 adults and 2 
children
2 adults and 1 
children
Source: Prometeia elaborations on Istat data, 2010
Immigrants and Elderly People
Which social groups are suffering from housing 
stress?     
O
P
U
L
A
T
I
O
N
T
 
O
F
 
T
O
T
 
P
O
R
A
N
T
S
 
O
U
T
%
 
I
M
M
I
G
OVER 65 YEARS OLD, OUT OF THE TOT POPULATION
Source: Ismu elaborations on Istat data, 2010
Which social groups are suffering from housing 
stress?
% of divorced males (36 – 54 years old)
 
Source: Ismu elaborations on Istat data, 2010
Which social groups are suffering from housing 
stress?
120%
Request for apartments with 1‐2 rooms
[municipal data]
 
100%
38%
60%
80%
47%
20%
40%
0%
compravendita locazionesales rents
Source: SiTI elaborations on Fiaip data, 2010
The new Italian Housing Plan: a 
resourceful tool fitting the operators’     
expectations
• In 2008, the Italian Legislative Decree n. 122 “Piano Nazionale per
l’Edilizia Abitativa” introduced new flexible tools for public and private
investors to support an improvement of the existing housing stress
conditions.
• The program aims to increase the provision of residential units,
introduce higher energy standards in housing, and promote public and
private partnerships. With particular regards to the latter, article 1 “Six
lines of intervention” entails:
1. The creation of an integrated national system of real estate funds aimed at increasing
and valorizing the rental sector, promoting the creation of private-public delivering
partnerships;
2. The expansion of public housing stock, through central and local resources;
3. The promotion of private developers’ involvement;
4. Funding opportunities for real estate cooperatives;
5. The promotion of social housing interventions, so-called Programmi di promozione di
edilizia residenziale sociale; and
6. The development and completion of the interventions included in previous housing plans.
Regulatory 
Authority
Main Institutions 
(investors)
Implementation 
Vehicle
Assets strategy
Other 
Operative 
Subjects
Main Fiscal 
Incentives
Financial 
incentives
Expected 
profitability 
level
Average 
discount on free 
market rents 
Private and Public
Banca d'Italia 
(Italian Central 
Bank)            
CDPI                
&                    
Public ‐Private 
Subjects 
National Fund     
&                  
Local Ethical 
Funds
     
resources + other 
resources          
(land and 
buildings at a fair 
Local Public 
Subjects
Tax 
reductions &   
exemptions
Up to 40% 
equity 
invested by 
CDPI
2%‐5% 20%‐50%
price) 
Central
Integrated  Multi‐ Governance 
Coordination 
with the
Coordinatio
n with a
Ethical and 
Vulnerable 
Regulation
governance & 
competence
dimentional 
implementation
Resource mix support at a 
local scale
   
national 
Jurisdiction
     
trusting 
national 
low risk 
profile
 
groups targeted

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 
protected circ it of sa ings (40% on the tot portfolio) A note the CDPI u   v      .  :   
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-up 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:
Stefania Sabatino 
stefania.sabatino@polito.it


The real estate funds for social housing: an insight into the local ethical fund "FASP" in Piedmont

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