The Specialist Disability Accommodation (SDA) sector is new and evolving. In five years, SDA has grown to be a $2.5 billion industry.
Fund managers, including Australian Unity, Macquarie and Lighthouse Infrastructure – all part of the SDA SDA Investor Think Tank – told Government Services Minister Linda Reynolds last Friday that major changes can realise the potential of SDA and turn it into a $12 billion social impact asset class, dwarfing sectors such as social impact bonds ($66 million) and impact private equity ($97 million).
“It’s the institutional phase of the market now,” Matt Tominc, the chief investment officer of impact investor Conscious Investment Management, told the Financial Review.
“It’s moved beyond early stage fund managers still refining their models. We’re now getting to the scale phase where there’s an opportunity to show how the market can work for the maximum impact.”
“What we’d say in terms of returns at the macro level, they’re slightly above residential property market rates,” Mr Tominc said.
The fund managers, who collectively have put $650 million into financing nearly 1000 places for NDIS participants, want a senior person in the NDIA responsible for engaging with the sector and regular quarterly statements analysing and anticipating the market. Otherwise investors will limit their exposure.
SDA investments focus on income, as the high level of modification required to many of the buildings mean capital returns are limited.
A survey of funds last year by the Not For Profit Summer Foundation found the estimated returns from SDA investors varied according to whether the funds were open to retail investors or only to institutional and sophisticated investors, the value of investment and length of investment, and the after-fee, pre-tax returns varied between 7 and 14%.