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Nightingale 1.0 – urban housing with long-term sustainable benefits

Urban housing with long-term sustainable benefits

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Photos courtesy of http://klongersklongers.squarespace.com/blog/

Highlights 

  • Nightingale Housing was established to support, promote and advocate for housing fostering environmental and social sustainability and strengthening communities.
  • Nightingale 1.0 on Florence Street, in Brunswick, VIC, came to SEFA for a construction loan for its first pilot project, to complete a multi-residential development that was innovative by design and the way it would deliver and finance housing.
  • SEFA acted as the originator and agent of a $6.15m senior debt syndicate from the impact investment sector. The syndicate was made up of Social Ventures Australia (SVA), Christian Super, the Hantomeli Foundation and the McKinnon Family Foundation.
  • SEFA was able to lead the syndicate with a $2.3m commitment on the back of a $4m facility made available by NAB’s Social Innovation Team.
  • The Syndicate offered a loan facility to a new development model without the traditional balance sheet. Nightingale 1.0 had the strength of committed ethical equity investors willing to accept a capped return to drive affordability and was able to attract a waitlist of committed buyers to demonstrate 100% pre-sales through a structured balloting process prior to construction start.
  • The professional Nightingale 1.0 project team, led by development managers Hip v Hype and Breathe Architecture, worked with a value-aligned builder to build a beautiful new home in partnership with the 20 purchasers.
  • The development came in under budget, and $110,000 of contingency funds were refunded back to the purchasers of all 20 of the units.

Key Impacts

  • 20 residential units were built for mostly first home buyers. These were sold at up to 15% or $100,000 less than comparable current market rates in the area.
  • Of two commercial units in the development, one has been leased to Home.One and Nightingale Housing, both social enterprises. Nighingale 1.0 empowered buyers with the choice to collectively decide to sell other commercial unit and reduce their own purchase prices, which they did.
  • Affordability of residential units is protected long-term through an onselling caveat in line with general housing price increases to reduce the impact of speculative investor purchases.
  • This is the first 100% fossil-fuel-free residential building in Australia – Nightingale 1.0 recently won the Victorian Premier’s Sustainability award for the Built Environment for the building.
  • Embedded utility networks and solar installation as well as thermal efficient design reduce ongoing energy costs to 70% below that of traditional higher-density housing, achieving a minimum 7.5 rating on the Nationwide House Energy Rating Scheme (NatHERS).
  • The development provides the platform for an activated community with shared facilities and a neighbourhood pocket garden. Nightingale’s welcoming living environment has proven to be particularly attractive to single, elderly women and has also encouraged introvert residents to engage with their neighbours.

What SEFA says

‘The Nightingale Housing concept is a truly unique movement in Australia that adopts best practice s from overseas to the Australian context. SEFA has worked with the team since creating the senior debt syndicate for the first pilot project in Brunswick, Nightingale on Florence Street. For the second Nightingale project in Fairfield, we have provided a mezzanine finance syndicate to partner with NAB as the senior debt provider. We believe in Nightingale’s ability to scale rapidly and to have a material impact on the entire housing sector in this country. SEFA is excited to be part of this journey, with the Nightingale Village in Brunswick being the next significant stepping stone.’
Hanna Ebeling, Head of Portfolio Management, SEFA Ltd

What Nightingale 1.0  says

‘Nightingale is about a triple bottom line approach to housing. It’s about community, sustainability and affordability. Everything we have tried to deliver has been viewed through this lens. We cared where we sourced our recycled bricks and reclaimed timbers from, we cared who our power was coming from and what their commitment to renewables were so, of course, when it came to finance we cared where the money came from. We sought out a lending partner that had similar values to our own, a lender that cared about community, that cared about sustainability and that cared about how their investment should support positive change. After meeting with SEFA for the first time, we knew we had finally found a funder that spoke our language.’

What Christian Super says

‘At every stage of the investment process we have been immensely impressed by the quality of Nightingale’s approach. We believe the Nightingale model is a clear leader within its market segment from both a financial and impact perspective, combining simple yet highly effective de-risking mechanisms alongside a framework of social and environmental management that is well ahead of all other initiatives. Our relationship with Nightingale has over time evolved from admirer to syndicate lender to partner, and we have currently committed to structuring a pooled funding solution to further scale their solution. The Nightingale team epitomises professionalism and has been a pleasure to deal with at every turn, bringing deep sector level expertise and networks alongside a rare degree of humility and collaborative spirit.’
Brightlight Impact Advisory, impact investment consultant to Syndicate lender Christian Super

What Social Ventures Australia says

‘SVA has a vision in which stable, appropriate and affordable accommodation is available for all people in Australia. To further this goal, SVA was proud to be a part of the lending syndicate for Nightingale 1. This project pilots a number of innovative steps towards housing affordability in Australia, including a cap on equity returns to reduce the cost of development, a cap on resale prices to reduce speculation, and design innovations to reduce the lifetime cost to the homeowners. Congratulations to Jeremy McLeod and Jessie Hochberg-Summons for this ground-breaking development.’
Alex Oppes, Director, SVA

What the McKinnon Family Foundation says

Addressing climate change and environmental sustainability is not just about better technology. It is also about changing the way we live together. Nightingale Housing brings all this together: innovative designs that maximise sustainability and rebuild community. We are proud to be involved with such projects.’ 

John and Sue McKinnon, McKinnon Family Foundation

What the Hantomeli Foundation says

‘The Hantomeli foundation was excited to invest in Nightingale 1.0, an innovative, sustainable and socially impactful venture.  Nightingale is creating a new paradigm for the future of urban design, sustainable development and connected communities.’
Hantomeli Foundation

What the NAB says

‘We believe access to adequate, safe and affordable housing should be available to everyone. Nightingale delivers a vision of housing that challenges the standard conventions and seeks to drive sustainable positive impact that benefits community, individuals and the environment.  Jeremy and the team inspired us to innovate around the challenge of how to provide capital quickly to meet their growing demand.

We are delighted to support SEFA to finance Nightingale 1.0 and provide senior debt finance to the second Nightingale Project in Fairfield.  These are early steps in Nightingale’s journey and we hope to assist them to further scale their impact and create more housing that meets the targets outlined by the UN Sustainable Development Goals.’

Katherine Leong, Product and Channel Development, NAB