Bridge Investment Group: Workforce and affordable housing strategy

Describe how you identify positive and negative sustainability outcomes related to your investments.

To date, Bridge Investment Group has adopted the following frameworks and tools to help identify positive and negative sustainability outcomes related to our investments:

• United Nations Sustainable Development Goals (SDGs): Our portfolio-level metrics for Workforce & Affordable Housing (WFAH) strategy are aligned with SDG #3 (Good Health & Well-being), SDG #7 (Affordable & Clean Energy), and SDG #11 (Sustainable Cities & Communities). Furthermore, our Responsible Supplier Policy demonstrates alignment with the SDGs.
• Principles for Responsible Investment (PRI): Bridge became a PRI signatory in 2020 and completed its first firmwide PRI report submission in 2021 for our equity strategies. We believe that ESG issues can affect our investment portfolios to varying degrees across companies, sectors, regions, and asset classes.
• Global Real Estate Sustainability Benchmark (GRESB): In 2021, Bridge completed its first GRESB reporting submission for WFAH Fund I and Office Fund II (BOF II). We recently submitted our 2022 GRESB reports for the aforementioned funds plus Multifamily Fund IV (BMF IV) and Seniors Housing Fund II (BSH II).
• Global Impact Investing Network’s Impact Reporting & Investment Standards (IRIS): This reporting framework illustrates the impact and progress of Bridge’s work over time and includes portfolio-level IRIS metrics aligned with SDGs. Our IRIS report is produced annually and focuses on reporting across affordability, environment, social, and community metrics.
• Task Force on Climate-Related Financial Disclosures (TCFD): Bridge became a supporter of the TCFD in 2021 and is reviewing applicable principles from the TCFD framework to determine positive and negative outcomes.

Bridge also partners with Project Access (PA), a non-profit and social organisation, to provide on-site health, education, and employment services to families living in affordable housing communities. In 2021, we identified numerous positive sustainability outcomes from our WFAH strategy including:

• Affordability: 96% of residents spend no more than 30% of their household income on rent and 80.2% of residents are at or below 80% area median income (AMI).
• Environmental Sustainability: Through energy efficiency improvements, we achieved 17% in energy savings, 7% in natural gas savings, and 8% in water savings from Q3 2020 to Q2 2021.
• Health & Wellness: 2,569 residents engaged in physical health and nutrition education workshops, mental health and wellness activities, and health fairs and screenings. One hundred percent of residents surveyed (n=210) said they planned to put their health programme learnings into action.
• Education for Youth & Families: 1,039 youth and parents/caregivers engaged in services such as after school programmes, summer activities, and college and career readiness workshops.
• Economic Stability: 1,315 residents engaged in financial literacy education, employment assistance, and technology workshops. The computer lab enabled 377 residents to get better access to the internet and technology resources.
• Community Building: 4,364 residents engaged in holiday events, movie nights, and safety awareness workshops.

Regarding negative sustainability outcomes, typical challenges for WFAH have included managing temporary resource centres as renovations and facility improvements are completed and overcoming operational challenges from prior property owners. We are also striving to obtain more complete utility data for our properties in order to accurately measure our environmental impact.

 

Give an overview of your sustainability outcome policies and/or targets, explaining the methodology for establishing them. 

We believe Bridge founders were early adopters of integrating social and community programming into on-site operations, dating back to an acquisition of a dedicated resource centre at Warwick Square, in collaboration with non-profit partner PA. Our founders faced a 100% residential turnover rate during the first year of ownership. By 2016, through building renovations and the creation of playgrounds, a solar energy system, and on-site resource centre, Warwick achieved a 9% turnover rate, doubled net operating income (NOI), and helped 1,200+ residents with health, education, and employment services. This experience served as a defining and catalytic event that deepened interest in the workforce and affordable housing sector and set the stage for our WFAH strategy.

Bridge has been a market leader in the preservation and rehabilitation of the workforce and affordable housing and has owned, managed, and operated over 69,000 multi-family units. In 2017, we achieved our goal of offering a dedicated strategy and private market solution that would support affordable housing without any reliance on subsidies and with true double-bottom line goals, i.e., risk-adjusted market rate returns for investors and measurable social good. We launched our WFAH strategy to provide this private, scalable solution and offer a differentiated approach that seeks to build thriving communities beyond “four walls and a roof”.

Essential to the WFAH strategy is the integration of affordability with social and economic mobility. We believe this ultimately leads to a more just and equitable society. By providing social support, alleviating the burden and strain of housing, and targeting programming that is specifically geared towards attaining these better outcomes, we believe we are improving the livelihoods of households that need it most.

Bridge is actively engaged with PA in evaluating the prioritisation of applicable sustainability outcomes. PA applies the Theory of Change (ToC) and its corresponding programme model in this process. Furthermore, we conduct regular community needs assessments and evaluations through PA to ensure residents are empowered to describe their own needs and succeed with the right support. The insights from these assessments provide PA with the opportunity to continually improve its programming and meet the needs of Bridge residents.

Through policies and targets, Bridge seeks to reduce potential negative outcomes and increase positive outcomes across our WFAH portfolio in the following areas:

Affordability

• Build, preserve and rehabilitate predominantly non-government subsidised housing wherein at least 51% of residents earn below 80% AMI, with rents not greater than 30% of their income.
• Expand on the Community Reinvestment Act (CRA)/PWI definition, with social and community programmes that revitalise communities and enhance residents’ quality of life.

Environmental sustainability

• Target a minimum of 15% energy savings and 15% water savings in renovated units for assets under Freddie Mac’s Green Advantage programme. Our procurement team will target Energy Star appliances for renovations and, whenever possible, purchase appliances that are Energy Star certified.
• Dedicate human and capital resources to creating and implementing environmentally sustainable practices.
• Implement measures and capital improvements to reduce our carbon footprint and increase resilience, while driving efficiencies and cost savings, including in new construction.
• Measure and report energy emissions, water usage, and waste, all while striving to obtain more complete data, to steadily improve environmental performance across portfolios and communities.
• Increase affordability through energy efficiency projects such as solar PV systems where feasible.

Community enhancement

• Bridge elected to reduce a part of its management fee payable by the Fund and direct that amount to be used for social programmes, translating to $6.5 million as of 31 December 2021, and up to $40 million over the lives of Bridge WFAH Fund I and II, if fundraising targets are met as part of the Bridge Community Enhancement Initiative (BCEI).
• Target a minimum of 30% of our resident population to participate in at least one of up to 33 social/community programmes offered in various WFAH properties.
• Target a minimum of 75% youth participant improvement in report card performance year over year through education programmes administered by PA.

Furthermore, in 2021, Bridge engaged its ESG consultant, CodeGreen, to facilitate our first Materiality Assessment to gain insight into and prioritise topics that stakeholders consider the most important aspects of environmental, social, and governance (ESG) factors. Going forward, we are committed to conducting a Materiality Assessment every two to three years.

 

Explain how you have sought to increase positive and decrease negative sustainability outcomes.

Bridge uses numerous levers throughout the lifecycle of investments in the WFAH strategy to increase positive and decrease negative sustainability outcomes.

The acquisitions team assesses each potential property for the ability to develop a dedicated on-site Community Resource Centre. In addition, the due diligence team evaluates sustainability features and targets as well as environmental and social risks and opportunities across its potential acquisitions. To inform the underwriting process, Bridge utilises Property Condition Assessments (PCAs), Phase I environmental reports (and if needed, Phase II reports) and pre-acquisition desktop energy audits.

For each WFAH asset acquisition, the Investment Committee (IC) will evaluate a number of ESG-related improvements and investments. These include ESG capital investments, considering both offensive and defensive ESG-related CapEx, the potential feasibility of solar PV installations, on-site social and community programming for residents, and financial health and wellness initiatives.

Throughout our hold period, Bridge is actively engaged with PA in designing, evaluating, and tracking the community programming for our on-site Community Resource Centres. PA provides monthly reports and Bridge’s WFAH strategy leadership meets quarterly with PA’s management to discuss the portfolio. Bridge also publishes annual IRIS reports on community programming, environmental sustainability, and housing affordability. Environmental data is collected and tracked on ENERGY STAR Portfolio Manager (ESPM) by our utility bill processing partner Conservice, and flows to our centralised utility data platform Measurabl. Furthermore, property-level sustainability projects and housing affordability metrics are collected and tracked by our property management arm Bridge Property Management.

The Bridge Community Enhancement Initiative (BCEI) is our commitment to helping residents in our communities build a bridge to a better life. Through BCEI’s funding structure, Bridge expects to commit up to $40 million over the lives of its two WFAH to support its firmwide pillars of connecting, educating, and empowering its residents. Building upon PA’s existing offerings, BCEI is now offering a college scholarship programme to support first generation college students.

In addition, in 2016, Bridge partnered with Rent Dynamics to launch Bridge Credit Plus, a programme that subsidises credit score enhancement. As of Q2 2022, more than 72,000 Bridge residents had enrolled in the programme. In 2021, Bridge and Rent Dynamics launched The Advantage Program (TAP) to help Bridge residents become homeowners, offering free financial management tools and connections to local real estate agents.

 

Describe how you are tracking performance against your sustainability outcomes targets and/or policies (qualitative and quantitative).

Bridge is committed to enacting lasting, unambiguous positive impact within its WFAH strategy and has adopted Global Impact Investing Network’s IRIS metrics to communicate our results. Bridge collects IRIS data at each workforce and affordable housing asset and publishes reports on an annual basis on community programming, environmental sustainability, and housing affordability. Furthermore, we have been collaborating with Measurabl to centralise and streamline the collection of Bridge’s energy, fuel, and water data across multiple verticals and vendors.

During the pandemic, Bridge’s Charitable Giving Committee worked closely with PA to establish the Bridge CARES: COVID-19 Relief Funds and the application process for our residents, raising nearly $2.8 million with 100% of qualifying WFAH residential applicants receiving financial support. PA also shifted resources to increase food distribution to residents and ran enrichment activities for youth residents. Since the COVID-19 outbreak and throughout 2021, PA provided 101,352 meals, interacted with 17,666 residents in-person and 4,402 residents via virtual platforms, and provided 28,390 referrals to critical services.