NHFIC chief Nathan Dal Bon is asking super funds to work with the agency to develop social and affordable housing into an investible asset class at scale in Australia.

The chief executive of the National Housing Finance and Investment Corporation (NHFIC) Nathan Dal Bon’s message to Australian super funds – no one is expecting them to accept less than market return if they take the jump to invest in the Federal Government’s ambitious social and affordable housing plans.

As the industry awaits the passage of the Federal Government’s $10 billion Housing Australia Future Fund in the Senate, Dal Bon has been travelling the country talking to super funds, taking in their feedback and trying to get them comfortable with what is becoming a new asset class in Australia.

While funds such as construction industry super fund Cbus, UniSuper and HESTA, have already invested in NHFIC’s Triple A rated bonds in the past, others are cautious about becoming involved in the low cost side of the domestic housing market, acutely aware of the need to invest in the best financial interests of their members.

But Dal Bon sees attracting super fund capital as critical in delivering the Albanese Government’s ambitious plans to build another 40,000 social and affordable houses in Australia, estimate to cost $20 billion to $25 billion in total.

“We are building a new asset class in Australia,” Dal Bon says in an interview with Investment Magazine.

“We’ve been talking to super funds about how we can potentially tap into the different parts of their business – the real estate side or the infrastructure side. They all have different risk profiles and different rates of return commensurate with the risk.”

“But we want to be clear none of this is predicted on super funds taking a haircut on their rate of return. They have legal obligations to get the best possible rate of return for members.

“We are saying to the super funds, what are your rate of return thresholds or benchmarks and we will look to structure things within those rate of return benchmarks.”

Tackling the housing crisis

Dal Bon is chief executive of the Federal Government’s bond aggregator which generates finance for the not-for-profit community housing providers (CHPs) to build social and affordable housing. The agency is overseeing the delivery of the Albanese Government’s plans to tackle the housing crisis for Australians on welfare and low incomes.

As he awaits the passage of the enabling legislation in the Senate, he has become the marriage broker, talking to super funds to see just how he can bring their money to the table and looking for ways to structure investments to meet their return criteria.

“We’ve got the objectives from government, and the objectives of institutional investors like the super funds, and we are trying to marry them up,” he says.

After extensive consultations with funds as well as industry organisations, the agency has appointed Macquarie Bank as an adviser to turn the concerns and investment parameters of super funds as potential investors, into financial models which could make the deals potentially viable.

It has also set up an advisory panel to liaise with the super fund sector on potential ways to structure the financing.