Information on the Target

In 2023, approximately 4.1 million people in France are living in inadequate housing conditions or lack personal accommodation. Beyond these severe situations, more than 12 million individuals are affected to varying degrees by the housing crisis. The growing insecurity, exacerbated by economic, social, and health crises, has led to a significant rise in the number of homeless individuals in France. According to the latest report from the Abbé Pierre Foundation, there are over 300,000 homeless people in 2023, which includes individuals living on the streets, in makeshift housing, in collective accommodations, hotels, reception centers for asylum seekers, or in associative housing.

Emergency shelter has become a major social issue, highlighting the inadequacies of the current system. Emergency accommodation facilities are often overwhelmed due to a lack of available spaces, particularly during winter. The living conditions in some centers can be precarious, with concerns regarding hygiene and safety. To meet the increasing demand, stable housing solutions are being developed to provide alternatives for individuals facing housing instability, whether employed or unemployed, homeless or forced to leave their homes abruptly (particularly women victims of violence), singles or families.

Industry Overview in France

In the absence of space in traditional centers, the most frequently used emergency shelter solution remains private park hotels. However, overnight stays in these hotels are expensive, especially since individuals often stay for more than one night. This form of accommodation also entails long-term social and health costs. While private hotel lodging addresses an immediate need, it fails to provide the necessary support to improve the circumstances of those urgently sheltered, the majority of whom are families.

To cope with the significant increase in reliance on private hotels as a temporary accommodation solution, the government has engaged in various plans aimed at combating poverty and promoting social inclusion since 2013. Notably, a three-year plan was launched in 2015 aimed at substantially reducing hotel night stays. This plan aimed to create 13,000 alternative places to hotels over three years, including 9,000 through rental intermediation. This initiative represents a key step in governmental efforts to enhance the quality and sustainability of housing solutions for people in vulnerable situations.

In recent years, emergency shelter in low-cost hotels has seen significant growth. Entrepreneurs and real estate companies have specialized in acquiring accessible hotel establishments to meet the increasing demand for emergency accommodation systems, ensuring high occupancy rates. A 2016 Senate report highlighted the importance of supporting these hotel acquisition operations while recommending more efficient management of public funds and optimizing accommodation modalities. This recommendation prompted industry players to rethink their strategies, yielding tangible results such as the Paris Social Emergency Services which significantly reduced its dependency on external reservists for managing hotel nights, thereby improving its capacity to provide solutions directly tailored to the needs of homeless individuals.

Social hotel services are emerging as an innovative solution to address the growing needs for emergency accommodation in France. This social housing model blends comfort, dignity, and social support, offering individual, shared, or family rooms with private bathrooms and basic services, guaranteeing more dignified living conditions. Moreover, social hotel services commit to providing social assistance to residents, including orientation toward employment, access to education and healthcare, thereby helping individuals regain their autonomy.

The Rationale Behind the Deal

In response to the emergency housing crisis in France, AMPERE Gestion and Adoma, subsidiaries of the CDC Habitat Group, one of the major housing stakeholders in France, launched Hémisphère in 2018. This was France's first social impact investment fund, exclusively aimed at institutional investors. The innovative fund, with over 100 million euros, has facilitated the financing of 10,000 emergency accommodation places for the most vulnerable individuals.

This fund has acquired over fifty hotels across France, transforming them into Social Hotel Residences (Résidences hôtelière à vocation sociale, RHVS) to better accommodate those in need. Hémisphère stands out for its innovative approach and direct social impact, as Adoma, recognized for its expertise in accommodation and social support, ensures high-quality lodging alongside essential social assistance to help residents achieve lasting reintegration.

Information About the Investor

The CDC (Caisse des Dépôts et Consignations) Group plays a crucial role in the housing sector in France, aiming to reconcile investment with positive social impact. By collaborating with the state and local authorities, the Hémisphère fund represents a major advancement in the fight against homelessness. The fund's commitment to social causes demonstrates that financial returns can coexist with valuable social outcomes, making it a unique player in the investment landscape.

The CDC Habitat Group's dedication to addressing the housing crisis through innovative solutions positions it as a leading entity in the push for social equity and stability. Through its investments, the group not only enhances the immediate living conditions of vulnerable communities but also contributes towards the long-term strategic goals of comprehensive social reintegration.

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From an investment perspective, the Hémisphère fund represents a compelling opportunity, as it aligns financial performance with social responsibility. Investments in social hotel services provide a dual benefit: they generate financial returns while addressing pressing social issues. The rising demand for alternative emergency housing solutions, especially amidst ongoing housing crises, suggests significant growth potential within this sector, creating attractive opportunities for institutional investors.

Furthermore, innovative housing models such as social hotel residences foster a sustainable approach to housing that contributes positively to community welfare and economic stability. The fund’s alignment with government initiatives and social impact measures indicates a well-structured investment strategy with a focus on long-term results.

Nonetheless, investors should remain cautious and aware of the intricacies involved in managing such facilities, as operational challenges and quality assurance are paramount in delivering on the promise of social impact. The success of such investments will depend on the ability to maintain high operational standards while ensuring residents receive the support needed to transition toward permanent housing solutions.

Overall, investing in the Hémisphère fund presents a thoughtful approach for those looking to merge profitability with a strong societal contribution, exemplifying how financial ventures can actively engage in the fight against homelessness and promote sustainable solutions for housing vulnerabilities.

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