Affordable and Workforce Housing Shortage
7 Million
The shortage of rental housing in the U.S. for the lowest income renters. [1]
Fewer than 4
Affordable units are available for every ten eligible low-income renters. [1]
About Half
Current production of units will replace only a portion of what is at risk of loss. [2]
Fund Overview
Alliant Strategic Investments (“ASI”) and CommonGood Capital have created the ASI Multi-Family Impact Fund (“MFIF”) which will source, acquire, enhance, operate and asset manage a portfolio of multi-family properties. These properties will consist of both Affordable and Workforce housing assets located in census tracts with a minority population of at least 50%. Affordable and Workforce housing renters can be generally thought of as “Renters by Necessity” because the cost burden to buy a house is prohibitive. MFIF favors investments in these properties because of the deep renter demand for the product, the absence of adequate supply in the foreseeable future, the social impact, and the barriers to entry. We believe there are significant opportunities to refresh and enhance the current supply of Affordable and Workforce housing to provide clean, safe and affordable homes for residents, while also generating potentially competitive returns for investors.
Key Offering Terms [3]
- Asset Class – Affordable and Workforce Multi-Family properties
- Geographic Focus – Diversified across US markets
- Fund Manager – ASI Multi-Family Impact GP, LLC
- Target Fund Size – $25 – $50 million
- Investment Sizes – Approx. 3 to 8 assets at $6-10M per asset
- Fund Term – 5 years plus 2 one-year extensions
- Preferred Return – 8% annual return, cumulative [4]
- Carried Interest – 20% above Preferred Return, 50% Catch-up [5]
- Fees – 1.5% Management Fee on Committed Capital [6]
- Early Investor Terms – 10% Preferred Return / 15% Carried Interest; applies to first $5M of Capital Commitments [7]
- Legal Structure – Delaware Limited Partnership
- Suitability – Accredited Investor only
- Min. Investment – $50,000 per investor
COVID-19 Expands the Need
Even prior to 2020, the US had insufficient stock of affordable housing – this shortage was magnified by the pandemic and the ensuing economic disaster. These asset classes continue to perform well because quality, affordable housing is a precious commodity. Average occupancy and rent collections for an affiliated investment fund were consistent in 2020, at an averageof 95.6% and 94.2%. [8]
Impact of Housing
Housing has always played an essential role in shaping numerous outcomes for each member of a household. It is a well-researched and proven concept that the location and quality of one’s home may impact current and future generation’s employment, education, social interactions, life span, mental and physical health, and economic growth. [9]
Highly Experienced Team
MFIF’s executive team averages over 25 years of industry experience and has invested in 100,000+ units in 48 states across 1,000+ properties and has a proven track record in managing institutional Multi-Family real estate funds. The team has directed the oversight of more than 170,000 units of affordable housing including overseeing compliance, asset management, and reporting. [10]
Footnotes
[1] National Low-Income Housing Coalition.
[2] Preserving Multifamily Workforce and Affordable Housing, Stockton Williams, Urban Land Institute.
[3] Please refer to the private placement memorandum for MFIF for a full description of the terms of the offering.
[4] While the Preferred Return is a term of the offering, there is no guarantee that there will be sufficient funds to pay the Preferred Return.
[5] Following the full return of invested capital and the Preferred Return to Investors, the GP will be entitled to 20% of any additional cash generated with respect to each investment, subject to a Catch-Up provision.
[6] (i) During the Investment Period, 1.50% per annum of Capital Commitment, and (ii) after the Investment Period 1.50% per annum of Net Invested Capital.
[7] Discount applies to first $5M of complete and irrevocable Capital Commitments received by the General Partner.
[8] Occupancy and collection data for the six properties in Alliant Strategic Preservation Fund II, Ltd.
[9] Housing Affordability And Children’s Cognitive Achievement, Newman and Holupka.
[10] Numbers stated include assets of funds owned by ASI’s affiliate, Alliant Capital, Ltd.
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