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
Affordable and Workforce Housing Shortage
The shortage of rental housing in the U.S. for the lowest income renters exceeds 7 million units. [8] Fewer than four Affordable units are available for every ten eligible low-income renters. [8] The supply of Affordable and Workforce units is shrinking, as new construction has not kept pace with demand. Current production of Affordable housing units will replace only a portion, about half, of what is at risk of loss. [9]
Strong Fundamentals
Multifamily has generally outperformed other real estate sectors during challenging times [10] due to largely inelastic demand and rent growth consistently exceeding the rate of inflation. [11] Cash flows from affordable housing are also partly insulated from the economy due to government assisted rents for some tenants, and historically short term leases allow for more frequent rental adjustments to keep up with inflation.
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. [12]
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. [13]
Preserving Affordable Housing
AIS’s Preservation strategy for the Multi-Family Impact Fund is committed to updates that create meaningful value, including renovations to units and common areas, implementing efficiency measures, and developing and promoting programs and resources for residents.
Physical Improvements
- Exterior paint
- Roof replacements
- Parking lot renovations
- Security and gate improvements
- Landscaping & recreational
- Signage
- Mechanical upgrades
Property Optimization
- Utilities: energy, water, etc.
- Cost savings initiatives: Asset and Residents
- Property management improvements
Resident Impact
- Non-profit partners and local organizations assist with Credit Help, Health & Nutrition, Job & Career Development, Social Services and Referrals, Etc.
- Increasing affordability through operational expertise and tax credit accessibility
Echelon Energy
Echelon Energy helps MFIF properties cut energy consumption, and reduce energy for both the owner and the residents.
Portfolio Resident Services
PRS provides services to tenants of MFIF properties, including programs that build knowledge, marketable skills, enhance a healthy lifestyle, and lift families up.
Property Managers
Hear from an actual Property Manager of an Affordable Housing community on the effect ASI has had on their community and their residents.
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] National Low-Income Housing Coalition.
[9] Preserving Multifamily Workforce and Affordable Housing, Stockton Williams, Urban Land Institute.
[10] Commercial Real Estate and a Potential Recession
[11] Rents in us Rise at Fastest Pace Since 1986 Buoying Inflation
[12] Housing Affordability And Children’s Cognitive Achievement, Newman and Holupka.
[13] Numbers stated include assets of funds owned by ASI’s affiliate, Alliant Capital, Ltd.
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