Greystone Housing Impact Investors (GHI) and BlackRock Impact Opportunities (BIO) have established a joint venture (JV) to invest in loans aimed at funding the construction and rehabilitation of affordable housing across the US.
The partnership is poised to provide approximately $500m of gross financing, focusing on properties in undercapitalised communities.
This initiative is set to address the country's significant shortage of affordable housing units.
The company cited the National Low Income Housing Coalition’s annual Gap report, which estimates a deficit of 7.3 million affordable housing units for extremely low-income renters in the US.
The report also noted that renters with extremely low incomes are more likely to allocate a higher percentage of their earnings toward housing costs compared to other renters.
The new JV's mission is to mitigate this shortfall by offering construction financing solutions to bolster the supply of affordable multifamily housing units nationwide, according to GHI.
GHI CEO Kenneth Rogozinski said: “We are pleased to partner with BlackRock Impact Opportunities to scale and expand our construction loan investments portfolio.
“The strategy and objectives of BlackRock Impact Opportunities are closely aligned with those of the partnership, and we believe that together we can deploy capital to increase the availability of affordable multifamily housing in underserved areas while achieving attractive risk-adjusted returns for our respective investors.”
The joint venture leverages the partners' substantial experience in direct affordable multifamily lending. The JV members' expertise includes investments in construction loans that prepare affordable properties for permanent agency financing such as the Freddie Mac Tax Exempt Loan programme.
A wholly-owned subsidiary of the partnership will act as the managing member of the JV, tasked with the identification, evaluation, underwriting, and closing of investments.
BIO will review and approve these investments in accordance with the terms and conditions of the joint venture.
Raymond James played a pivotal role as the transaction advisor to the partnership while Ballard Spahr provided legal counsel.
Additionally, Kramer Levin Naftalis & Frankel offered legal advice to BIO, ensuring the joint venture's compliance and governance.
