Hillpointe LLC has closed its third fund in a series of funds aimed at creating workforce housing in the Southeastern U.S. Hillpointe closed Hillpointe Workforce Housing Partnership III LP (Fund III) at its hard cap of $190 million after opening it to investors in August and passing its initial target of $175 million.
Jeff Goll, managing director & head of capital markets at Hillpointe, said in prepared remarks, that Fund III was oversubscribed and showed significant interest from new and existing investors. Goll added in his prepared statement that the investors included endowments, insurance companies, family offices and multifamily offices. There was no placement agent for the fund, but Greenberg Traurig, P.A. served as the legal counsel for Hillpointe.
Hillpointe’s latest fund will be used for the development of 12 workforce housing projects in the U.S.’s Southeastern region. When fully built out, the fund’s portfolio will total $500 million in asset value and 3,500 workforce housing units.
Kelly Mahoney, co-founder & managing partner at Hillpointe, said in prepared remarks that the ability to deliver new multifamily communities at target rental rates between $1 and $1.20 per square feet offers Hillpointe a competitive advantage versus other real estate investments.
Steven Campisi, co-founder & managing partner at Hillpointe, said in prepared remarks that the firm’s investment thesis and the need for its projects is a result of the job and population growth in the Southeastern region of the U.S. combined with the deterioration of housing affordability throughout the country.
According to Hillpointe, the rising construction costs has led to a majority of newly developed rental units being unattainable for median income earners. The firm also attributed the shortage to the workforce housing sector only representing around 10 percent of newly developed units and to general obsolescence, which is estimated to remove at least 100,000 units a year.
Earlier this year, Hillpointe closed on its second workforce housing fund in the series at $110 million. The fund closed in March and was similarly aimed at building eight Class A communities for workforce residents in the Southeastern U.S. Currently, Hillpointe’s overall portfolio includes communities in Georgia, Florida and South Carolina.