Hillpointe Closes $750M Workforce Housing Fund
This marks the company's largest fund to date.
Real estate development and investment management firm Hillpointe LLC has closed the Hillpointe Workforce Housing Partnership V, LP at its hard cap of $750 million. The closing marks the company’s largest fund to date. It is anticipated to be focused around the development of market-rate workforce housing in the Sun Belt.
Fund V represents Hillpointe’s aims to support the development of approximately 30 workforce housing projects in the company pipeline. The communities will represent roughly $2 billion of total asset value and 10,000 workforce housing units.
Given that housing deliveries are expected to drop in 2025, this housing could play a significant role in balancing supply and demand for those earning between 60 and 120 percent of the Area Median Income, or about $50,000 to $85,000 annually.
The fund exceeded its $600 million target. Greenberg Traurig, P.A. is heading up legal counsel. Juniper Square is the fund administrator.
In 2021, Hillpointe LLC 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 at its hard cap of $190 million after opening it to investors in August and passing its initial target of $175 million.
The importance of workforce housing
C.W. Early, affordable housing co-head at JLL, told Multi-Housing News that he finds it exciting to see Hillpointe’s significant commitment through its $750 million Fund V.
“This initiative targeting workforce housing projects is crucial in addressing the housing shortage,” Early said.
JLL research shows a massive shortfall of approximately 3.5 million housing units in the U.S. “The problem is even more acute in the affordable and workforce sectors, so new funding in conjunction with governmental and other impact capital is critical in making steps to meet the need,” Early said.
LISTEN TO: Mission Success: Serving Neighborhoods Through Workforce Housing
Workforce housing is currently challenged by the rising cost of living, as seen with inflation costs in the last few years, Jeff Holzmann, COO of RREAF Holdings, told MHN.
“The forecast is for modest increases in new building starts, but that can be offset by increased construction costs that would be affected by the new tariffs the government places on imports from Canada and Mexico,” according to Holzmann.
Areas like Texas and California could also see the impacts of increased labor costs as a result of deportations, Holzmann noted. It will be critical to watch for policy changes in the coming months to see how they shape the workforce sector.
“One of the ways local governments can offset the impact of federal policies is by providing subsidies and other incentives to builders, think land, tax, and utility discounts, to make investments in workforce housing in their communities more economical,” he said. “While these assets are usually less lucrative, they tend to be more stable over time and recession-resistant than luxury developments.”
Late last year, AION Partners formed a strategic partnership with Vintage Strategies at Goldman Sachs Alternatives and a global institutional investor to recapitalize a multifamily portfolio and increase workforce housing across the eastern U.S. The goals of the partnership are centered around a portfolio of 12 stabilized workforce properties that include more than 3,500 units. The $700 million recapitalization was made through the AION Value Add III LP, the company’s third discretionary fund vehicle.
