Hudson Valley Property Group, a national affordable housing preservation company, has closed its second real estate private equity fund after raising $292 million in capital commitments–$42 million more than its $250 million target.
The New York-based firm raised the capital for Hudson Valley Preservation Fund II from institutional investors, including family offices, banks, endowments, foundations, insurance companies, healthcare companies, registered investment advisers and museums.
Jason Bordainick, managing partner & co-founder of HVPG, said the broad range of institutional investors speaks to the strength of the firm’s platform and of affordable housing preservation. He described it as an often overlooked and traditionally undervalued asset class. Since 2010, HVPG and its funds have utilized equity and capital to leverage more than $2 billion of investment into affordable housing. The company, which acquires existing affordable multifamily properties and strategically invests capital to make physical, financial and social improvements at its assets, has preserved more than 9,500 units across more than 50 properties serving more than 20,000 residents.
HVPG’s first preservation fund closed in March 2019 with $60 million in capital commitments. It made 13 investments in 25 properties, preserving more than 4,000 units on nearly $1 billion in projects.
To date, the second fund has already acquired nine properties across New York, New Jersey, Pennsylvania, Maryland and Rhode Island. The acquisitions were also made in new geographic areas like Philadelphia and East Providence, R.I., expanding HVPG’s portfolio to seven states. The firm anticipates preserving more than 10,000 homes with the second fund.
The second fund’s closing also comes as HVPG continues to grow its operations, expanding its staff by 54 percent since 2019. In July, Bordainick and Andrew Cavaluzzi, HVPG partner & co-founder, announced they had hired Gleb Lerman as acquisitions director to help drive HVPG’s portfolio growth by securing strategic partnerships and portfolio-side investment opportunities across the United States.
In February, HVPG purchased its first property in New England–the 250-unit, mixed-income Kent Farm Apartments in East Providence–for $53.7 million from Taymil Partners. The acquisition was financed with equity from HVPF II and a bridge loan from PGIM Real Estate. The majority of the units are affordable under a HUD project-based Section 8 contract and will remain affordable for the long term.
A month later, HVPG recapitalized three multifamily properties in New York City in two refinancing deals totaling $190 million. The communities –Keith Plaza, Kelly Towers and Los Tres Unidos Apartments–are all located in the Bronx and have a total of 748 units. The $104 million recapitalization enabled HVPG to use HVPF II to deploy equity and additional debt financing secured through the New York City Housing Development Corp. to make repairs and extend the existing affordability restrictions by 15 years at 311-unit Keith Plaza and 302-unit Kelly Towers. HVPF II also joined a partnership between HVPG and Phoenix Realty Group in owning the two properties.
At the 135-unit Los Tres Unidos Apartments, HVPF II entered into a joint venture along with Nuveen to aid long-term preservation of the property that had been owned by HVPG and partners Nuevo El Barrio para la Rehabilitacion de la Vivienda y la Economia (NERVE) and NCV Capital Partners, which had owned the property since 2017. The $85 million recapitalization there was used to repair sidewalks, replace the roof and add free Wi-Fi among other improvements.