IMPACT Community Capital has closed the new $210 million IMPACT Mortgage Opportunity Fund developed in partnership with Rose Community Capital’s Bridge Lending Program for affordable housing properties. The fund, which raised capital from six large institutional investors, exceeded its target and closed five months ahead of schedule.
The fund was created in partnership with RCC, the lending arm of Jonathan Rose Cos. that is focused on the origination, underwriting and placement of FHA insured and USDA guaranteed multifamily mortgages. RCC and IMPACT expect to preserve more than 5,000 affordable units across the U.S. during the lifespan of the fund that will provide bridge loans to developers and owners of affordable housing who want to preserve their properties’ affordability status or transition existing market-rate projects to affordable properties. The loans provide borrowers time to apply for permanent financing and government subsidy programs.
The initiative was backed by the institutional investors after a successful pilot that saw IIMPACT invest in $50 million in deals to support the new bridge lending program. The RCC Bridge Loan program is available across the U.S. to preserve and create affordable housing. Current projects include preserving a Savannah, Ga., Section 8 senior housing community with 138 units and creating a set-aside for 50 units of permanent supportive housing for formerly unhoused persons in Los Angeles.
Kelly Boyer, Rose Community Capital president, said in a prepared statement RCC worked closely with IMPACT as the funding partner to structure a bridge lending program that will help secure the affordability of projects well into the future. Boyer said most of the residents in properties receiving the financing have household incomes at or below 60 percent AMI and would face economic displacement if those communities were converted to market-rate housing.
RCC and IMPACT noted affordability restrictions on hundreds of thousands of federally assisted homes are set to expire over the next several years, placing the properties at risk of becoming market-rate rentals. This year alone, affordability restrictions on more than 123,000 federally assisted units, including those developed through the Low-Income Housing Tax Credit (LIHTC) program, Section 8 and other government programs, are due to expire.
Jeff Brenner, IMPACT CEO, said in prepared remarks the preservation of affordable housing is critical because of the housing crisis and because so many vulnerable communities have been disproportionately impacted by the pandemic. Addressing those concerns was the motivation for creating the fund.
IMPACT was founded in 1998 by leading insurance companies to generate institutional-quality, purpose-driven investments. The investment manager has originated $2 billion in investments to provide affordable housing, healthcare, childcare and economic opportunities.