JBG Smith Affordable Housing Fund Closes at $115M

Crystal House Lobby. Image by Ira Wexler

A fund dedicated to preserving or developing affordable workforce housing in the Washington, D.C., area has reached its final closing.

The Washington Housing Initiative Impact Pool, a fund created by JBG Smith and the nonprofit Federal City Council, has closed to new investors after raising $114.5 million. The investments came from more than two dozen investors who were primarily institutional investors. According to JBG Smith, the last investors to join the fund before its final closing was MainStreet Bank and other undisclosed investors.

The fund was created with the goal of providing capital to projects that would preserve or develop affordable workforce housing, particularly in neighborhoods that are vulnerable to rapidly rising housing costs. The Impact Pool had its first closing in May 2019 and has since deployed about 20 percent of its capital. To date, the fund has used $21.8 million to preserve a total of 1,151 units of affordable workforce housing.

LAST LOAN BEFORE FINAL CLOSING

Before its final closing at the end of 2020, the Impact Pool was able to provide a  $6.7 million subordinate loan to the Washington Housing Conservancy for its purchase of Crystal House. The 825-unit apartment community in Arlington, Va., is located at 1900 S. Eads St. near Amazon’s upcoming HQ2 development.

The acquisition also included a 99-year affordability covenant that ensured that 75 percent of the units will be available for residents making 80 percent of the AMI or less, 20 percent of which will be reserved for those making 50 percent AMI. Crystal House’s remaining 25 percent of units will be market-rate. JBG Smith will also serve as the property manager for Washington Housing Conservancy.

AJ Jackson, JBG Smith’s executive vice president of social impact investing, said in prepared remarks that one of the challenges to preserving affordability is getting the necessary funding quickly enough to compete with other potential buyers. For the Crystal House acquisition, capital from the Impact Pool along with senior financing from Amazon’s new Housing Equity Fund allowed the purchase to close in less than two months, Jackson added in his prepared statement.

Last February, the Impact Pool made its first investment with a $15.1 million mezzanine loan for Alexandria Housing Development Corp.’s purchase of the 326-unit Parkstone Apartments in Alexandria, Va.