Amazon Unveils $2B Affordable Housing Fund
- Jan 07, 2021
Amazon has announced a major move into the affordable housing sector by launching a more than $2 billion Housing Equity Fund that aims to invest in tens of thousands of apartment units across three regions where the e-commerce firm operates.
Through the new fund, which targets the creation and preservation of more than 20,000 affordable homes, Amazon joins tech giants Facebook, Google and Microsoft, which have committed billions of dollars to affordable housing on the West Coast.
The Housing Equity Fund will invest in Washington State’s Puget Sound region—home to Amazon’s sprawling Seattle headquarters—as well as Arlington, Va., and Nashville, Tenn. The company has or expect to have at least 5,000 employees in each market over the coming years. The vehicle will also provide $125 million in cash grants to businesses, nonprofits and minority-led organizations.
A first investment of more than $567 million is earmarked for up to 2,300 affordable apartments in Arlington and the Puget Sound. That sum will include $381.9 million in loans and grants to the Washington Housing Conservancy (WHC) to preserve and create as many as 1,300 units at Crystal House in Arlington, along with $185.5 million in loans and grants to King County Housing Authority to preserve up to 1,000 homes in Washington State.
WHC, an affordable housing nonprofit, recently purchased Crystal House, an 825-unit community in Arlington’s Crystal City neighborhood, from an affiliate of Mack-Cali Realty. Amazon said in a statement that its flexible capital enabled WHC to execute the deal in under two months. The property at 2000 South Eads St. sold for $337 million, according to a separate announcement by Mack-Cali, while land land held for future development changed hands for $40 million.
Amazon said that WHC’s finance partner in the acquisition was the Washington Housing Initiative and Impact Pool, formed by developer JBG SMITH, which is also building a two-tower residential development a short distance away at 1900 Crystal Drive. The partner provided an additional loan of $6.7 million as well as commercial real estate expertise.
The Crystal House property will feature a “dynamic rental structure,” according to Amazon’s statement, with rents being significantly reduced to cater to households earning less than 80 percent of the area median income. This equates to a household of four earning less than $79,600 per year in the Washington, D.C. metro area.
Existing apartments have begun to be converted to more affordable units and will continue for the next 5 years, and the property will remain affordable under a 99-year covenant. JBG SMITH will manage the community on behalf of WHC. Amazon’s commitment in Virginia includes a $339.9 million below-market loans along with grants worth $42 to WHC, and the grants include $2 million to fund social impact efforts by the nonprofit.
Amazon’s Puget Sound investment will build on an existing partnership with the King County Housing Authority (KCHA) by fund an initial million below-market of $161.5 million together with $24 million in grants to keep some 1,000 apartments affordable.
The funds will enable KHCA to complete acquisition financing on 470 units recently acquired across three communities in the region, including Pinewood Village and Hampton Greens in Bellevue and Illahee Apartments in Richland. The housing authority will maintain the affordability of the homes for people earning no more than 80 percent of local median incomes—translating to less than $95,250 for a four-person household in the Seattle-Tacoma-Bellevue area.
Amazon previous committed $20 million to affordable housing in Arlington County in November 2019. The e-commerce titan’s new fund follows a similar move by Facebook, which pledged $1 billion to affordable housing projects in California in 2019.
Google made its own $1 billion commitment to housing development, including affordable units, in California’s Bay Area earlier in 2019, after Microsoft announced a $500 billion investment in affordable housing solutions.