Affiliated's $125M Workforce Housing Fund Targets Florida

Affiliated Development is renewing its commitment to workforce housing projects and social impact investing with the launch of the Affiliated Housing Impact Fund. The $125 million fund will provide equity capital for the development and investment of mixed-income workforce housing in Central and South Florida.

Launched this week, the fund already has requisite capital commitments and the initial close is scheduled in December. Fort Lauderdale Police and Firefighters’ Pension Fund, West Palm Beach Police Pension Fund, Hollywood Police Pension Fund, Hollywood Firefighters’ Pension Fund and Miramar Police Pension Fund have already committed capital. “We are thrilled to be partnering with local public pension plans. We see an inherent alignment of interest with our pension partners who can reinvest capital back into the community while providing housing for their contributors and the local workforce,” said Nick Rojo, co-general partner and manager of the fund. In addition, Affiliated is seeking investment from family offices and individual investors.

Affiliated has laid out specific investment objectives for this fund. Primarily, the fund will focus on social and environmental impact investing by developing high-quality properties at attainable rents. These properties are in high demand in the Central and South Florida markets where 60% of renters are rent burdened, according to Jeff Burns, co-general partner and manager of the fund. In addition, inward migration to the market has exacerbated the demand for attainably priced housing.

This has become a national trend. The pandemic has fueled demand for workforce housing throughout the nation, and it has triggered a fervent response from the investment community. Last month, Avanath Capital Management and MacFarlane Partners formed a new REIT to develop and invest in affordable housing in opportunity zone markets throughout the US. David Leopold, SVP and head of Affordable Housing at Berkadia, also said there has been a significant increase in demand for affordable housing, and most investors anticipate this trend to continue well beyond the pandemic. As a result, cap rates for the product have compressed.

Lenders are also expanding exposure to workforce housing. Freddie Mac and Fannie Mae doubled down on their commitment to affordable housing earlier this month, mandating that at least 50% of new loan originations be dedicated to affordable housing. Previously, the mandate was 37.5%.

This isn’t an unfamiliar strategy for Affiliated. The firm has experience developing workforce housing in Florida cities, and it specializes in public-private partnerships that often include government financing incentives. As a result, Affiliated believes that it is well equipped to provide quality and attainably priced housing to the market while delivering attractive risk-adjusted returns to investors.