SDS Capital Closes $150M Housing Fund

SDS Capital has closed its SDS Supportive Housing Fund with $150 million in capital commitments. The fund will support the creation of 30 developments totaling 1,800 permanent supportive housing units for people experiencing homelessness in Los Angeles.

The fund sought private investment capital during its fundraising campaign. Kaiser Permanente committed $50 million from its Thriving Communities impact investment fund, which ultimately allowed the fund to scale efforts and raise capital in excess of $100 million. Other investors include Ally Bank, Synchrony Bank, Pacific Premier Bank, East West Bank, CIT Bank, the Weingart Foundation, Western Alliance Bank, Hudson Pacific Properties, Charles Schwab Bank, First Republic Bank, California Community Foundation, and the Annenberg Foundation.

As a result, it is able to build permanent supportive housing for less than half the cost of a typical development of this nature and three times faster. The expedited timeline is possible because the fund will provide 100% of the development costs, versus the typical capital stack for supportive housing of five to 10 capital sources.

Each of the 30 developments will include 40 to 100 single-bedroom units with an average of 500 square feet, and each property will feature gyms and garden space, as well as case-management services. From funding to construction and delivery, each project will take 24 months to complete. As a result, each unit will have a development cost of $200,000 on average, while the typical supportive housing unit has a development cost of $500,000 to $700,000 per unit in California.

The fund has already gotten started. It has funded five projects in Los Angeles and a sixth prototype development in San Francisco for modular development, a construction style that the firm expects to pursue more frequently. In addition, one-third of the funds initial projects have been built on church land.

Los Angeles has a significant homeless population of 161,000, and this fund will help to provide housing and services for 1,800 people suffering from homelessness. Other investors have also addressed the problem. The Greystone affiliate of America First Multifamily Investors LP has provided more than $33 million in tax-exempt and taxable loans for the construction of a 67-unit permanent housing building and a 21-unit transitional housing building in Los Angeles. And, in January Alta Housing started construction of Wilton Court, a 100% affordable residential rental community at 3705 El Camino Real in San Francisco. The new 59-unit development is slated for completion in summer 2022.