Goldman Sachs Group Inc.’s Urban Investment Group teamed up with the Michaels Organization and the Community Development Trust to buy a $1.15 billion portfolio of 90 affordable housing complexes.
(Bloomberg) — Goldman Sachs Group Inc.’s Urban Investment Group teamed up with the Michaels Organization and the Community Development Trust to buy a $1.15 billion portfolio of 90 affordable housing complexes.
The deal is for more than 10,000 apartments that on average rent for less than $1,000 per month, executives said in an interview.
“Affordability is at the lowest point it’s ever been — as a country, we’re not going to be able to build affordable housing at scale to make any sort of dent in the crisis,” said Dan Alger, co-head of Goldman’s UIG. “Sometimes in difficult markets, you can make the most significant investments and have an impact.”
When Goldman became a bank holding company in 2008, it was subject to the Community Reinvestment Act that pushes institutions to address the credit needs of individuals and businesses in low-income neighborhoods. UIG, formed in 2001, is responsible for ensuring the bank’s compliance with the law.
Obtaining assumable long-term, fixed-rate agency financing was key, Alger said, declining to disclose specifics. The joint venture aims to discourage turnover by offering services like after-school programming and financial literacy.
The portfolio, previously owned by Harmony Housing and developed with federal low income housing tax credits, is home to more than 30,000 residents across eight US states. It includes multifamily and unassisted senior-living properties in cities including Chicago, Dallas, Milwaukee, Tampa and Indianapolis.
Cristhian Codorniu, vice president of capital markets at Michaels, said the joint venture is targeting core to core-plus returns, which are typically an annual rate of 6% to 12%.
–With assistance from Sridhar Natarajan.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.