A forthcoming fund by Goldman Sachs is aimed at addressing one aspect of racial inequity in the real estate world by supporting Black affordable housing developers.
The firm’s Urban Investment Group is launching a $75 million joint venture with the National Affordable Housing Trust. The Commercial Observer reported the venture establishes the Black Developers Initiative Affordable Housing Fund, which will largely target development led by Black women.
“There are incredible Black developers out there who can really drive meaningful impact in these communities, but we all have to band together and make sure that the capital they need is available and accessible,” said Margaret Anadu, global head of sustainability and impact for Goldman Sachs.”
The firm last year launched the $10 billion One Million Black Women initiative, which is investing in the new venture. NAHT is managing the fund, which is associated with the Black Developer Capital Initiative with a goal of making more equitable capital access for Black affordable housing developers.
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The fund will provide Black developers with increased access to Low-Income Housing Tax Credit investment capital.
The fund has already made its first investment, allocating $17.4 million of debt capital for an 80-unit development in Rome, Georgia, the Observer reported. Laurel Street is leading the project, scheduled for completion next year.
The venture is looking at other potential projects in Georgia, as well as California and the entire East Coast.
Black developers have criticized unequal partnerships in real estate, claiming large builders use them as tokens to take advantage of federal initiatives with diversity mandates.
Minority and female-led contractors previously told The Real Deal large developers often partner with their firms to employ them as “marketing representatives” in gentrifying areas for a miniscule slice of the profits in return.
A previous attempt to reconcile this imbalance came from developer Don Peebles, who in 2019 announced a $500 million fund to support minority and women developers in top U.S. multifamily and commercial markets. However, the fund proved a tough sell for investors, with Peebles telling TRD in August he hoped the initiative would notch some closings by the end of the fourth quarter.
[CO] — Holden Walter-Warner