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A longstanding relationship with Goldman Sachs (GS) Asset Management’s Urban Investment Group (UIG), forged by James H. Simmons III prior to his founding of Asland Capital Partners in 2019, proved to be a key catalyst in the creation of the real estate investment firm’s new housing fund.
Ashland, which specializes in multifamily and mixed-use investments, has teamed up with the investment bank giant’s asset management arm to launch the Asland Sustainable Housing Fund (ASH). The fund, which has a national focus, will initially target $250 million toward affordable housing and mixed-income multifamily transactions throughout the New York City metropolitan region.
“When Margaret Anadu ran the Urban Investment Group, that was my introduction and impetus behind the relationship, and it carried through the launch of Asland in January of 2019,” Simmons told Commercial Observer. “We have done two previous transactions with Goldman and have looked and talked about a plethora of opportunities with them.”
Simmons added that the idea for ASH was first broached around two and half years ago with Daniel Alger, who took over as co-head of UIG along with Sherry Wang in February 2021. Simmons said the relationship with Alger expanded as Asland executed two deals with UIG, including a 14-story senior housing project at 1940 Turnbull Avenue in the Bronx with 30 percent of the units designated as affordable, and the District of Columbia’s new Department of General Services headquarters project in the low-income Benning neighborhood of Washington, D.C.
Concurrent with the launch of ASH, Asland and Goldman Sachs also announced the fund’s first acquisition of Heighliner Portfolio, which comprises five multifamily properties with 334 residential units and multiple community-focused retail spaces spanning 225,000 square feet. The seller was not provided by ASH, but sources told CO it was L+M Development Partners. The purchase price was $45.2 million, according to ASH.
Ariel Property Advisors’ Victor Sozio and Shimon Shkury brokered the transaction. The properties are at 351 Lenox Avenue, Harlem; 201 – 215 W 148th Street, Harlem; 1011 Washington Avenue, the Bronx; and 1090 Franklin Avenue, the Bronx.
As part of the fund, ASH plans to preserve affordable housing for more than 700 residents over a 40-year period in collaboration with the New York City Department of Housing Preservation & Development (HPD) and the New York City Housing Development Corporation (HDC).
A lack of affordable housing units in New York and nationally has been compounded recently by a surge of migrants from Latin America seeking asylum in the U.S., according to Simmons,
“We believe that given our experience and their experience that we can come together and work in a public-private partnership way with cities, states and counties, to be able to bring our expertise to bear in helping to solve those issues and in particular the supply and demand issue, and that includes not only the production, but also the preservation,” Simmons said. “We want to extend and preserve that affordability and at the same time upgrade the assets so they are durable and sustainable.”
Simmons said ASH will look to ensure the long-term viability of Heighliner Portfolio assets, which have reached the end of their initial 15-year tax credit compliance period. Ashland and Goldman Sachs plan to tackle deferred maintenance needs in each of the buildings, implement sustainability upgrades and add free broadband services. The portfolio received a long-term property tax exemption in exchange for preserving affordable housing at the properties.
In today’s higher interest rate environment, Simmons said it is important for affordable developers to be extra creative in finding tools to fund acquisitions or renovation projects with more use of low-income housing tax credits, tax abatements and tax-increment financing. ASH will target core-plus transactions with investment return expectations in the high single digits to low single digits.
“The preservation of affordable housing is central to our mission and the investment in this portfolio, with its focus on affordability, sustainability and services is a perfect example of our approach,” Alger said in a statement. “Asland has been a long-standing partner of ours, and with the launch of the Asland Sustainable Housing Fund, we hope to continue to address the housing needs of the underserved communities across New York City together.”
Andrew Coen can be reached at acoen@commercialobserver.com
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