Catalytic Capital In Action: New York City Housing Acquisition Fund
This case study was written by the Catalytic Capital Consortium (C3), an investment, learning, and market development initiative by the MacArthur Foundation, Rockefeller Foundation, and Omidyar Network, which brings together leading impact investors to encourage greater impact and use of catalytic capital. To learn about what catalytic capita is and why it matters, visit the library below.
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Financing More Than 12,000 Affordable Apartments
To acquire and preserve high-quality rental housing for low- and moderate-income residents, local developers need access to large and flexible acquisition and pre-development loans at terms not typically available from the commercial market. The NYC Housing Acquisition Fund was created in 2006 to address that need, offering bridge financing to affordable housing developers.
The fund was launched with first-loss capital from the housing agency and subordinated, low-cost debt from six foundations, which laid the groundwork for senior loans from 16 financial institutions. By blending capital from these sources, the fund can take on greater risk and offer patient repayment terms tailored to project needs, below-market interest rates, and pricing incentives for nonprofits and minority/women-owned developers.
For more than a decade, this innovative blended fund has raised and invested more than $415 million to help finance 12,359 affordable apartments for low- to moderate-income residents. It has helped anchor revitalization efforts that make communities safer and stronger, while protecting against displacement so that long-time residents can benefit from the gains that accompany economic growth.
Catalytic Capital Investment
$5 million program-related investments (PRI)* from the John D. and Catherine T. MacArthur Foundation, as well as financing from The Rockefeller Foundation, Ford Foundation, FB Heron Foundation, Robin Hood Foundation, Starr Foundation, NYC Department of Housing Preservation and Development, and a syndicate of commercial lending institutions.
Ongoing investment vehicle, with $162 million capitalization.