Apr 05$47M Land Acquisition Fund Launches
On April 4, 2022, Mercy Housing California announced the launch of the California Land Acquisition Fund, created to bring the speed and impact of private equity funds to the nonprofit affordable housing space. The $47 million fund was launched with significant participation from JPMorgan Chase, Morgan Stanley, The California Endowment, Wells Fargo, CommonSpirit Health, California Community Foundation, and the Weingart Foundation.
Mercy Housing is one of the nation’s largest and most active affordable housing developers. In California, Mercy Housing owns and manages more than 10,000 homes and has over 4,000 new homes in development. Given the depth of the housing and homelessness crises, Mercy Housing has committed itself to innovative strategies that have the potential to change how affordable housing is developed. The Fund will serve as a model for other housing developers grappling with the challenges of developing cost-effective affordable housing in California’s competitive market.
More than 700 affordable, high-quality homes will be built throughout California on sites acquired through the California Land Acquisition Fund. Based on Mercy Housing’s experience elsewhere, the Fund is expected to reduce development costs by focusing on sites that can be quickly entitled for development and lend themselves to efficient construction practices like modular construction.
“We launched this Fund to reduce the cost of developing new homes and to expand our reach to compete for land in more communities, particularly those that have historically not provided affordable housing opportunities,” said Melissa Garcia, the Fund’s director. Garcia noted that the Fund has a goal of investing a significant portion of its capital in communities that the State of California has identified as “high resource” based on a series of economic and health indicators.
“California is experiencing one of the worst housing crises in the history of our state. There are a countless number of families who are today homeless or on the verge of losing their homes due to rapidly rising housing costs in the state,” said Dr. Robert K. Ross, President and CEO of The California Endowment. “By supporting the Fund, we can focus on the urgent need for affordable housing in the state and support different approaches to providing safe, healthy, and affordable homes to those families who are experiencing housing insecurity.”
“Mercy Housing continues to address the affordable housing gap head on by finding more opportunities to create affordable homes,” said James Vossoughi, Executive Director, Community Development Banking, Chase. “We’re thrilled to be a part of their journey and to lean in on this innovative effort by going beyond the standard commercial real estate terms for this Fund.”
“Morgan Stanley is proud to be a founding partner of Mercy Housing’s innovative California Land Acquisition Fund,” said Bob Taylor, Executive Director, Community Development Finance at Morgan Stanley. “Providing flexible capital to nonprofits who are at the forefront of solving the housing affordability crisis is a cornerstone of our work across communities.”
“To successfully acquire good-quality sites in high-resource communities, affordable housing developers need to be able to act as effectively as their market-rate competitors,” commented Eileen Fitzgerald, head of Housing Affordability Philanthropy at Wells Fargo. “The Land Acquisition Fund is that tool, supporting the purchase of property at lower cost and at scale thanks to the ready availability of capital.”
“In order to be healthy, we all need a clean, safe, and stable place to live. As a health care provider that is focused on bridging clinical care with social care, we see the important connection between housing and health every day at our hospitals and clinics,” said Eddie Salvador, Community Investment Program Manager at CommonSpirit Health. “We are delighted to continue our decades-long partnership with Mercy Housing with this new initiative.”
For more information on this Fund, please contact Melissa Garcia, Land Fund Director, at Melissa.Garcia@MercyHousing.org.
California Land Fund Board of Directors
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