March 28, 2023
LOS ANGELES – March 23, 2023– SDS Capital Group’s $150M Supportive Housing Fund (SHF or Fund), a first of its kind private equity fund to construct permanent supportive housing (PSH), has been awarded the Pension Real Estate Association (PREA) Environmental and Social Governance (ESG) Award in the Social Impact category for their private equity funding approach to addressing the homeless crisis in California.
PREA, considered one of the premier trade associations for the global real estate investment industry, for a third year has awarded the PREA ESG Awards and for the second year running has included the PREA Social Impact ESG Award. The 2023 PREA ESG Awards received submissions from 31 real estate funds with aggregate net assets under management of over $113 billion.
“It is an honor to receive the PREA Social Impact ESG Award,” said Deborah La Franchi, Founder & CEO, SDS Capital Group. “When SDS Capital launched the Supportive Housing Fund in 2019, our goal was to build permanent supportive housing more efficiently and at a quicker pace than the traditional models in the marketplace. We’re proud to be providing more than 3,000 of our unhoused neighbors in California with quality homes while seeking market rates of return for our investors.”
SDS Capital Group, a pioneer in impact investing for over 20 years, manages over $1.3 billion in impact assets across six funds and finance platforms across the US. The SDS Supportive Housing Fund was selected as the winner of the Social Impact Award based on the new high-speed, low-cost financing model developed by SDS Capital Group and the developer they are funding – RMG Housing. SDS’s financing focuses on PSH projects for previously unhoused residents in Los Angeles and California. The SDS Supportive Housing Fund model uses private equity financing – with zero taxpayer dollars – for land acquisition or construction.
The key point of distinction of the SDS Supportive Housing Fund is that it invests exclusively in projects that are financially sustainable over the long term. This requires that the Fund’s cost per PSH unit in the Los Angeles area be below $250,000 — as compared to the $600,000 average in the current California market. Financing issues and per-unit costs are often cited as the foremost obstacles to developing much-needed housing for the Los Angeles County unhoused population, which currently exceeds 69,000.
Greg MacKinnon, Director of Research at PREA, said: “PREA is tremendously proud to recognize this year’s winners of the PREA ESG Awards, across all five of the categories, who are market leaders in incorporating ESG into their investment decision making. All of the winners demonstrate that not only can real estate investors create positive environmental and social impacts, but that they can do it while generating competitive investment performance. ESG is not a drag on real estate investment performance – in fact, it can be the source of significant investment opportunities.”
PREA developed their Annual PREA Awards to recognize members at the forefront of ESG within real estate investing and to provide the industry with examples of best practices in the field. SDS Capital Group’s Founder and CEO Deborah La Franchi accepted the award at a gala event held in Seattle’s Hyatt Regency, concluding the PREA 2023 Spring Conference. The two-day conference covered major economic and geopolitical forces as well as headline financial indicators in the US, and featured Starbucks CEO Howard Schultz as a keynote speaker.
The SHF has invested in nine projects to date (seven in Los Angeles and two in the Bay Area) that will result in the construction of 638 PSH units over the next couple of years. The first project to complete construction, the Dolores Huerta Apartments located in South Los Angeles, is scheduled to open doors this April. The Fund’s goal is to construct 3,000 units throughout Los Angeles, a region that has been impacted by high numbers of homeless residents, and other urban centers in California. SDS anticipates that it will invest in seven additional projects in 2023, with three closing over the coming six weeks.
The SDS Supportive Housing Fund is the sole source of capital for PSH projects developed by RMG Housing, providing a streamlined and quick funding turnaround that allows a project to break ground much sooner than what is typical within the industry. PSH developments typically require an average of seven funding sources which can take developers years to aggregate. The Fund’s “one-stop” model significantly reduces underwriting and closing time to less than 60 days. The typical PSH project takes an average of 5-7 years from underwriting to tenant move-in; the SDS model takes approximately 24 months.
In addition to quality housing, the Fund’s PSH projects offer tenants on-site case management services with one case manager living at each development for free.
About SDS Capital Group and the SDS Supportive Housing Fund
Los Angeles-based SDS Capital Group serves as manager of the SDS Supportive Housing Fund. Founded in 2001 by Deborah La Franchi, SDS Capital Group manages a platform of impact investment funds – each with a distinct geography and investment strategy. SDS has been recognized for the past five years by ‘ImpactAssets 50’ as one of the top impact managers globally. With six funds and finance products on its platform, SDS currently manages over $1.3 billion in impact assets. The SDS Supportive Housing Fund is the company’s newest fund. It focuses solely on financing permanent supportive housing (PSH) developments in California that are financially sustainable and provide case management support services. Investors in the Fund include: Kaiser Permanente, Ally Bank, Synchrony Bank, Pacific Premiere Bank, East West Bank, Charles Schwab Bank, CIT Bank, the Weingart Foundation, First Republic Bank, Western Alliance Bank, Hudson Pacific Properties, California Community Foundation, and the Annenberg Foundation. For more information, visit www.sds.capital or contact us.
About Pension Real Estate Association (PREA)
Founded in 1979, the Pension Real Estate Association (PREA) is a non-profit trade association for the global institutional real estate investment industry. PREA currently lists over 700 corporate member firms across the United States, Canada, Europe, and Asia. Our members include public and corporate pension funds, endowments, foundations, insurance companies, investment advisory firms, REITs, developers, real estate operating companies, and industry service providers. PREA’s mission is to serve its members engaged in institutional real estate investment through the sponsorship of objective forums for education, research initiatives, membership interaction, and the exchange of information.
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