LOS ANGELES – October 11, 2021 –
The SDS Supportive Housing Fund, a first-of-its-kind real estate impact fund managed by SDS Capital Group, has closed its fundraising campaign at $150 million, announced Deborah La Franchi, Founder & CEO, SDS Capital Group. The capital raised will be used to build 30 developments providing 1,800 financially sustainable permanent supportive housing (PSH) units for people experiencing homelessness in Los Angeles and other cities throughout California. The Fund leverages private investment capital to build PSH for less than half the cost of typical developments, and at a rate three times faster than current average construction times needed to finance and build similar PSH in California.
“We are proud to announce the $150 million closing of the SDS Supportive Housing Fund. The Fund is transforming the lives of 1,800 individuals – they will soon have a safe, quality home and no longer live on the streets of Los Angeles and in communities across California,” said La Franchi.
SDS purposefully pursued private-sector capital to capitalize the Fund given the opportunity this resource provides.
“Private-sector capital enables us to invest more nimbly, quickly and without having to leap through the many bureaucratic hurdles that add time and cost, SDS is closing on one investment every 60 to 90 days. Our capital is flowing expeditiously from bank accounts into construction. To confront the homeless crisis throughout the City of Los Angeles and across the state…speed is of the essence.”
Deborah La Franchi, Founder & CEO, SDS Capital Group
SDS launched the Supportive Housing Fund with the specific goal of scaling the unique PSH housing model of Los Angeles-based RMG Housing. The 30 anticipated apartment community developments will typically consist of 40 to100 single-bedroom units each averaging 500 square feet.
The innovative SDS and RMG funding and construction model has an average timeline of just 24 months – 60 days to underwrite and close financing and an additional 22 months to complete construction and open doors for tenant occupancy. The typical PSH project in California requires 5-10 capital sources, which often leads to timeframes of 5-7 years to obtain financing and complete construction.
The Fund is designed as a single-source capital model: the Fund provides 100% of the project capital needed for land acquisition and construction (beyond RMG’s limited investment requirement). No additional private-sector capital nor government subsidy is needed to cover these costs. The ease of using private-sector capital, along with the time saved in identifying and securing various funding sources, are two of the core factors enabling Fund-financed developments to have per unit costs of $200,000 on average – a fraction of the typical $500,00 to $700,000 for PSH units in California.
“Times of great adversity require an innovative approach to financing PSH projects. Our ability to tap the $150 million SDS Supportive Housing Fund to develop 30 projects is a game changer for RMG. This one-stop capital source allows us to exponentially scale our model on every level. RMG Housing could ask for no better partner than SDS as we seek to eliminate homelessness in our communities.”
Tim Roth, CEO & Founder, RMG Housing
The Fund has financed six developments to date: five developments located in Los Angeles (including a prototype modular housing development) and one additional development in the Bay Area. SDS and RMG anticipate constructing more projects as modular developments, allowing project timeframes for financing and development to be further reduced from their current 24-month schedule to an estimated 14 months.
The Fund has plans to finance the development of 1,800 PSH units. California currently has a homeless population above 161,000. Los Angeles County – where approximately 20 of the 30 projects will be located – has an estimated homeless population of 66,000.
Los Angeles City Councilmember Curren Price (District 9) currently has two RMG PSH projects of this model located within his district – one financed by the Fund – and has a number of other locations under consideration.
“Living on the streets is not a safe place for anyone to lay their heads. Trying to rest in a makeshift shelter without access to plumbing, water and other basic necessities is inhumane, this should not be an acceptable state of living anywhere in our City. The SDS Supportive Housing Fund and the RMG developments they are funding is exactly the type of innovation that will help our City tackle our homeless crisis once and for all.”
-Los Angeles City Councilmember Curren Price (District 9)
Each development provides residents with holistic support and on-site amenities that include gyms and garden space, as well as case-management services. Some developments will have ground-level retail and service space that will also serve the local community, providing health or fresh food services. In Los Angeles, most resident support services will be provided by Homeless Health Care Los Angeles (HHCLA). Since 1985, HHCLA has provided more than 190,000 of LA’s most marginalized individuals and families with behavioral healthcare, medical, and quality of life services.
“Finding available permanent supportive housing units for clients has been challenging. The SDS Supportive Housing Fund’s investments with RMG Housing will accelerate the supply of housing necessary for our clients to move from the streets and begin to build an improved quality of life.”
Mark Casanova, Executive Director, HHCLA
African American churches also play a unique role in the Fund model. Out of the initial fifteen Fund projects, at least one third are expected to be built on church lands creating mutually beneficial partnerships that generate cash flows for churches while serving their mission of providing for and supporting community members in need of housing. Two of the current projects financed include partnerships with South Los Angeles churches.
The participation of private-sector investors was very purposely pursued by SDS. “The motivation driving SDS’s investors has been the alarming and ongoing expansion of the homeless crisis” said La Franchi. “I believe the private-sector has a critical role to play relative to financing new approaches to address the homeless crisis. Our investors want to be a part of a solution that centers on a financially viable, faster, scalable, and lower-cost PSH model. Our investors really went out on a limb to support such a dramatically different approach –
we are deeply appreciative of their partnership with us.”
Kaiser Permanente has committed $50 million to the effort from its Thriving Communities impact investment fund. This keystone investment allowed the SHF Fund to scale efforts and raise capital above $100 million. The nonprofit health system leads an array of efforts to end homelessness and preserve affordable housing by making strategic impact investments, philanthropic grant-making, shaping policy, and forming innovative partnerships. Kaiser Permanente’s focus on creating affordable housing is critical to its ongoing mission to improve health outcomes in the communities it serves.
“The continued growth of California’s unhoused population, and the immeasurable toll that homelessness takes on individual and community health, demands innovative approaches. We are proud our investment in SDS will create so many new affordable units that will bring people off of the streets and provide them with much-needed support.”
John Yamamoto, Vice President, Community Health and Government Relations, Kaiser Permanente.
Investors in the Fund included Kaiser Permanente, Ally Bank, Synchrony Bank, East West Bank, CIT Bank, the Weingart Foundation, Western Alliance Bank, Hudson Pacific Properties, Pacific Premiere Bank, and the newest investors in the most recent close – Charles Schwab Bank, First Republic Bank, California Community Foundation, and the Annenberg Foundation.
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 four 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 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. For more information about SDS Capital Group, visit www.sdscapitalgroup.com and to learn more about the SDS Supportive Housing Fund, click here. To contact SDS Capital Group, Click Here.
About RMG Housing
RMG Housing, based in Los Angeles, is a developer of permanent supportive housing (PSH) for individuals and families experiencing homelessness. Each property RMG develops offers on-site intensive case management services for residents. RMG’s core mission is to develop high-quality PSH units that are both cost-effective and financially sustainable. For more information, visit www.rmghousing.com
CONTACT & MORE INFO:
Contact Sybil MacDonald,
Marketing & Communications
sybil@marketing-comm.com
Tel: 323.376.8961
For more information on the SDS Supportive Housing Fund, click here.
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