The New York City Employees’ pension fund invests $60 million for a 25% stake in Community Stabilization Partners. This substantial commitment shows the city’s intention to strengthen local communities while securing the pension fund’s future. The partnership’s opportunities are set to enhance long-term financial rewards while cementing a visible impact on society.
Community Stabilization Partners, comprising Community Preservation Corporation, Related Fund Management, and Neighborhood Restore, will combine their strengths in affordable housing finance, robust monetary resources, and the preservation of underutilized properties. The joint effort promises efficient teamwork to yield effective community development results.
The strategic investment follows the acquisition of a 5% stake in Signature Bank’s $5.8 billion rent-stabilized loan portfolio after the economic downturn. It indicates a captivating opportunity seized and a potential shift in investment tactics for the institution involved.
The investment aims to stabilize roughly 35,000 apartment units linked to the loans. Yet Community Stabilization Partners neither owns nor directly refurbishes the buildings.
Pension fund’s strategic investment in community stability
Instead, they facilitate the transactions and guide the owners in maintaining affordable, sustainable apartments. They also work to ensure compliance with affordability contracts and building preservation.
The partnership, acting as the loan servicer, influences borrowers and sets the terms for loan refinancing. This alliance’s foremost objective is to maintain a consistent level of stability, especially during rarities like loan defaults, refinancing, or changes in property ownership.
The partnership foresees a 10.8% net internal rate of return on the investment and is also eligible to collect servicing fees. The majority of the 868 loans, accounting for roughly 35,000 residential units, are showing significant ongoing financial improvement. Such a positive trend reflects the partnership’s efforts to maintain the loans while increasing its initial investment.
In addition to the pension fund, additional funds have been proposed for necessary improvements as part of loan discussions by the Community Preservation Corporation and the Federal Deposit Insurance Corp. These enhancements include modernizations, energy-saving measures, and structural fixes, boosting the property’s allure and market value.
The Adams administration backs Community Stabilization Partners due to their vast expertise in multifamily, rent-regulated, and affordable housing finance in New York City. The partnership ensures regulatory compliance, financial stability, and accessible homes for city residents.
