The name of the financing arm of Habitat For Humanity International, Habitat Mortgage Solutions, was changed to Habitat Capital as the single member limited liability corporation (LLC) unveiled at least $113 million in two funds for financing affordable housing through Habitat affiliates.
An arrangement with JP Morgan created a $13 million fund that Habitat affiliates can tap into to support homebuilding in local communities. As of December 2023, Habitat Capital had issued $5.4 million in loans to support various projects undertaken by Habitat affiliates. Habit Capital currently has approximately $30 million in its loan portfolio, said Daniel Gura, managing director of Habitat Capital.
Later this year, with seed funding received from MacKenzie Scott, Habitat Capital, launched in 2017, will launch a property acquisition fund, a $100 million investment initiative for advancing Black homeownership and fostering climate-resilient housing. This initiative will ensure that Habitat affiliates gain access to loans essential to facilitating affordable homeownership projects, including acquisition, rehabilitation and construction. Through these investments, Habitat Capital aims to increase overall network production by 5%.
Habitat Capital has a range of financial products, services and tools including:
* Predevelopment loans;
* Acquisitions loans;
* Construction loans;
* Mini-perm loans;
* Bridge loans;
* Working capital; and,
* New market tax credits.
They are designed to facilitate increased production of affordable housing in three primary ways. There is property acquisition and establishing partnerships that yield affordable financing solutions. There is leveraging the performance of Habitat mortgages to demonstrate the financial viability of lending to lower-income homeowners and, third, providing financing that helps Habitat affiliates operate efficiently, increase production and deepen mission impact.
Gura explained that the intention is to secure between eight and 10 investors in the $100 million fund. Some of the investors will get a return on the investment while other money is concessionary, meaning impact is expected, rather than a return on cash. Investors to the two funds include MacKenzie Scott, JP Morgan, MetLife, the Arnold Foundation, and the Robert Wood Johnson Foundation.
The rate charged on loans is below market rates but also depends on the underlying costs of capital. The financing sources include a combination of banks, catalytic investors, foundations and corporations in what Gura described as a “blended capital stack.”
Habitat Capital and related entities have provided more than 820 loans to more than 350 of the 1,000 Habitat affiliates, awarding more than $400 million in loans, according to data from the organization.
