Lauren Garren, vice president of production and sales at Freddie Mac Multifamily recently sat down with us to share her perspective on social impact investing and how Freddie Mac’s new financing program represents an innovative approach to the affordable housing crisis.
How do you define social impact investing?
Social impact investing describes investments that have a social or environmental impact while also generating a reasonable financial return. In the multifamily sector, these types of investments are mutually beneficial to renters, borrowers and financiers alike.
Freddie Mac’s social impact focus seeks to help solve the affordability crisis by creating or preserving affordable rental housing. We’re using our existing product set to provide favorable pricing to borrowers who commit to keeping a majority of units in a property affordable between 60% and 80% of the area median income (AMI). And, for the first time, properties will be reviewed on an annual basis to ensure that the agreed-upon level of rent restrictions are met during the life of the loan.
Describe your first social impact effort with Bridge Investment Group.
Our work with Bridge will preserve hundreds of affordable housing units across the nation. We have committed to purchasing and aggregating up to $500 million in loans over a one-year period to allow Bridge to acquire, improve and preserve workforce and affordable housing stock nationwide. Under this relationship, a majority of units in each property will be affordable to those earning at or below 80%of the AMI—and will remain that way for the life of each loan.
Can you share some details on the first property acquired under the Bridge deal?
The first asset to be acquired within this vehicle is a 352-unit multifamily community in Plant City, Fla., with 82% of rents affordable to those residents earning less than 80% of the AMI. This property presented an attractive opportunity to preserve and rehabilitate a meaningful amount of affordable housing for the local Tampa workforce.
What does the future look like for social impact investing?
The possibilities for social impact investment are endless. We remain very much in the midst of an affordable housing crisis and need to find innovative solutions. Social impact investing is a great way to “test and learn” what solutions work to help stem the crisis. We’re confident that with new and innovative efforts, we can help increase the affordable housing stock, and spurn a new era of creativity and thoughtfulness to solve this problem.
To learn more about social impact investing visit Freddie Mac Multifamily.
