SDS Capital Group has launched a new platform with expectations to finance more than $1 billion of affordable housing over the next 18 months.
The Los Angeles-based impact fund manager says SDS Impact Debt (SDSID) will provide below-market permanent and construction financing for the preservation and development of affordable housing across the country.
SDSID is working on closing six financings with 1,427 multifamily units, including 54% affordable to families earningi up to 80% of the area median income (AMI) and about another 30% affordable to families earning up to 120% of the AMI.
“This new product fits in with our goals at SDS, which is to provide efficient, nimble capital that can move quickly and at a lower cost so we can have more impact out in the communities where this capital is needed,” CEO Deborah La Franchi tells Affordable Housing Finance.
She founded the company in 2001 to create a platform of different products focused on deploying capital to the lowest-income neighborhoods for economic development or affordable housing. Today, SDS has more than $1.6 billion of assets under management and has invested in more than 8,000 housing units across the country. About 72% of those homes are affordable to families making less than 80% of the AMI or are permanent supportive housing units for people who were homeless.
SDSID is the firm’s sixth product line and first dedicated to debt. Previously, LaFranchi and her team concentrated on providing private equity.
The latest strategy will utilize a variety of private asset-based products to offer financing for a single or pool of assets with terms ranging from three to 40 years, priced at 150 to 250 basis points below current retail debt offerings with a loan-to-value up to 90%, according to the company.
“If you can provide a single source of financing, you can provide that quicker and you can provide that cheaper,” says Jason Riffe, managing director of SDSID. “Everybody benefits. Developers get all their leverage. The building gets built. People get housed. We get people off the street. That’s where the idea for the product came from.”
SDSID opens the door to having a one-stop shop, where affordable housing developers can obtain both debt and equity under one roof, in states in which SDS is active, according to Riffe, who will continue as managing partner of Thropo Capital, a community impact investment company he founded in 2024.
“We are endeavoring to make affordable housing financing more affordable,” La Franchi says.
