SDS Capital Group Closes $150 Million Supportive Housing Fund

First-of-its-kind Private Equity Impact Fund to Finance 1,800 Permanent Supportive Housing Units in California

SDS Supportive Housing Fund Will Maximize Private Capital Impact on Homelessness with Per-Unit Costs Below $200,000

News provided by

Oct 11, 2021, 08:00 ET

LOS ANGELES, Oct. 11, 2021 /PRNewswire/ -- 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.

(Left) The Dolores Huerta Apartments, first modular housing development financed by the Fund; (Center) May 7th ground-breaking of Fund financed Dolores Huerta Apartments; Dolores Huerta, labor and civil rights activist and SDS Capital Group Founder & CEO Deborah La Franchi; (Right) First SDS Fund investment on Western in Los Angeles (currently under construction).

"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.

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.

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.

"Times of great adversity require an innovative approach to financing PSH projects," said RMG Housing Founder and CEO Tim Roth. "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."

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.

Full press release

Media downloads