Funds Will Provide For Up to $1.5B In Capital For Destroyed Or Damaged Housing, Retail
Four of New York City's largest pension funds have voted to invest $500 million in redevelopment of commercial and residential property in areas ravaged by Hurricane Sandy last October.
With leverage, the $500 million investment will result in a $1.5 billion capital infusion for potentially 3,000 housing units and 150,000 to 200,000 square feet of commercial space, according to City Comptroller John C. Liu, who made the announcement last week.
Collectively valued at $127.8 billion as of third-quarter 2012, the five New York City pension funds have enormous investment clout. Liu serves as investment advisor and trustee of the funds for New York City teachers, firefighters, police and city administrative employees.
Two newly formed partnerships between Liu’s Bureau of Asset Management (BAM) and Related Companies and the Hudson Companies Inc. will invest $300 million and $200 million, respectively, provided by the pension funds, which will earn a risk-adjusted market rate of return.
"The $1.5 billion rebuilding program will become the bricks and mortar neighborhoods need to rebuild from Sandy’s wrath," Liu said in a statement. "This investment demonstrates the steadfast commitment of city employees and retirees to pursue opportunities that are not only expected to deliver strong returns, but also to generate collateral benefits for the communities they call home."
The Related Cos. $300 million investment program will focus on the renovation and reconstruction of housing damaged or destroyed by Sandy in the city’s outer boroughs and low-lying areas of Manhattan. Related will also invest across New York City in multifamily housing in order to increase the overall availability of housing units to city residents displaced by the superstorm, with a priority on rental units.
The Related investment will also create a loan program to offer property owners who face shortfalls from insurance proceeds, and New York City-based Related will invest $10 million of its own funds. The company has an existing portfolio of real estate assets valued at over $15 billion.
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The $200 million received by The Hudson Cos. Inc. will largely be used to create affordable and market-rate housing in certain coastal areas impacted by Sandy. Hudson will acquire properties in need of repair and retrofitting, with part of the money used to develop properties that incorporate green and flood-prevention design technologies.
Another portion of the funds will go toward retail properties, with New York City-based Hudson investing an additional $8 million into the projects. The Hudson Cos Inc., which is also based in New York City, is experienced in new construction, building rehabilitation, and development, including sustainable building and rehabilitation of historic properties. The firm’s residential developments span the luxury, middle-income, and subsidized affordable housing markets.