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Goldman Sachs JV spends $1B on affordable housing spread

Michaels Organization, Community Development Trust partner on 10K-unit portfolio

Goldman Sachs is leading the charge on a 10-figure affordable housing portfolio purchase spanning several major cities.

Goldman Sachs’ Urban Investment Group purchased the portfolio alongside the Michaels Organization and the Community Development Trust for $1.15 billion, Bloomberg reported. The joint venture picked up a total of more than 10,000 units, sold by Harmony Housing and developed with federal low income housing tax credits.

The average rent across the portfolio is below $1,000 per unit, executives told the outlet. There are more than 30,000 residents in the portfolio, which covers eight states and dips into major cities such as Chicago, Dallas, Milwaukee, Tampa and Indianapolis.

The properties include multifamily buildings and unassisted senior living homes. The joint venture will try to retain tenants by providing residents with services including after-school programs and financial literacy courses.

The venture obtained unspecified long-term, fixed-rate agency financing for the acquisition. An executive for Michaels said the venture is shooting for core to core-plus returns, typically annualized at a rate between 6 and 12 percent.

Housing affordability nationwide is at its worst levels on record, hindered by spiking home prices and rising interest rates and mortgage rates. In September, a median-income household would need to have spent slightly more than 46 percent of its income to afford a median-priced home, a 14-point spike from the previous year.

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Goldman’s Urban Investment Group last year launched a $75 million joint venture with the National Affordable Housing Trust to establish the Black Developers Initiative Affordable Housing Fund. The fund’s goal is to target development led by Black women and support Black affordable housing developers.

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— Holden Walter-Warner

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Affordable HousingGoldman Sachsmichaels organization