NEW YORK CITY-Four of the city's five pension funds have voted to invest $500 million in residential and commercial real estate, focused in areas affected by Superstorm Sandy, it was announced earlier this week by City Comptroller John Liu. The move is expected to bring the city about $1.5 billion for approximately 3,000 units of housing and 150,000 to 200,000 square feet of commercial space.
The projects will develop in the coming months as the money is invested in repairs and construction over the next three years. Most of the housing restored and rebuilt by the funds' investment will be in the affordable class, with the projects concentrated in the outer boroughs. The investments will be made by two newly formed partnerships with Related Cos. and the Hudson Cos. Inc., which will receive $300 million and $200 million respectively, from the funds. The funds are expected to earn a risk-adjusted market rate of return on the investments.
The New York City Pension Funds' $500 million investment will provide the needed equity for the projects, which are expected to utilize approximately $1 billion of additional loans toward the total $1.5 billion in Sandy-related building projects.
“The $1.5 billion rebuilding program will become the bricks and mortar neighborhoods need to rebuild from Sandy's wrath,” says Liu in the announcement. “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 investment program will focus on the renovation and reconstruction of housing that was damaged or destroyed by Sandy. The company will use the funds' investment in the city's outer boroughs and low-lying areas of Manhattan. Related also will invest across the in multifamily housing in order to increase the overall availability of housing units to NYC residents displaced by Superstorm Sandy, with a priority on rental units.
In addition, the investment will create a loan program to offer property owners who face shortfalls from insurance proceeds, with funds to restore properties to full function. Related will invest $10 million of its own funds into the overall program.
Hudson will work to create affordable and market-rate housing in Sandy-ravaged coastal areas zoned A, B, and C with 80% of its $200 million pot. Hudson will acquire properties in need of repair and retrofitting. Part of the money will be used to develop properties that incorporate green and flood-prevention design technologies while another portion of the funds will go toward retail properties. Hudson will invest an additional $8 million into the projects.
Liu serves as the investment advisor to, custodian and trustee of the New York City Pension Funds. The funds are comprisedd of the New York City Employees' Retirement System, Teachers' Retirement System, New York City Police Pension Fund, New York City Fire Department Pension Fund, and the Board of Education Retirement System.
“I am pleased to vote in support of investing NYCERS pension funds to rebuild New York City neighborhoods affected by Hurricane Sandy,” says District Council 37 Executive Director and NYCERS trustee Lillian Roberts. “This will create hundreds of jobs during the construction phase and in long-term employment in businesses that will locate to this space.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
